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What is Tail Spend?

Published May 2020

Tail Spend is a phrase that is commonly used to describe the spend that a company is making, but not accounting for or managing strategically through the company’s procurement policy.

Tail Spend falls outside of the main purchasing processes associated with the direct business line of an organisation and is usually not effectively managed by the procurement team, as it is seen as non-Strategic spend.

Tail Spend can fall into a number of categories, for example:

  • Print and Packaging
  • Signage and Display
  • Business Services
  • Marketing Services
  • Professional Services
  • Office Products
  • Uniforms and Apparel
  • Facilities
  • Gifts and Premiums
  • Temporary Labour

The following table compares Tail Spend to Strategic Spend to highlight the major differences:

Focus AreaTail SpendStrategic Spend

Number of suppliers in the market

High

Low

Number of suppliers being used

High

Medium

Number of categories of spend

High

Medium

Average transaction $

Low

High

Number of transactions

High

Low

Number of decision makers

High

Low

Procurement control

No

Yes

Number of requisitioners

High

Low

Number of suppliers per Procurement Manager

High

Low

Maverick spend issues

Yes

No

Multiple Business Units and many people involved

Yes

No

Achieving impact (savings / controlled growth)

Difficult

Easy

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