Every company has a different definition of tail spend, but at Fairmarkit we define it generally as spend that is not strategically managed and typically under $100K per purchase. Tail spend is not inconsequential. It makes up 20% of the average company’s overall annual procurement spend. Also, because tail spend comprises hundreds if not thousands of small-spend purchases and is generally not automated, tail spend is an inefficient, high-touch nightmare as it involves some level of interaction with 80% of all vendors.
By leveraging machine learning techniques Fairmarkit intelligently understands the right set of vendors that should be added to each Request for Quote (RFQ) or Request for Service (RFS). The underlying technology is built to handle a significant amount of unstructured and incomplete data (tail spend data, tends to be this way by nature) and enable our customers to achieve procurement speed at an enterprise scale. Using machine learning, Fairmarkit understands which vendors sell items or services to different units of companies, across various categories.
After thousands of conversations regarding tail spend, there’s one resonating message: tail spend needs to be automated. At Fairmarkit, our customers acknowledge that there’s always a trade-off between Effort vs. Impact on every project. Providing our customers the ability to automate their tail spend sourcing, purchases and services makes the decision to onboard our platform a no-brainer.
We live in a data driven world and incomplete data is sometimes as bad as no data. In the tail spend procurement space we have yet to come find an enterprise that has complete, clean data on tail spend buyer behaviors, vendor performance, and unit or service pricing. The lack of data limits visibility and control, resulting in a lack of understanding when trying to make high level strategic decisions. Fairmarkit’s customers receive a simple-to-use, standardized process that not only collects clean data, but highlights different flags across analytics and trends where management should get involved.