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Tail Spend

Tail spend refers to a group of low-value purchases that a company makes with a large number of suppliers, but each supplier only accounts for a small percentage of the company's overall spend. These purchases are typically for items or services that are not core to the business and are often unmanaged or poorly managed.

While each individual tail spend purchase may be small, collectively, they can account for a significant portion of a company's total spend. Managing tail spend is becoming increasingly important for companies as they look for ways to reduce costs and increase efficiency. By consolidating suppliers and optimizing procurement processes, companies can reduce the number of suppliers they work with, negotiate better pricing and terms, and improve spend visibility and control.

Specialism:
Category Management Procurement Process Spend Analysis Supplier Management
Related terms:
Category Segmentation Spend Analysis Supplier Segmentation
Third-party Risk Management
Third-party Risk Management (TPRM) or Supplier Risk Management is the act of managing risk within the supplier base and associated supply chain. It is a core pillar of most procurement functions. The ability of an organization to manage the risks within their supply chain has a direct impact on their performance in the markets they participate within. Proactive risk management can allow preemptive identified risk mitigations that limit any affect on the organization’s operation.
Specialism:
Category Management Risk Management Supplier Management
Total Cost of Ownership (TCO)
Total Cost of Ownership (TCO), sometimes Cost Driver Analysis, Acquisition Cost or Value for Money (VfM), is an estimate of the true cost of buying a product or service. It is the sum of all costs incurred during acquisition, possession, utilization and disposition of a product or service. TCO is important because it represents a bigger picture beyond the basic purchase price and reflects the costs that aren’t necessarily included in the upfront pricing.
Specialism:
Category Management Sourcing Spend Analysis
Related terms:
Category Management
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Triple Bottom Line (TBL)
Triple Bottom Line (TBL) is a framework that measures the performance of an organization in three dimensions: economic, social, and environmental. It emphasizes considering not only financial profit (the traditional bottom line) but also the organization's impact on people and the planet. The economic dimension assesses financial performance, the social dimension evaluates social responsibility and stakeholder engagement, and the environmental dimension focuses on sustainability and ecological impact. The TBL approach aims to achieve a balance between profit, social well-being, and environmental conservation, recognizing that sustainable success requires considering broader impacts beyond financial measures.
Specialism:
Procurement Strategy Sustainability
Related terms:
Sustainable Procurement