Maverick buying – the enemy in your own ranks
The basic task of every purchasing department is the procurement of the goods or services required by the company in the needed quantity and quality at the right time and place with the best possible conditions – so much for the little business studies 101. It is not only a question of placing orders with the business partners, but first of setting up strategies and processes, on whose basis and under whose conditions the operational procurement is built up. Within the framework of supplier, material group and risk management, for example, the most diverse factors are considered and are always viewed and evaluated in an overall corporate context.
Everything could go its regular way, were it not for the enemy in the company’s own ranks: Departments and requestors who buy goods and services on their own authority without involving the purchasing department (in good time) and without following the company’s purchasing rules. We are talking here about maverick buying, also called wild purchasing. Across Germany, the average maverick buying rate is 25.6 percent, according to a study by the Leipzig University of Applied Sciences. The rate includes all orders placed without the involvement of the purchasing department and relates them to the total purchasing volume. Medium-sized companies or indirect product groups are frequently affected.
The why and its consequences
There are many reasons for maverick buying: On the one hand, this can be the employees‘ lack of knowledge about the existing procurement processes or simply their unwillingness to use them, because they do not trust the purchasing department and its competence or that of the set suppliers, because they consider the processes to be cumbersome for them, because they need a higher speed for an urgent requirement or because they actually obtain a better price in the individual case. The total costs of ownership are rarely included in the ordering decision, nor are any additional process costs or risk considerations. It is often the case that maverick buyers, focused on their own situation, perceive only their individual advantage and are not aware of the consequences of their actions for the entire company or willingly accept them.
As a result of wild purchasing, there are uncoordinated processes and problems in the downstream interfaces, for example in the receiving and accounting department. Often, poorer prices for the purchased goods and services result due to small order volumes and a lack of negotiation skills or the non-utilization of conditions defined in framework agreements. A lack of transparency regarding order volumes as well as unbundled requirements also cause a weakened position of purchasing vis-à-vis the market. Last but not least, maverick buying entails an increased risk due to insufficient qualification of the suppliers used or an increasing risk of corruption.
No chance for wild purchasing!
It is therefore clearly necessary to prevent maverick buying! The purchasing department must be involved in all procurement processes in good time in order to minimize negative effects for the company. There are various approaches to this:
To minimize employee unawareness of existing purchasing processes, rules and responsibilities, these should be clearly defined and communicated, for example in the form of a purchasing guideline. In addition, all parties involved should be aware of the contact persons in purchasing.
- Create understanding for the processes
Active purchasing marketing is an important element in promoting an understanding of the processes and their benefits, and thus their acceptance within the company. The aim is to provide transparent and comprehensible information about the work of purchasing and its successes, thereby making colleagues aware of the benefits for themselves and the company.
Simplifying processes also increases their acceptance among the workforces. The greatest potential here lies in digitization, for example by implementing purchasing platforms that everyone is already familiar with from their private environment. These enable direct purchasing by users in accordance with the rules as well as the uncomplicated mapping of (approval) workflows.
- Active tracking
Finally, consistent monitoring of maverick buying and sanctioning of violations helps to reduce it. The effect of measures can be monitored by looking at the maverick buying rate over time.
Consultant. ADCONIA GmbH