Tail spend has often been a topic best left ignored by manufacturers and retailers alike. These are expenses that have a relatively low proportion under each category, but large number of vendors. But potentially if well managed they can lead to a reduction of up to 15%. Thus, companies are looking at better ways to deal with this. First of all, to solve this, the right data warehousing has to be done on each product, and the amount that goes up in tail spends. A proper distributor and supplied strategy needs to be honed for this. The qualification requirements for the vendors too needs to be standardized as this will reduce the clutter. It can eventually lead to improved automation at work. The digital technologies now available need to be used up by companies to proactively manage such tail spends.

Source:https://www.mckinsey.com/business-functions/operations/our-insights/long-tail-big-savings-digital-unlocks-hidden-value-in-procurement

Uploaded Date:03 December 2018