Taming the Tail: The four-step strategic category management approach for optimal spend efficiency

Are you interested in effectively managing tail spend to capture substantial cost savings, streamline processes, and improve your supplier relationships?  

Tail spend management is a critical yet often-overlooked aspect of procurement strategy given it involves fragmented and typically low-value transactions. The collective impact of tail spend across the enterprise can represent a sizable portion of a company’s overall spend. 

In Arroyo Strategy’s strategic category management framework, you can explore how to manage tail spend through these four steps: 

• Spend and supplier analysis: Identify and classify where your spending is going based on suppliers and frequency 

• Establish clear policies and guidelines: Standardize, strategize, and align your policies with the goals of your organization 

• Strategic sourcing implementation: Focus at the category level to leverage the expertise of your category managers and optimize procurement processes 

• Monitor and measure performance: Leverage industry benchmarks, encourage feedback from stakeholders, and create an environment of continuous monitoring and measurement of key performance metrics 

Gain insights into implementing these strategies to help organizations unlock significant value from their tail spend—essential for any organization looking to optimize their procurement processes and drive cost savings.