What is tail spend?
Tail spend is the long run of small, one-off purchases that sit below the suppliers and categories a procurement team manages. Each order is minor, but together they often make up a large share of the supplier count and a smaller share of total spend.
Example
Ridgeline Foods spends $2.4M a year across 340 suppliers. Twelve suppliers account for $1.9M. The other 328 account for $500K, an average of about $1,500 each. Most of those are a single order: a replacement pump seal, a banner for a trade show, a case of gloves.
Nobody negotiates those. Each one costs a person 20 minutes to find, request, approve and expense, so 328 suppliers cost roughly 110 hours a year of staff time on top of the $500K.
In Atta
Atta is aimed at this slice. The requester describes the item, and the agent searches the stores the workspace allows, skips the ones it blocks and returns options with prices. The approval rules and, with a card program, a per-order capped card mean a $60 order doesn't need a meeting.
Spend lands on one record per request, so finance can see the tail by supplier without chasing receipts. The tail spend calculator works out how large yours is from a supplier list.
Where to cut it
The usual first step is to rank suppliers by annual spend and draw a line where the cumulative total reaches 80%. Everything past the line is the tail. Then look at what repeats: if 40 of the 328 suppliers sold you the same kind of item, one approved supplier for that category removes 39 relationships.
Questions
How big is tail spend usually?
It varies by company. The common pattern is a minority of spend spread across the majority of suppliers. Your own supplier list shows it.
Related
- What is maverick spend?Maverick spend is buying outside the approved process or suppliers. Definition, why it happens, and a worked example with figures.
- What is spend under management?Spend under management is the share of total spend that flows through a managed process with contracts, approvals and visibility. With an example.
- Tail spend management for small, frequent purchasesTail spend is the long run of small purchases nobody sources. Atta takes them in chat, applies your approval rules and keeps a record for each one.