Tuesday 22 April 2014

Finding Cost Savings Opportunities Through Maverick Spend!

Authored by Azra Sultan

Have you ever thought of motive behind maverick spend by an employee? Maverick spend refers to purchases made while deviating from organizational procurement policies and procedure. It is hard to hear but it's management's fault; the internal processes, inefficiencies and lack of controls are the reasons behind the maverick spend. The personnel practicing maverick spend is considered as an offender who precludes purchasing contract and organizational policies which ultimately contributes towards raise in costs. Well it is often observed that there is another group - with no malicious intent; yet flout a company's purchasing policies. 

Just think about the opportunity available through maverick spend. Yes, it is absolutely possible, provided a purchaser is determined to induce new sources of supply and put the existing contractual vendor in a furious competitive environment enabling them to rethink their sales strategy and bring down the cost which ultimately adds up to your bottom line. While working with various organizations, I have experienced where on one hand procurement professional opted to go for maverick spend yet had found an opportunity through visibility into supply industry to further bring down the cost. 

Do you have any experience to share where the maverick spend turned into cost savings? Please do share with us!

1 comment:

  1. My experience has been that within a large consumable supply contract for example, internal customers may go maverick on individual items insisting that the contract pricing is higher but if the overall pricing sample had been evaluated properly at the RFP stage, rationalizing supply down to that one company should still result in overall savings. Our internal customers don't consider the overall volume and those administrative costs of managing many vendors rather than one or two. I will admit however that within some of that maverick buying, the internal customer may have exposed true higher costs that we had insufficient time to analyze that did result in re-negotiation within the contract.