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Maverick buying can significantly affect an organization’s procurement efficiency, budget compliance, and supplier relationships. This article explores practical strategies that procurement professionals can adopt to tackle maverick buying, streamline processes, and mitigate risks.

Key Takeaways:

Define clear procurement policies.
Educate stakeholders on compliance importance.
Implement robust approval workflows.
Leverage technology for real-time tracking.
Foster collaboration between procurement and other departments.
Regularly review and optimize procurement processes.

What is Maverick Buying?

Maverick buying happens when employees make unauthorized purchases outside of established procurement processes, leading to issues like inflated costs, poor contract compliance, and increased risk exposure. These purchases usually bypass the procurement team and do not adhere to negotiated supplier contracts or corporate guidelines. As a result, businesses miss out on the benefits of pre-negotiated pricing, discount arrangements, or established terms with preferred vendors.

Industry studies estimate that maverick buying can account for up to 80% of a company’s procurement spend, which significantly impacts the company’s ability to track expenditures, maintain cost control, and optimize supplier relationships. The risk exposure is not limited to cost, as unauthorized purchases may lead to regulatory compliance issues or supply chain disruptions.

Effectively controlling maverick buying requires a systematic and strategic approach that includes technology, process re-engineering, and education of stakeholders across the organization.

Identifying Maverick Buying

The first step in tackling maverick buying is to identify it. Procurement teams need a data-driven approach to uncover instances of off-contract purchasing. Identifying maverick buying within an organization can be challenging, especially in large, decentralized companies where purchases are spread across multiple locations or departments.

Here are some effective ways to detect maverick buying:

High volume of on-demand purchases: On-demand purchases that bypass established processes tend to be smaller and more frequent. If the organization regularly makes ad-hoc purchases with minimal oversight, this indicates a higher propensity for maverick buying. Conducting a thorough analysis of purchasing patterns will help identify departments or individuals that frequently make such purchases.
Low supplier engagement: A reduction in core supplier transactions suggests that employees may be purchasing goods or services from unapproved vendors. This leads to a dilution of your purchasing power, as you are not benefiting from preferred supplier contracts or negotiated terms.
Numerous small-value invoices: The frequency and size of invoices can be a sign of maverick buying. If your procurement team is processing a high number of small-value invoices, it could indicate that employees are engaging in low-level purchasing without going through the proper channels.
Low contract adherence: Another critical indicator of maverick buying is a low rate of contract adherence. Monitoring the ratio of contract versus non-contract purchases will highlight how often employees are sidestepping preferred suppliers and purchasing from off-contract vendors.
Fewer contract renewals: When the number of contracts up for renewal decreases over time, it could mean that employees have found alternate, unauthorized suppliers. This is a strong indication of maverick buying, as employees are circumventing established procurement processes.

Each of these indicators can be uncovered through robust data analysis. An effective strategy for curbing maverick buying starts with gaining visibility into your organization’s purchasing behaviors.

How Maverick Buying Impacts the Organization

Maverick buying can create a wide array of negative consequences for organizations. The absence of oversight in the purchasing process opens up a myriad of challenges:

Increased Procurement Costs: Unauthorized purchases often occur outside negotiated contracts, missing out on bulk discounts, volume-based pricing, and other favorable terms. This can quickly inflate procurement costs and make it difficult for finance departments to accurately forecast budgets.
Loss of Supplier Leverage: As purchases shift away from approved suppliers, your procurement team loses leverage in negotiations. Suppliers may be less willing to offer favorable terms if they perceive that the company is not committed to the agreed contracts. Inconsistent purchasing behavior can erode long-term supplier relationships, weakening your organization’s position.
Non-Compliance with Corporate Policies: Maverick buying is a serious compliance issue. When employees bypass established procurement guidelines, they may inadvertently expose the company to legal or regulatory risks, especially if the purchases involve restricted or high-risk goods. In some industries, non-compliance can result in penalties, fines, or reputational damage.
Data Inconsistency: Without centralized procurement, data becomes fragmented. This makes it challenging for procurement and finance teams to track spending patterns, conduct accurate spend analysis, and implement effective cost-control measures. The lack of unified data can also hinder audits and reporting, creating inefficiencies.

Steps to Stop Maverick Buying

To effectively curb maverick buying, organizations must adopt a multi-pronged approach involving technology, process improvements, and stakeholder education.

1. Increase Spend Visibility

Achieving full spend visibility is the first step toward addressing maverick buying. By conducting regular spend analysis audits, organizations can identify gaps in compliance and off-contract purchases. Comprehensive spend visibility allows procurement teams to detect unauthorized purchases early and take corrective actions.

Advanced spend analysis tools, like Zycus’ Spend Analysis, provide actionable insights into organizational spend by consolidating data from multiple sources. These insights help organizations pinpoint where maverick buying is occurring and assess how to enforce compliance more effectively.

Case Study: McKinsey’s 2024 Procurement Insights

According to a McKinsey report on procurement value creation, companies that prioritize spend visibility have managed to reduce maverick buying by 40% within the first year. By leveraging spend analysis software and implementing stringent procurement policies, organizations have gained better control over their procurement processes, preventing unauthorized purchases from disrupting their operations.

2. Leverage Procurement Technology

Procurement technology plays a crucial role in combating maverick buying. eProcurement platforms and Source-to-Pay (S2P) solutions ensure that all purchases comply with company policies by enforcing the use of approved suppliers and contracts. These systems automate approval workflows and provide real-time visibility into procurement activities, helping procurement teams monitor compliance.

A robust Procure-to-Pay (P2P) solution from Zycus can streamline the entire procurement process, ensuring that only approved suppliers are used, and that employees adhere to purchasing policies. With automated processes, organizations can reduce manual interventions, ensuring compliance is maintained throughout the purchasing lifecycle.

3. Educate and Train Employees

Employee awareness is a critical component of reducing maverick buying. Regularly educating employees on the importance of following procurement processes ensures they understand the impact of their purchases on the organization’s bottom line and compliance posture. Workshops, training sessions, and internal communications about procurement compliance can reinforce the need to use approved suppliers and contracts.

Procurement teams should also train employees to use eProcurement platforms and provide clear guidelines for making purchases. This way, employees are better equipped to follow established processes, reducing instances of unauthorized buying.

4. Enhance Supplier Management

Managing supplier relationships is key to controlling maverick buying. By enforcing stricter supplier onboarding processes and promoting the use of preferred suppliers, organizations can minimize off-contract spending. Supplier management solutions help centralize supplier information, ensuring that procurement teams have access to vetted, approved vendors.

Zycus Supplier Management offers a comprehensive suite of tools that allow procurement teams to monitor supplier performance, streamline supplier onboarding, and ensure compliance with organizational policies. This ensures that only trusted suppliers are used, reducing the risk of rogue purchasing.

5. Shared Accountability with Stakeholders

Shared accountability across departments is essential for maintaining procurement discipline. By engaging with department heads and fostering collaboration, procurement teams can ensure that compliance is viewed as a shared responsibility rather than an isolated function. Cross-departmental collaboration encourages employees to follow procurement guidelines, knowing that their choices have a direct impact on the organization’s financial health.

Engaging stakeholders at all levels and reinforcing the importance of procurement policies across the organization helps create a culture where everyone is invested in controlling maverick buying.

6. Enforce Stricter Approval Workflows

Strict approval workflows can significantly reduce maverick buying by introducing checks and balances into the procurement process. For example, purchases outside of pre-approved suppliers should require additional layers of approval from senior management, making it more difficult for unauthorized purchases to proceed.

Zycus’ eProcurement solution automates approval workflows, ensuring that every purchase is tracked, authorized, and compliant with procurement policies. With real-time alerts and approval tracking, organizations can stay on top of all purchasing activities and prevent maverick buying.

Conclusion: Take Control of Maverick Buying with Zycus

Maverick buying can have a significant negative impact on procurement efficiency, cost control, and supplier relationships. However, organizations can combat this issue by implementing clear procurement policies, leveraging technology, and fostering cross-departmental collaboration. By enhancing spend visibility, automating procurement processes, and training employees, companies can drastically reduce unauthorized purchases and improve compliance.

Zycus offers a range of procurement solutions designed to tackle maverick buying head-on. From spend analysis to procure-to-pay (P2P) platforms and supplier management tools, Zycus empowers organizations to stay compliant, enhance procurement efficiency, and drive cost savings.

Want to see how Zycus can help your organization curb maverick buying?

Schedule a demo today and explore how our solutions can transform your procurement process.

FAQs

Q1: What is Maverick Buying?

Maverick buying refers to off-contract purchasing that does not adhere to the company’s procurement policies.

Q2: How does maverick buying impact organizations?

Maverick buying increases costs, decreases supplier leverage, and creates compliance risks.

Q3: What technology can help curb maverick buying?

eProcurement and source-to-pay platforms enforce compliance by automating approval workflows and monitoring purchases in real-time.

Q4: How can training help reduce maverick buying?

Regular employee training on procurement policies ensures awareness of compliance requirements and reduces unauthorized purchases.

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