WIREDGOV

Our Tail Spend Solution helps the public sector to better manage and aggregate ‘tail spend’ – often classified as low volume and low value products which organisations usually buy to meet a specific, short term need, such as stationery for schools. However, tail spend can also refer to misspending that presents risks and inefficiencies to government buyers. This can be categorised as: unusual spending, fragmented spending, maverick spending, and misclassified spending. 

It’s estimated that public sector tail spend on goods is currently in excess of £1 billion per year. There is widespread agreement across the sector that it is an under-managed and often overlooked area of spend that is increasingly important for organisations to deal with.

Tail spend – the challenges and the solution

By streamlining the entire process, from search through to payment, the tail spend solution helps to protect an organisation’s most valuable resource: the time of its team members. Our research demonstrates that organisations could expect to see up to a 38% reduction in time spent on purchasing by staff through using our agreement, through reduced invoicing and lower product search costs. This can consequently reduce transaction costs for organisations by up to 35% per transaction. 

Often, with tail spend, the main issue is the sheer amount of ad-hoc purchases made by many staff members, making it hard to track. This can cause a huge strain on budgets. Our research demonstrates how by procuring through the Tail Spend Solution agreement customers can set spend controls and user restrictions, which can reduce rogue or maverick spending – spending that falls outside of the organisation’s procurement guidelines – by almost 10%. 

Improving social value through tail spend

Managing tail spend can also be an effective way for public sector organisations to improve sustainable and local purchasing habits. For example, purchasing through the Tail Spend Solution can allow organisations to increase their purchasing of green products by up to 25% and also increase their spend with local buyers by up to 16% through the use of available spend controls, user restrictions and search filters. 

For example, since the integration of the Tail Spend Solution, the procurement function at the Home Office has made significant strides in improving social value and now boasts a robust understanding of its tail spend. The solution’s detailed reporting tool highlighted social value metrics such as; 40% of orders (circa £925,000) being delivered through SMEs (55 SMEs in total), and 10% of orders (circa £325,000) being delivered through local suppliers. Through the detailed reporting tool, the Home Office has also been able to evidence the aggregation of data and improve supplier and process efficiencies. For example, by only having only 1 supplier as their main point of contact across 3,833 orders, which would have previously been spread across 83 suppliers. 

Find out how you could improve efficiencies for your organisation through using our new tail spend benefits calculator

To demonstrate how public sector customers could potentially improve efficiencies, reduce costs and increase social value, through using our Tail Spend Solution we’ve introduced a new benefits calculator, tailored to the individual needs of organisations. 

The calculator will help schools, charities, the NHS and other public sector and third sector organisations identify how they can make potential savings on a broad range of non-safety critical products. 

Organisations will need to answer a few simple questions to get started, through an online platform, relating to their current annual number of purchases, suppliers used and volume of invoices processed.

Using the example of a medium sized local authority (250-4,999 employees), purchasing a range of product categories covering estates and facilities (2,000 purchase orders), the calculation could demonstrate how the organisation could expect to save over 8,400 hours in manpower and reduce costs by over £465,000 from managing these tail spend purchases through the Tail Spend Solution framework*.

Find out more

Access CCS’s new tail spend calculator.

To find out more about our Tail Spend Solution visit the agreement page.

*This example is based on a medium sized council placing 2,000 purchase orders and managing 2,000 invoices across 200 suppliers within their tail spend, per annum.