What is Maverick spend?

Maverick spend is defined as purchasing from suppliers who do not adhere to a pre-established procurement policy. Off-contract spending or purchasing from non-preferred vendors are examples of maverick spending. These purchases may not have been made on purpose, and some may have been made due to real errors or a lack of information.

Maverick spending will be intentional and accidental. It can occur if individuals do not follow the process of procurement, as well as due to miscommunication and unplanned workflow.

What Causes of Maverick Spend in Businesses?

1. Maverik's spending includes monitoring all purchasing activities. Organizations basically prefer this monitoring to control costs. But lack of control on process discrepancies creates maverick spending. It is not easy to manage frequent records of placing orders, approving orders, and different spending activities. Hence, control of the system is needed at any stage of span management.

2. Sometimes, complicated and redundant contracts with businesses cause lots of complications in procurement. When contracts and policies are established without considering many prospects like procurement and spending, then it becomes messy in the future. That is why, nowadays, organizations are starting to give more importance to spending, either direct or indirect.

3. Whether the organization is big or small, they only focus on big spending. This resulted in a significant discrepancy in the final calculation of spending because ignorance of minor purchases accumulated a significant amount. To provide more clarity about spending management, organizations must remove the spending limit threshold.

How to Combat Maverick Spending?

1. The conclusion will only be clear if there is a proper analysis of the data. So, spend analysis gives a greater picture to identify the problem. Many times, procurement management becomes more costly if proper analysis is not done. Hence, most organizations prefer spending analysis to tackle it. 

2. Inform stakeholders about all of the advantages of spend management. Everyone should be aware of the expense of the organization in their respective areas so that they can take initiative at their level. 

3. In the procurement process, the best way to reduce maverick spending is to put a limit on the spending person. The fewer and limited purchases give more flexibility to work better on maverick spending. The organizations that are assigning purchasing roles without any care must have to deal with the problem through spending management procedures.

4. In the current era, different Procurement software is available for a wide range of organizational purposes. It helps to integrate all the packages to create a consolidated solution. Procurement software widely helps to reduce workflow errors and other complexities of spending. Nowadays, organizations also focus on e-procurement to apply automation to the process.

5. Employes are the best section of any organization. In the complete journey of any operation, an employee's strength matters the most. So, making employees aware of new technology in procurement leads to better productivity. Adopting technology alone does not give the outcome. Educating the people who have to use it will give better efficiency for maverick spending.

6. Many times, some purchases need extra attention in the procurement process. We cannot put all cases in the same category because some exception processes need urgent action. To tackle this situation, try to create special purchase needs in the spend management process.

7. The purchasing process always has some risk element because it is hard to reduce every mistake at each step. So, try to implement risk management in the spending process. Risk management always gives a hint to think one extra step, and this will definitely help any organization increase its profitability.

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