One of the problems facing the procurement department in most companies is maverick buying. Maverick buying is described as the act of employees/procurement managers purchasing products for the company without following the procurement process. All companies, no matter their size, have to regularly buy products to ensure that the daily activities run smoothly. How can organizations solve the maverick-buying problem?
This problem is rampant in large manufacturing organizations which usually record massive losses. It also applies to organizations which purchase events. Although some people might argue that the practice hastens the acquisition of goods, its disadvantages out-weigh the advantages.
Effects of maverick buying
For companies, every decision made by the employees/management usually affects performance. There are various reasons as to why employees may resort to maverick buying. One of them is the notion that the product(s) is too insignificant to deserve strict adherence to the company’s procurement policy. Others do it with the hope that it will help acquire the products easily and save time. It may look like a harmless thing to do but it has a negative impact. When the buyer doesn’t follow the rules, it means that the company misses out on negotiated discounts from the suppliers.
More often than not, maverick buying attracts fewer suppliers who place higher bids making the company incur losses. Considering that the number of bidders will be lower, the organization puts itself in more trouble. It will be violating a law requiring a company to reach a particular number of bids before selecting a supplier. It may face corruption charges.
How to prevent maverick buying
Maverick buying can be avoided. One way to do this is by checking the complexity of the procurement software. If it is difficult to use then employees will be compelled to seek shortcuts. The software should be user-friendly. If your company uses e-mail and paper, it could be time to invest in e-procurement. This won’t be difficult because there are many companies out there which provide e-procurement management services.
Another way is having a clear buying process. The company should clearly state, preferably in writing, the steps that need to be followed when acquiring goods and services. This way, employees will always refer to it when they want to purchase a product.
Prohibiting maverick buying as one of the company’s policies is also vital. When employees know that they are not allowed to do it, there will be little or no cases of this act. Proper training on the appropriate methods of buying is also important. Some employees chose to take short cuts because they have little knowledge of the right procedure when making a purchase.
Benefits of avoiding maverick buying
The company retains its negotiating power. When the procurement manager seeks to acquire a product from a new supplier, it’s usually difficult to lower the prices. As for the pre-established suppliers, the company can easily negotiate and agree on a price that is affordable and avoid unnecessary expenses.
Some employees believe that when they get goods and services through maverick buying they will save time. Studies have shown that the practice significantly slows the time taken to process an order. It’s important for organizations to seek the services of their usual, approved suppliers. This is because in most cases, the reliability of these suppliers has been determined.
Meet us at at the iMEX in Frankfurt at May 15-17 and get more information about our online solution for event procurement. You will find us at our stand D790 in hall 8 at the Technology Pavillion.