Managing Tail Spend in Procurement: ProcureAbility’s CEO featured in Procurement Magazine
St. Petersburg, FL – ProcureAbility CEO, Conrad Snover, sits down for an interview with Procurement Magazine to discuss category management strategies and reducing tail spend.
Procurement Magazine
Q&A: Managing Tail Spend with Procurement Magazine
How would you define tail spend, and why is it often overlooked in procurement strategies despite its potential impact on a company’s overall spend?
What are some of the key challenges organizations face when trying to manage tail spend effectively?
Managing many suppliers can be resource-intensive, especially without automation and with data inconsistencies across channels. Lastly, there is often a perception of low ROI on tail spend transactions. This can lead to internal pushback against improvement initiatives.
Can you explain the four-step approach recommended for implementing a tail spend management strategy?
- Step 1: Identify and classify tail spend through spend and supplier analysis. By analyzing historical spending data, identifying low-value purchases that fall under the tail spend category becomes a straightforward process.
- Step 2: Establish clear policies and guidelines for proactive tail spend management. Develop and communicate procurement policies and guidelines by specifying thresholds and criteria for when to leverage existing category strategies with preferred suppliers, when to use established buying channels, and what to do when neither exists.
- Step 3: Implement strategic sourcing practices at the category level. Enlist category managers who are subject matter experts to monitor all spend for their respective categories, including tail spend, with incentives to redirect it to their preferred suppliers.
- Step 4: Monitor and measure performance. Foster collaboration between procurement, finance, operations, and other relevant departments to gain a holistic understanding of spending patterns, track leakage and compliance, and identify opportunities for ongoing improvement.
How does establishing clear policies and guidelines contribute to proactive tail spend management?
What role do category managers play in implementing strategic sourcing practices for tail spend?
How can technology and analytics tools improve an organization’s ability to manage tail spend?
What key performance indicators (KPIs) should companies track to measure the effectiveness of their tail spend management initiatives?
How can cross-functional collaboration within an organization enhance tail spend management efforts?
Fostering a collaboration between procurement, operations, finance, and other relevant departments helps to establish a holistic understanding of spend management priorities and principles and facilitates joint identification for process improvements and cost savings. Procurement governs the supply base and is steward of all spend, Finance is responsible for managing investments, budgets, costs, and expenses, Legal is responsible for risk management. Together they share an aligned responsibility to drive efficiency and effectiveness of the utilization of the corporation’s finances.
Read Conrad’s interview in Procurement Magazine.
CEO
As CEO of ProcureAbility, Conrad focuses on client success, employee engagement and culture, and product innovation. Conrad has more than 25 years of experience in strategic procurement and supply chain management. He has deep experience in launching and managing programs focused on strategy design, procurement transformation, category management, strategic sourcing, supplier development, and organizational sustainability.
Conrad has consulted with numerous Fortune 1000 companies in a variety of industries including oil and gas, utilities, technology, banking and insurance, hospitality, and healthcare. Conrad is on the Board of Directors of both the Utility Supply Management Alliance (USMA), and the Utility Purchasing Management Group (UPMG) and is a frequently requested presenter at national supply chain conferences such as USMA, UPMG, Platts, SIG, WEI, and APPA. He previously worked in strategic procurement as a consultant with Kearney.
Conrad holds a bachelor’s degree in business from the University of Washington. A retired sponsored athlete and aspiring ski-mountaineer, he spends his free time adventuring in the outdoors with his wife and their young son.
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