How to Reduce Tail Spend in Your Organization


multi-familyHow to Rein in Tail Spend as an Apartment Building Manager


The life of an apartment building manager can be hectic. Managing the team, running the day-to-day operations of your building, overseeing vendors and contractors, purchasing supplies - this can happen all in one day.


These challenges and added pressure can take their toll. When year-end comes around and you are scrutinizing your financial reports to examine property performance, this is when purchasing surprises will show their ugly faces and the act to justify or substantiate them gets messy.

These unmanaged expenses hurt your bottom line. Fortunately, you can rein in this tail spend with Raiven.

Tail spend for the apartment building manager

Most apartment managers try to get the majority of their contractors and vendors on service agreements or contracts. These services may include filter suppliers, landscape services, plumbing vendors and pest control, just to name a few.

These are the big items and services that will never go unnoticed, and they typically account for 80% of the spending in your business. The remaining 20% that goes unmanaged can be categorized as tail spend. Once identified, you can now take measures to control it.

Show me the spend

You know when your employees order big-ticket items. After all, it would be hard to miss a $3,000 pump. But a $30 tool bag might go unnoticed. These smaller purchases happen frequently in companies and often take place under the radar.

These purchases may not be done with ill intent - it could just be a lack of awareness or education in your staff. Even still, the consequences of these orders can wreak havoc. To manage tail spend, one of the first things that you can do as an apartment building manager is examine all purchasing data. Good data will expose where every dollar spent goes within your organization.

It sounds daunting to scrutinize spending and track where every red cent ends up. But the smart apartment building manager will look for tail spend in financial records. It will be one-off expenses from random suppliers - think Amazon.

Once identified, you can make these purchases with your approved suppliers, and Raiven has a software solution that makes this process easy. Raiven Marketplace allows you to compile and aggregate suppliers in a centralized platform, making the supply chain transparent for your team.

Raiven’s software has a full analytical dashboard that highlights areas of spend and shows when employees make rogue purchases. It has the ability to run reports and display relevant information for your review. This visibility will ensure compliance when employees stray from approved vendors.

Rogue spending exposed

Any rogue spending can hurt NOI, so it is important to control it early on. Your team members are moving at a fast pace just like you. When the crunch is on, and they are in the middle of a complicated project, the innocent act of buying a tool or product online from an unapproved supplier may seem okay. However, multiply this by 30-40 times a year. This is where you can see how much tail spend is occurring.

With Raiven's platform, you can manage those small purchases that add up throughout the year and thus see an improvement to your bottom line. When employees are pressed for time and try to purchase a necessary item, Raiven's browser extension will nudge them and display similar or same items from your approved suppliers. Your team will not be slowed down, and they can make purchases on the fly while staying in compliance. Indeed, there is no need to surf multiple sites for products. Raiven connects you to the top suppliers and ensures the best pricing - and you can purchase from many different suppliers with one universal cart.

Transparency and visibility

Visibility into your supply chain is crucial. It allows management to understand the procurement process from beginning to end. Your dedicated buyer(s) will earn your trust when there is a clear window into their purchasing process. Auditing will also become less painful, and the chances of skimming will be minimized. If you can control tail spend as an apartment building manager, several benefits will emerge:

  • Improved NOI - This is a no-brainer. NOI is top of mind, and if you can improve performance, this will make ownership happy and raise your reputation and salary.

  • Risk reduction -Tail spend is usually done with unapproved vendors that are not under contract. This exposes your company to unnecessary risk. Reduce tail spend, and you will reduce risk.

  • Improved data and reporting - Everyone wants good, clean data. Removing tail spend will clean your data up and make financial reporting clear and easier to digest.

  • Better rental rates - Reducing tail spend gives you more leverage to stay competitive with your rental rates. It will set you up as a leader in your market area.

Cut and grow

With Raiven's solutions, you can watch your margins, cut tail spend, organize operations and stop rogue purchases.

We can help you run detailed reports on your spending practices and streamline your suppliers to lower your maintenance costs with preferred pricing. Reach out to Raiven to learn more about how you can stay ahead of the competition and help your team grow.