Uncoordinated procurement processes are an all-too-common occurrence – not just for office supplies, but also for ITC products. Individual departments order products without involving the procurement department, thus causing high additional internal costs. We explore the causes behind this wild buying behaviour, also known as maverick buying, and reveal strategies to bring order back into your procurement.
In the context of procurement, the term maverick refers to buying single-handedly. There are various reasons why departments purchase on their own instead of going through the central procurement department. In many companies, for example, there is a lack of communication and transparency regarding existing processes and framework agreements. Underestimating the expertise of the procurement department, urgent needs not being met quickly enough or personal preferences can also influence the decision.
A study by WUCATO Marketplace GmbH shows that maverick buying should not be underestimated, especially in the ITC environment. 11% of respondents state that they often buy ‘wildly’ in the area of ‘Electrical/IT’ goods – in addition to the front-runners ‘Office supplies’ and ‘Workwear’.
Source: WUCATO Marketplace GmbH | ‘Beschaffung von Betriebsmitteln’
However, maverick buying can also offer advantages – which is why it occurs again and again despite various preventative measures. Special offers can be exploited and departments are generally able to respond faster and with more flexibility – but these upsides are hardly in proportion to the disadvantages. Namely: the processes are uncoordinated, there is a lack of cost transparency and both purchase as well as any maintenance costs are significantly higher. Overall, the study by WUCATO also shows that more than half of the buyers surveyed see potential savings of up to 20% of total purchasing costs if there was no maverick buying in their company. On average, an estimated 24% of total costs could be saved.
Source: WUCATO Marketplace GmbH | ‘Beschaffung von Betriebsmitteln’
It can also be problematic for system houses, which in this case are affected by maverick buying from the view of a service provider or supplier. Orders are no longer received from the procurement department of their business customers, but directly from the specialist departments. Disregarding existing framework agreements or falling short of agreed minimum order quantities may not only cost the customer dearly, but also have a negative impact on the business relationship. Therefore, it is best to clarify with customers beforehand how you as a system house can best deal with any maverick orders, and at the same time help to contain maverick buying on the part of your customers.
So, from a wide variety of points of view, it is entirely in the interest of companies to handle ordering processes as centrally as possible in order to prevent maverick buying. Especially in the ITC sector, this can be achieved via a direct integration between the eProcurement system and the shop(s) of the respective supplier. If system houses, which in this case take on the role of supplier, cannot ‘dock’ onto the corresponding eProcurement system of their business customers, they will most likely not be considered for an order. Conversely, thanks to the simple and practical procurement process, contract loyalty to the system house grows. And customers that can buy without fuss don’t just buy readily and often, but are also able to counteract maverick buying at the same time.
Would you like to learn more about how system houses can create sustainable customer loyalty by linking their customers’ eProcurement systems to their customer portal or shop? Our eProcurement Guide provides you with all the information you need about PunchOut integrations and the integration of eProcurement systems.