What Is Tail Spend Management? | Exertis Supply Chain Services

Tail Spend Management is the process of controlling and optimising the long-tail spend within a supply chain — namely, the procurement of indirect goods, small-value orders, and ad-hoc purchases.
According to the Pareto Principle, the “long tail” of a company’s supplier base represents around 80% of suppliers but only 20% of overall spend. In procurement, tail spend is typically defined as fragmented, low-value purchasing spread across a wide vendor base, often unmanaged and outside the structured procurement process.
Ironically, managing this 20% of spend often requires more time, resources, and effort than the strategically managed 80%, given the highly transactional nature of tail spend. Without proper vendor management, approval workflows, and spend analytics, organisations risk inefficiencies, higher costs, and reduced operational efficiency.

Why Has Tail Spend Increased?

Globalisation and the rise of complex supply chains have expanded the “long tail” for many manufacturing organisations. As businesses seek specialised suppliers to meet diverse customer demands, their vendor base grows — often creating fragmented procurement and excess inventory.
In an effort to gain economies of scale, procurement teams may engage with too many suppliers across too many categories. This creates risks such as:
Overstocked inventory that exceeds customer demand
• Increased Accounts Payable processing costs
• Tied-up working capital that could otherwise fund growth, innovation, or strategic investments
This unmanaged spend — often referred to as maverick spend — creates no added value and represents a cash drain on the business.

How to Manage Tail Spend Effectively

While managing long-tail spend is challenging, organisations can leverage a mix of process improvements, technology, and outsourcing to achieve greater control. Practical techniques include:
• Consolidating the supplier base to reduce complexity
• Reviewing and comparing vendor pricing with structured spend analytics
• Bypassing intermediaries by buying direct from manufacturers
• Monitoring supplier performance and lead times through digital platforms
• Identifying recurring bottlenecks that delay work orders
• Strengthening contract management to enforce compliance and reduce maverick spend
These practices form the foundation of tail spend analysis — a structured approach to using supplier data and advanced analytics to uncover inefficiencies, drive savings, and improve operational efficiency. Integrated ERP systems and modern procurement platforms with strong reporting capabilities make this process significantly easier.

The Challenges of Tail Spend Management

Despite the benefits, effective tail management is difficult to implement without the right procurement system. Challenges include:
• Limited visibility due to fragmented supplier data
• Lack of digital platforms to automate reporting and approval workflows
• Heavy resource requirements for manual monitoring
• Difficulty tracking spend across multiple ERP systems
For these reasons, many organisations choose to outsource long-tail spend management to specialist supply chain partners. These providers use advanced analytics, digital procurement platforms, and expertise in vendor management to deliver efficiency gains and cost savings. Outsourcing enables procurement teams to focus on strategic sourcing while ensuring the long tail is managed cost-effectively.

Frequently Asked Questions About Tail Spend

What is tail spend in procurement?

It refers to low-value, fragmented purchases across many small suppliers, often unmanaged and outside the structured procurement process.

How do you track tail spend?

By using spend analytics and procurement systems that capture all purchase order data. This ensures visibility into supplier performance, vendor base fragmentation, and maverick spend.

How do you report on tail spend?

Reports consolidate procurement data into dashboards and KPIs, highlighting opportunities for supplier consolidation, contract management improvements, and efficiency gains.

What is tail spend analysis?

It is the systematic review of long-tail spend using advanced analytics and supplier data to identify cost-saving opportunities, vendor management improvements, and better operational workflows.

Final Thoughts

Though it represents only 20% of spend, long-tail spend consumes disproportionate time and resources. By improving procurement processes with digital platforms, vendor management strategies, and contract management tools — or by outsourcing tail management entirely — organisations can unlock hidden value, strengthen operational efficiency, and ensure procurement contributes to long-term business growth.

Partner With Us for Smarter Tail Spend Management

Managing the long tail doesn’t have to drain your resources. At Exertis Supply Chain Services, we help organisations streamline managed procurement, reduce costs, and gain full visibility over their supplier base through advanced analytics and tailored outsourcing solutions.

Let’s discuss how we can transform your tail spend into a strategic advantage — Contact Us to get started.