Consequences of Maverick Buying
Many organisations are faced with an unexpected drain on their resources. Often this is the result of maverick buying. This takes money away from the company, and it can be difficult to stop because it is spread across so many employees. This article is the second in a series on why maverick buying is a problem and how companies can stop it.
Article 2/3
What is maverick buying?
Maverick buying is non-compliant behaviour by employees who do not follow the company's official purchasing processes and contracts.
Maverick buying is non-compliant purchasing
But what are the various consequences of maverick buying and why should it be avoided? Continue reading to find out more...
Financial cost of maverick buying
A serious consequence of maverick buying is the additional financial cost. Additional costs come from an increase in actual purchasing costs as well as an increase in process costs. These are mostly downstream costs that arise from additional manual work such as registering new suppliers and managing the growing number of suppliers. Not only are there more purchasing costs, but there is also less purchasing leverage, which brings us directly to the next consequence.
Procurement loses control
The second result of maverick buying is that the procurement team loses control over the procurement process and the supplier base. Excessive fragmentation of processes and suppliers leads to a lack of transparency and a lack of visibility into procurement spend. Visibility into processes, suppliers and spend is critical to optimising a company's procurement.
No expertise, no excellence
Another consequence of maverick buying is that the buyers lack the negotiating skills and experience of a procurement expert. This often results in poor product quality, late deliveries and claims for damages due to breach of contract.
A threat to ESG goals
Maverick buying is also a major barrier to achieving ESG goals, this is because it contributes to lack of control over the procurement process. In addition, maverick buying can also damage the image of the entire company. This happens when maverick buyers purchase from suppliers that do not meet ESG criteria or are involved in scandals.
Maverick buying and legal issues
Other problems associated with maverick buying include legal and compliance issues. For example, the disclosure of confidential information to external parties is a risk. Also, corruption is linked to ill-intentioned maverick buyers.
How to stop maverick buying
While there are many tailored approaches that mitigate the different types of maverick buying, there is also a general approach that can stop maverick buying. These solutions and approaches will be discussed in our next article.
**Are you experiencing maverick buying as well?
If you wish to find out more about how Lhotse can help you to improve your procurement processes, book a demo with us today!
