When expenditures are made within a corporate organization without the supervision or control of Purchasing, we speak of maverick buying. This creates several disadvantages to the procurement process. Because there is no visibility into the purchases being made, expenditures do not come on Finance's radar until the purchase invoice arrives. As a result, an organization does not operate transparently and compliantly. There is then no contract or preferred supplier associated with the purchases, which means no purchasing advantage can be achieved and new suppliers must be added to the accounts payable file all the time. What steps can corporate organizations take to prevent maverick buying?
Method and software to analyze procurement processes
Finance does not know that something has been purchased until the purchase invoice comes in. To identify these types of bottlenecks in an organization's current processes, it makes sense to understand where the waste is and figure out how to reduce it and optimize your processes.
For example, a proven method such as Lean/Six Sigma offers insight into how your purchase to pay process is set up, what solutions are used and what areas for improvement exist.
Understanding data and processes at play in your organization such as the Purchase to Pay process are crucial here. By combining Lean/Six Sigma and data analysis software, maverick spend can be reduced. This combination provides you with a clear picture of the procurement process so you can make improvements.
💡LEESTIP: Finance experiences maverick buying as a problem
There are also solutions to improve the purchasing process. For example, offer a corporate purchasing portal to employees so they order from preferred suppliers and you can streamline your purchasing process. When employees use this portal, you can be sure they are making purchases from suppliers that have already been vetted by your organization. In addition, the purchase will automatically come to your manager for approval.
The importance of communication and change management
Making processes and suppliers transparent is necessary to avoid maverick buying, but the process must also be addressed on the front end - especially internal communication about the desired process.
If employees don't follow the central purchasing process to order a product then maverick buying will persist, no matter how hard they work to set up the process properly on the back end.
But if employees are so used to their own way of purchasing, how do you encourage your employees to adopt the new way of doing things? By making the process user-friendly, clear and approachable, employees are less likely to fall back into their old habits. Consider, for example, eliminating unnecessary extra steps to place an order or offering a purchase portal.
And by raising awareness of the importance of preferred suppliers, employees are easier to convince and more open to change. Make transparent and concrete what it brings to the bottom line when employees order from those suppliers.
Continuous improvement
Change management is very important, but it is also the most difficult part and it takes time. That is why I recommend organizations to work with an external change manager who brings employees into the change and convinces them of (the benefits of) the new way of working, namely according to the established process.
In addition, I believe in continuous improvement, which means you don't stop when a solution is implemented. By continuously analyzing your processes and data and communicating with employees, you continue to improve your processes and are most likely to avoid maverick buying.
Getting started with maverick buying
To what extent is your organization already able to prevent maverick buying? What steps for improvement can you still take? Feel free to contact me or my colleagues to exchange views.
Curious about what an online central platform could look like that allows employees to place orders with preferred suppliers on their own? Then check out my demonstration right away.
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Christian Willemsen |
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