Tail spend occurs when organisations analyse expenditure within their supply and procurement departments. This can include business travel spend.
Based upon the Pareto Principle, or ’80/20 rule’. The theory states that for numerous events approximately 80% of the effects come from 20% of the causes. For example 80% of your suppliers will account for 20% of your total spend.
The 20% of total spend is what is known as the tail spend. The tail spend allows companies to focus on how to optimise their supply and procurement departments to achieve process and cost benefits.