Maverick spend – purchasing that occurs outside approved procurement processes – continues to be a significant challenge for organizations across industries. A recent study by WBR Insights, ProcureCon, and SDI (The Digital Supply Chain Company) reveals that 91% of procurement leaders view maverick spend as a challenge, with 39% seeing it as very significant. Even more concerning, 87% of respondents reported that maverick spend has increased over the past year.
Why is maverick spend on the rise, and what can procurement teams do about it? The comprehensive report offers several key insights and strategies:
The Technology Gap
While most organizations are using supplier management systems (75%), contract management software (70%), and spend analysis tools (67%), there’s still room for improvement. Only 61% are leveraging eProcurement solutions and audit/compliance software. And a mere 16% are tapping into AI and machine learning capabilities.
Upgrading to more advanced procurement technologies could help close visibility gaps and reduce unauthorized spending. Of those using eProcurement solutions, 66% report high satisfaction – indicating these tools can make a real impact.
SDI, with its ZEUS Digital Supply Chain Management platform, exemplifies how cutting-edge technology can transform procurement processes. Their suite of mobile applications and integrated parts management solutions are designed to enhance efficiency and visibility across the supply chain.
The Power of Collaboration
Group Purchasing Organizations (GPOs) are emerging as a powerful strategy. While only 20% of respondents currently belong to a GPO, 73% are considering joining one. Of current GPO members:
- 90% have realized cost savings
- 80% saw improved purchasing visibility
- 65% experienced reduced maverick spend
- 65% noted enhanced sustainability
- 55% reported improved supplier performance and quality control
These findings suggest that joining a GPO could be a game-changing move for many organizations looking to optimize their procurement processes and reduce maverick spend.
Facilities Management: A Key Focus Area
Facilities management and maintenance represent a significant portion of spend for many organizations – up to 20-30% of total spend for nearly a third of respondents. Yet this area faces major procurement challenges:
- 79% struggle with inventory management
- 78% lack supplier/spend visibility
- 62% are grappling with escalating costs
- 60% are hindered by legacy systems or inadequate technology infrastructure
Addressing these pain points in facilities spend could go a long way toward reducing overall maverick purchasing. SDI’s expertise in integrated parts management and warehouse management solutions is particularly relevant here, offering targeted solutions for the unique challenges of facilities management procurement.
Key Factors Contributing to Maverick Spend
The report identified several critical factors that lead to maverick spend:
- Lack of centralized controls and coherent policies
- Decentralized decision-making across departments
- Inadequate spend monitoring systems
- Insufficient or outdated technology infrastructure
- Poor communication regarding procurement policies
- Lack of an ethical spending culture
Key Recommendations
Based on the report findings, procurement leaders should consider:
- Implementing centralized procurement controls and policies
- Investing in advanced spend analytics and eProcurement technologies
- Improving cross-departmental communication around procurement
- Exploring GPO membership opportunities
- Focusing on facilities management spend optimization
- Fostering an ethical spending culture through education and clear guidelines
- Upgrading monitoring systems for better organizational transparency
- Implementing dedicated teams or personnel for facilities procurement
By taking a multi-faceted approach combining people, processes, and technology, organizations can regain control over maverick spend and drive greater procurement efficiency.
The Path Forward
As the procurement landscape continues to evolve, collaboration and digital transformation will be key to success. Companies like SDI are at the forefront of this revolution, offering solutions that not only improve business efficiency but also pave the way for a smarter, more connected, and sustainable future in supply chain management.
For more in-depth insights and strategies, procurement professionals should explore the full “Tackling Maverick Spend in Procurement” report from WBR Insights, ProcureCon, and SDI. This comprehensive study offers valuable data and actionable recommendations for addressing one of procurement’s most persistent challenges. Maverick Spend Download Link: https://www.sdi.com/resources/whitepapers/tackling-maverick-spend-in-procurement/
