Olivier Chalon's presentation on Tail End Spend Management was shown at the World Procurement Congress 2014 during a Breakfast Briefing hosted by Xchanging Procurement.

1. TAIL END SPEND
MANAGEMENT
Presented by Olivier Chalon

2. © 2014 Xchanging plcTail end spend management
AGENDA
2
1 What is tail end spend?
3 Challenges and best practices
Why is it important?2

3. © 2014 Xchanging plc
WHAT IS TAIL END SPEND?
Traditional spend management covers only 83% of an organisation’s spend.
Source : CAPS Research – Cross-industry report on standard benchmarks (2012)
Tail end spend management3
 Tail-end spend usual characteristics :
– Unadressed by the procurement team (under the radar)
– Large (and growing) number of suppliers
– Misclassified spend – we don’t really know what is bought
– Large number of small transactions
– Spot buys
– Maverick spend (non compliant)
– Fragmented spend – each company entity is buying for itself only
– Low volume, low-price items (tail of the tail)
Percentage of spendPercentage of vendors
80
80 20
20
Traditionally
managed spend
Tail-end spend
Source : “Betting on tail spend to save coins” Everest Group 2014

4. © 2014 Xchanging plc
WHY IS IT IMPORTANT?
Tail end spend management4
 TSM can generate savings between 15% and 17%
– So for an organisation generating 8% savings on its strategic spend, TSM can
potentially add up to 50% savings globally
– Where do these savings come from?
• Spend reclassification and vendor consolidation
• Compliance and demand management
• Automated processes (eRFx, P-card & e-catalog can reduce operational cost)
 TSM can help mitigate risks in the company spend
– Supply disruption
– CSR issues
– Business ethics, fair practices etc
Source : “Betting on tail spend to save coins” Everest Group 2014

5. © 2014 Xchanging plc
CHALLENGES AND BEST PRACTICES
Finally, experience shows that in order to promote adoption and reap the full
benefits from TSM, a significant portion of the delivery team has to be local. A quick
turnaround time and a deep knowledge of the supply market are prerequisites to a
successfull TSM programme.
Despite the huge potential, organisations find it difficult to manage their tail-end
spend.
Tail end spend management5
Source : “Betting on tail spend to save coins” Everest Group 2014
 Challenges in Tail spend
management
Industry best practices
 Poor data quality and visibility  Technology-focused solution
implementation
 Fragmented nature of spend
with disparate stakeholders,
technology landscape and
lack of compliance
 Stakeholder alignment,
change management and
effective compliance
 High cost, seemingly low
savings potential and lack of
management interest
 TCO approach to business
case creation
 Lack of dedicated team and
expertise
 Utilisation of third-party
expertise and global best
practices

6. THANK YOU
For more information please contact:
Olivier Chalon
Phone +33 (0)1 70 39 70 61
Mobile +33 (0)6 13 66 48 06
Email olivier.chalon@xchanging.com
Website www.xchanging.com