As geopolitical tensions and supply chain uncertainty continue to reshape global manufacturing, many organizations are re-examining how they manage cost, risk, and supplier complexity. Manufacturers today are under sustained pressure to do more with less. Rising costs, ongoing disruption, and rising regulatory expectations have sharpened the focus on efficiency across the enterprise.

Many organizations tell us that, in response, they have invested heavily in optimizing core production, streamlining logistics, and strengthening strategic sourcing. Yet there remains a sizeable portion of spend that often escapes the same level of scrutiny.

In most manufacturing organizations, around 20–30% of third-party spend sits in what is typically referred to as the “tail” — a mix of non-strategic purchases spanning maintenance, repair and operations (MRO), logistics support, IT tools, and other ad hoc requirements. Individually, these transactions are low value but in aggregate represent a significant and often under-managed area of spend.

What is becoming increasingly clear is that this is not just a procurement inconvenience. In many cases, it is a source of inefficiency that quietly affects margins, operational performance, and risk exposure.

When efficiency meets operational reality

Tail spend can prove difficult to manage because it sits at the intersection of procurement and operations, with decisions often made close to the plant floor. When equipment fails or urgent maintenance is required, teams need to act quickly – procurement processes can, in such cases, take a back seat.

Over time, this tends to result in a familiar pattern – too many vendors providing similar services, inconsistent pricing, and limited visibility of the supply chain across sites.

Our customers often describe this as an accumulation rather than a deliberate strategy. Each decision makes sense in isolation. But taken together, they can lead to duplication, price variance, and limited visibility of what is actually being spent and with whom.

For procurement teams, this can create a difficult balancing act. They are generally expected to drive savings and enforce policy, while also supporting operational agility. Managing thousands of low-value transactions across multiple sites can stretch even well-resourced teams.

The cost of not seeing clearly

The financial impact of this dynamic is often less visible than in strategic sourcing, but it can be significant.

Without a clear view of tail spend, it is difficult to benchmark pricing, identify opportunities to consolidate suppliers, or introduce competitive tension into vendor selection. In many cases, organizations find that similar goods or services are being purchased at materially different prices across locations simply because there is no unified view.

When visibility improves, organizations often uncover savings that had previously gone unnoticed. These are rarely the result of large, one-off negotiations, but of incremental improvements — aligning pricing, rationalizing suppliers, and introducing more consistent sourcing practices.

Over time, these gains can add up, often delivering meaningful cost reduction across categories that had previously been considered too complex to address.

Data as the starting point

A common thread we’re seeing across organizations that have made progress is a focus on data.

Tail spend information is often distributed across multiple systems and formats: ERP platforms, spreadsheets, emails, and local records. Bringing this data together into a more coherent structure allows organizations to begin asking better questions: How many suppliers are we using? Where does duplication exist? And which vendors consistently deliver value?

In many cases, simply being able to see this information in one place changes the conversation. It shifts tail spend from something managed reactively to something that can be approached more deliberately.

Scaling insight with AI and expertise

The challenge, of course, is scale. For large manufacturers, the volume of suppliers and transactions involved in tail spend can be considerable.

This is where many organisations are beginning to explore the role of artificial intelligence. AI can categorise spend, identify patterns, and surface anomalies across large datasets far more quickly than manual analysis. It can highlight duplicate suppliers, flag missing compliance information, and provide a more consistent view of activity across sites. Increasingly, it is also used to support tasks such as supplier onboarding, documentation capture, and the initial classification of risk and compliance attributes.

However, most organisations recognise that automation alone is not enough. Decisions about supplier consolidation, contract renewals, or sourcing strategy still require context that usually goes beyond what data alone can provide. Assessing a supplier’s ability to deliver consistently, understanding how they operate in practice, and managing relationships over time are all areas where human intelligence remains essential.

In practice, the most effective approaches combine AI with procurement expertise. AI brings speed and scale — processing transactions, organising data, and identifying opportunities. Human expertise provides oversight, negotiation, and judgement — validating suppliers, interpreting risk, and making decisions that reflect operational realities. Together, they allow organizations to act on data in a way that is both efficient and grounded in the practical needs of the business.

This combination is something we’re increasingly seeing shape how organisations approach tail spend at scale, particularly where control, visibility, and measurable outcomes are becoming more important.

Extending the procurement model

As this area comes into sharper focus, some manufacturers are also reconsidering how tail spend is managed.

Even with improved visibility, the effort required to manage large volumes of non-strategic spend can be considerable. Procurement teams often find themselves pulled between strategic priorities and day-to-day purchasing demands.

In response, we’re seeing some organisations explore ways to combine technology with external support to manage tail spend more consistently. In many cases, this involves working with specialist partners that bring together AI-driven tools with procurement expertise, enabling internal teams to focus on higher-value activities while ensuring non-strategic spend is governed with appropriate structure and control.

Beyond cost: resilience and compliance

While cost reduction is often the initial driver, the benefits of greater control over tail spend extend further — particularly in an environment where global uncertainty is making supply chains harder to predict and manage.

Improved visibility can support more resilient operations by identifying potential points of dependency within the supplier base. It can also help organizations respond to evolving Environmental, Social, and Governance (ESG) and reporting requirements, where data from smaller suppliers is often incomplete.

As regulatory and even internal reporting expectations increase, the ability to demonstrate control across the full supplier ecosystem — not just strategic vendors — is becoming more important than ever.

For many manufacturers, the opportunity in tail spend is less about a single transformation programme, and more about a gradual shift in visibility and control. As that visibility improves, so does the ability to make more informed, consistent decisions across what has historically been the most fragmented part of the supply base.

Oliver Norman is Chief Revenue Officer at Nomia. He works with procurement leaders across global organizations to improve visibility, control, and consistency across tail spend, combining technology with practical procurement expertise to deliver measurable outcomes.