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Maverick Spend: QAD Users, do you have a ‘Loophole’ in your procurement system?

By October 28, 2015No Comments

Maverick Spend_8aBeing a maverick isn’t always a bad thing. In fact, the ability to think outside the box and innovate is a desired employee trait in most industries.
BUT, what happens when procurement managers go rogue? They try to act as mavericks and reach out to suppliers that aren’t part of the company’s list of pre-approved vendors. Most of the time, suppliers such as these are often friends or close business contacts.
However, the intent may not always be malicious. Employees don’t always purposefully go against company procedure. For example, a procurement manager may want to save time by reaching out for bids from acquaintances or business partners only because the process implemented by the company is time consuming and cumbersome. Every professional wants to keep things running smoothly in his job and its human nature to follow the path of least resistance.
In a scenario such as this, holding employees accountable for maverick spend may not be the sole problem. Maverick spend indicates that a company has loopholes in its procurement system and it can’t be eliminated unless it is recognized in the first place. So, what’s needed is an approach to understand the shortfalls of the procurement system and develop ways to improve it. A structured and streamlined purchasing process will go a long way in reducing maverick spend.
So how can you tackle maverick spend?
1) Review your procurement process. Make your software user friendly. Ensure that employees are comfortable with the workings of the procurement system. In case they are not, provide adequate training. Do not give the impression that the processes and systems are time consuming and cumbersome.
2) Provide clear direction and channelize the ordering process by using systems with built-in automated approval routing. This ensures that only the pre-approved vendors are considered. So, use a transparent purchasing solution that enables buying materials only from designated suppliers.
3) Adopt a strong procurement strategy that is clear and communicated to all employees. An ineffective procurement cycle without proper checks and balances can lead to uncontrolled purchases through maverick spending.
4) Raise awareness about what maverick spend is…! Use a proper system to monitor employees. Sometimes employees are caught unaware about what’s good and what’s bad. Make them aware of the fact that maverick spending is not an acceptable practice. Bolster their confidence in the current purchasing process and show them that loyalty to pre-approved vendors scores points with those vendors and ensures faster receipt of purchased product.
ISS Group’s Business Process Improvement suite of solutions for QAD EA offers a comprehensive e-procurement solution, which will streamline procurement processes; achieving cost savings while saving your employees valuable time when buying goods and services, or even looking for the right information to complete their job.