Amy Fong's blog

Talking to Your Tail Spend – Chapter 4: Frameworks to Manage and Find Savings

Find savings and learn how to build a strategic sourcing framework to help you manage tail spend.

This is the final chapter in our tail spend series and we’ve covered some significant ground to understand what tail spend is, why it happens, and the potential issues with ignoring it or managing it in the wrong way. In this final chapter, we'll explore the ways you can find savings in your tail and how to build a strategic sourcing framework to help you manage it going forward.

To get up to speed, you can read the entire Talking to Your Tail Spend series on our blog:

Amy Fong, Principal - Procurement and Purchase to Pay Advisory, The Hackett Group

Talking to Your Tail Spend – Chapter 3: The Potential Risks Lurking in your Tail Spend

Unmanaged tail spend results in significant risks to organizations.

We’ve released a series of articles to answer your questions about tail spend. We started by defining tail spend, discussed how to better work with stakeholders to manage it, and now we’re diving into the potential risks lurking in your tail spend and the problem with taking a scorched Earth approach. To get up to speed, read our prologue, Chapter 1 and Chapter 2 on what this tail spend series will help you accomplish.

What is the risk exposure in my tail spend?

Risk is an increasingly important consideration in procurement and we’re right to think about the impact of risk hidden in our unmanaged spend. The tricky thing about risk is that it can differ across companies, even within the same industry. Supplier financial risk is important to most, but what about brand risk, geopolitical risk in the supply chain, and the risk of payment fraud? Depending on the spend category, IP risk or labor practice risk may also be a consideration.

The starting point, once again, is the spend analysis, with the category manager charged with determining the highest risks for their category. If a category isn’t actively managed, it can be assigned to a risk team for a basic analysis. Given that the average company only actively monitors about a quarter of suppliers for risk, there’s a lot of unwatched suppliers even outside the long tail. Risk assessments are typically driven by supplier spend or a triggering high-risk factor.

Amy Fong, Principal - Procurement and Purchase to Pay Advisory, The Hackett Group

Talking to Your Tail Spend: Chapter 2 – 4 Tips to Work with Internal Stakeholders

Advice on how to work with internal stakeholders to manage tail spend

We’re releasing a series of articles to answer your questions about tail spend, starting with the basics so you understand what tail spend is and we’ll progress along the spectrum to help you manage it. To get up to speed, read our prologue and Chapter 1 on what this tail spend series will help you accomplish. In this chapter, we'll explore how to better communicate with stakeholders to get tail spend under control.


“Who purchased you and why?”

This is perhaps the most intriguing question and the right place to start when looking at tail spend. A spend analysis is often the first step in building a procurement capability, and if used on an ongoing basis, it can help to understand what spend consolidation efforts leave out. To accurately capture the full picture, analysis should pull in data from multiple sources, such as purchasing/payment systems, purchasing card data, travel and expense systems, and often multiple ERP systems, even petty cash if local branches still use it.  

Fortunately, there are many helpful tools on the market that range from free-for-use apps to complex software platforms enabled with artificial intelligence (AI). Nearly all of these will help with generating what we call a “spend cube,” which is an analysis, at the line-item level, of global spend. This can include:  

Amy Fong, Principal - Procurement and Purchase to Pay Advisory, The Hackett Group

Talking to Your Tail Spend: Chapter 1 – Why don't you call me by my real name?

In this blog post, tail spend is defined as unmanaged spend.

We’re releasing a series of articles to answer your questions about tail spend, starting with the basics to help you understand what tail spend is and progress along the spectrum to help you manage it. To get up to speed, read our prologue on what this tail spend series will help you accomplish


The term “tail spend” has become a common term in procurement-speak because in our minds we like to visualize all of our spend fitting on a nice curve with suppliers on the X-axis and spend per supplier on the Y-axis, something like in Figure 1 below. The suppliers with the lowest spend are plotted to the right and we think of that as the tail. A shorter tail implies we’ve done a better job of consolidating our spend among fewer suppliers. Since supplier consolidation with the goal of cost savings was the raison d’etre of early sourcing groups, the shape of this curve feels like an indicator of success.

Typical Spend Curve with a Long Tail

Amy Fong, Principal - Procurement and Purchase to Pay Advisory, The Hackett Group