Taking Control of Maverick Spend

As maverick spending, or rogue buying, can account for up to 80% of a company's total spend, the inherent savings potential is often substantial. We have shared five steps to help you to get control of your maverick spend.

Maverick spend refers to purchases made outside of agreed contracts or, in broader terms, beyond a company's pre-established procurement policy. Ultimately, it leads to cost-saving leakages by preventing businesses from fully realizing the value associated with a negotiated contract.

The biggest consequences of maverick spending

Five steps to reduce maverick spend and drive savings

Let us take a closer look at five steps that can help you boost compliance and reduce rogue spending.

1. Investigate and understand the root causes

Talk to the responsible managers, department heads, and other relevant stakeholders where you have identified maverick spending. A pertinent question you need to address is;

What is the reason for maverick spend across the organization?

As a procurement professional, one of your responsibilities is to investigate and understand the root causes. And, of course, to implement the appropriate measures to mitigate the problem.

Use procurement analytics by combining spend and contract data to identify spend outside contracts and maverick spending.

2. Plan your initiatives

Once you understand the reasons, you need to start addressing the issue. Set an overall plan for your procurement initiatives, define your targets and goals, and outline the specific tasks required to get there with deadlines and responsibilities.

Initiatives & Tasks - Ignite Procurement

3. Make contract information and procurement policies easily accessible

One of the most common causes for maverick spending is defective policies and poor communication of contracts internally. In many cases, the end-users (usually the purchasers/buyers) are unaware that agreements covering their needs exist or lack information on using them.

To address this concern, you need to ensure that vital contract details, and any related procurement policies, are easily accessible throughout the organization.

If you have a spend management solution in place, sharing this information is relatively easy and provides you with multiple options, such as;

  • Grant access to contracts for applicable users, or
  • Use APIs to leverage the contract information across your solutions or embed data to your intranet through iFrames.

4. Report regularly to business stakeholders

You should always report data-driven facts to facilitate process transparency and drive compliance. For example, you could set up a report showcasing spend through and outside contracts by departments, business units, or similar. The key is making these insights readily available across your organization, especially for department heads, managers, and other key stakeholders.

Please ensure that the reports and internal communications highlight the importance of maverick spending. You should clearly state that this is a focus area for the procurement team and provide additional information about your current initiatives, expectations, and goals.

Spend through contracts by categories and BUs - Ignite Procurement

5. Follow up, track, and take necessary actions

Set up relevant KPIs, such as share of spend through contracts, to track your initiatives' progress. If the numbers and trends are not moving in the right direction, you need to reach out to the business stakeholders and understand why (ref. step 1). As mentioned previously, the problem might be poor policies and communication internally.

Regular measurement keeps you focused and helps you make smarter decisions to improve your results. You have probably heard the following saying, which is something we strongly believe in;

What gets measured gets done!

Good luck! And remember, digital tools will help you get the job done.

2. Procurement insights Category management Contract management Cost reduction & savings Maverick spend Procurement levers

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