What is tail spend management?
Tail spend management includes controlling and mapping purchasing expenditure at all non-strategic suppliers. The expenses at these C suppliers are also referred to as C-Spend. The Tail Spend expenses represent approximately 20% of the total costs. Often companies lack the knowledge, expertise or scope to manage these expenses. No less than 80% of all suppliers are so-called C-Suppliers and do not form a direct part of the business operations. Tail spend management enables companies to achieve a more efficient supplier base and better insight into expenditure and savings.
Tail end spend management is based on the Pareto principle, often referred to as the 80/20 rule. The Pareto principle states that in many cases about 80% of the outcomes arise from 20% of the causes.
80% of the suppliers (C-suppliers) are responsible for only 20% of the total purchasing expenditure where 20% (strategic suppliers) are responsible for 80% of the purchasing expenditure.
Focus on strategic spending
About 20% of the suppliers are strategic suppliers that have an important relationship with the company. These are suppliers that are indispensable for a company, in contrast to C suppliers. By outsourcing the Tail spend, there is room to focus more internally on strategic purchasing. It is important to maintain a good relationship with strategic suppliers, resulting in good delivery and payment conditions.
Strategic suppliers comprise only 20% of the supplier base but represent 80% of the purchasing expenditure.
The problem of C-suppliers
The Tail Spend expenditure at non-strategic suppliers is also referred to as C-spend. These expenditures represent only 20% of the total purchasing expenditure and comprise as much as 80% of all suppliers of an organization. These are so-called C suppliers that are not a direct part of the business operations.
The relatively small part of the purchasing expenditure at the C suppliers has a huge impact on a purchasing and/or administration department. Companies often have no insight into the size of these expenditures. This is mainly due to the fact that these are low-value, low-risk expenditures.
The products are in many cases purchased from non-contracted suppliers and consist of varying and often unnegotiated terms. This results in a large number of transactions per year, which are either too small to go through the (strategic) purchasing department or the C-items are not part of an existing framework contract catalogues.
C-suppliers only comprise 20% of the entire procurement expenditure, but they are responsible for 80% of the supplier base.
Outsourcing procurement from C-suppliers leads to more control and a more efficient supplier base and offers opportunities for saving direct and indirect costs, better cost control and better analysis and reporting. A large part of the tail spend is a one-time purchase, where onboarding a new supplier often takes a lot of time for many organizations. Thanks to Corlido Group, a single creditor model is created and the creation of new suppliers is no longer necessary.
Characteristics of tail spend at C-suppliers are:
- Non-contracted purchases
- Uncontrolled Expenses
- Low value/low risk
- Low volume
- One-off and (ad hoc) purchases
- Not or barely negotiated prices and conditions
- Maverick buying (buying outside contracts)
Why is tail spend management important?
In many cases, there is little or no insight into the expenditure and purchasing behaviour of buyers at C suppliers who are located in the tail, or tail of the spend. By having the tail spend managed by Corlido Group, there is more insight into the expenditure, the buying behaviour of buyers/requestors and the savings achieved thanks to transparent reporting. The time spent on C-suppliers who are in the tail of the spend creates an imbalance in the work of a purchasing department. A purchasing department spends a lot of time buying a variety of low-value products and/or services that are purchased only a few times or once.
It is almost impossible for many companies to purchase these products on the most favourable terms as each purchase is a time-consuming process. When mapping out the costs, it is important to keep the entire purchasing process under a magnifying glass. This not only provides insight into the direct purchasing costs but also the indirect purchasing costs. These costs vary from sourcing, expediting, vendor onboarding, invoice handling to logistics operations.
Outsource tail spend management to one total supplier
Over the past 25 years, Corlido Group has developed into a specialist in the field of purchasing and tail spend management. Internationally represented and with more than 100 specialists, we are at your service every day.
Corlido Group is an extension of your procurement department
By outsourcing all tail spend purchases, you achieve many benefits. From insight, manageability, control to direct savings. You shift the focus of all purchases to the strategic partners with the most important products that influence your day-to-day business. You reduce your supplier base by up to 80%. Corlido Group is a specialist in the field of Tail Spend Management. From (RFQ) to invoice settlement and shipment. Corlido Group offers a total solution; from taking over tail spend management to supplying specific commodities.
Because every organization is unique, Corlido Group tailors its services to your wishes and requirements. Corlido Group has developed a unique concept in which significant procurement improvements are achieved by simplifying the procurement process and reducing costs. Corlido Group is 100% transparent and works on the basis of open calculation.
Corlido Group is an independent supplier without a fixed range. We supply an unlimited product range and are not a stock-keeping partner. Thanks to our qualified “preferred suppliers” we can guarantee good quality, service, prices and delivery times.
We offer insight into procurement behaviour, delivery conditions, expenses and savings. Thanks to monthly KPI reports with information at the order line level, the entire tail spend becomes transparent for our partners. Corlido offers the option of taking care of invoice settlement as well as the entire sourcing process. Thanks to our purchasing volumes, you also benefit from favourable purchasing conditions and negotiated and reduced rates.
You place the order with a supplier and use Corlido Group as an invoice creditor. The invoice is received, checked, scanned, booked and paid by us.
Corlido Group places a purchase order with the supplier you have already selected. We then monitor the order until delivery has taken place and we handle the invoicing process.
Source to pay
Corlido Group will look for the purchase option with the best conditions for you. Based on the specifications provided by your organisation, Corlido Group will look for suppliers with the best commercial conditions.
Integration with systems
Integration with systems provides a lot of insight and a more efficient working method. We offer various options for this, ranging from manual workarounds, hybrid solutions and full end-to-end integrations with various ERP systems. In addition, we have developed our own E-procurement tool COPS. Via COPS, buyers can easily source various products, request quotations and place orders. COPS is available as a web-based standalone version or integrated PunchOut.
Benefits of outsourcing tail spend management
- Equal purchasing and payment conditions
- One supplier for thousands (single-creditor model).
- Reduce the supplier and invoice file by up to 80%.
- More time to focus on strategic purchasing.
- The grip on your tail spend.
- Reduce internal costs and save up to 21%
- Reporting and analysis. Insight into even the smallest one-time purchases
- No uncontrolled expenses
- Take advantage of negotiated prices
- Qualified Suppliers
From invoice settlement to the source-to-pay or procure-to-pay process. We are happy to take it over for you.
Non product related (indirect procurement)
Stop creating new creditors every day. Corlido Group is the total supplier for all indirect procurement
Invoice and supplier base reduction
Reduce your invoice and supplier base by up to 80%. Corlido Group is one supplier for thousands (single-creditor model).