What is maverick buying?
Maverick buying means purchases made outside the company's agreed procurement process. An employee orders directly from a seller of their choice instead of the contracted supplier, bypasses approval, or orders first and reports the need afterwards. The resulting spend is called maverick spend, sometimes also rogue spend.
A maverick is a loner, originally an unbranded calf that belongs to no herd. The term fits: the purchase happens outside the herd of agreed suppliers and processes.
Maverick buying almost only affects indirect procurement: office supplies, tools, lab equipment, IT accessories, services. Production materials run through planning and the ERP system and are hard to buy around procurement. For indirect needs, on the other hand, almost any employee with a company card or a seller account can order on their own.
Forms of maverick buying
- Buying from non-contracted suppliers
A framework agreement with negotiated prices exists, but the employee orders elsewhere, for example from an online shop they know privately.
- Ordering without a requisition
Goods are ordered by phone or email. Procurement only learns about it when the invoice arrives and has to create the purchase order after the fact.
- Bypassing approvals
A larger need is split into several small orders so that each stays below the approval threshold.
- Buying outside the catalog
An item is in the catalog but is ordered as free text, often at a different price or from a different supplier.
- Company cards and expenses
Purchases are paid with a company credit card or reimbursed through expense claims, even though an ordering route exists.
Why employees buy around procurement
Maverick buying is rarely ill intent. Most of the time the official route is simply more cumbersome than the unofficial one. The most common reasons:
- The process is too slow: It takes days until a requisition is approved and ordered. The online shop delivers tomorrow.
- The catalog finds nothing: Search returns no or wrong results, items are missing or poorly described.
- Too many routes: There are several catalogs, punchout shops and forms. Nobody knows where to look.
- Lack of awareness: Employees don't know a framework agreement exists for what they need.
- Perceived prices: The online shop looks cheaper because shipping, terms and process costs are not visible.
- No consequences: Invoices without a purchase order get paid anyway. The detour has no downside.
If you want to reduce maverick buying, improve the official route first. Bans without a better route only make the workarounds more creative.
What it costs the company
- Negotiated terms go to waste
Discounts in framework agreements usually depend on volume. If part of it flows to other sellers, the committed volume is missed, and the next negotiation loses its leverage.
- Higher process costs
Every invoice without a purchase order has to be cleared up: who ordered, which cost center, was it approved? The work lands in accounts payable and procurement.
- Supplier and compliance risks
Unvetted suppliers have not been checked for quality, safety, data protection or supply chain obligations. For software and cloud services, security risks come on top.
- Missing transparency
Spend without a purchase order often has no or the wrong material group. The analysis procurement needs for the next tender is incomplete.
How to measure maverick spend
Maverick buying can't be observed directly, but it can be derived from data you already have. Three metrics are enough to start.
- Share of invoices without a PO
How many invoices in indirect procurement have no purchase order, or only one created after the fact? This can be taken straight from accounts payable.
- Spend under contract
Which share of a material group's spend goes to suppliers with a framework agreement?
- Catalog rate
Which share of order lines comes from a catalog or punchout, and which from free text? If free text rises in a material group, a catalog is probably missing there or poorly maintained.
Break the figures down by material group and site. Maverick buying is rarely spread evenly. It is usually a few material groups where the official route doesn't work.
How to reduce maverick buying
Make the official route easier
- One entry point for everything: Catalogs, punchout shops and free text belong in one interface with one search. How supplier shops connect to SAP is covered in OCI punchout explained.
- Good catalogs: Complete item data, images and clean classification decide whether search finds the right item. More on that in our article on BMEcat.
- Fast approvals: Catalog items below a value threshold need no approval. Where approval is needed, it should take one click and work on mobile.
- Guided free text: Employees who find nothing in the catalog still need an official route. A form with material group and required fields beats an email to procurement.
Close the unofficial route
- No PO, no pay: Invoices without a purchase order number go back to the supplier. The rule works quickly, but only if the ordering route works.
- Rules for company cards: Define what company cards may be used for and block material groups that have catalogs.
- Involve suppliers: Contracted suppliers should only accept orders with a PO number and refer direct orders to procurement.
Explain and follow up
Employees stick to the process more readily when they know why. Show what a framework agreement saves and what an unresolved invoice costs. Ask when a department produces many invoices without a PO. You will often learn which item is missing from the catalog.
Not every exception is a problem
A complete ban is neither possible nor sensible. If a machine is down and the spare part is only available from the dealer around the corner, buying it directly is the right call. The same goes for very small amounts where each order costs more than the goods.
Define such exceptions explicitly: emergency purchases recorded afterwards, a value limit for company cards, a list of material groups without a catalog requirement. What is explicitly allowed is no longer maverick buying and won't show up as a problem in your metrics.
Frequently asked questions
What is the difference between maverick buying and maverick spend?
Maverick buying describes the behavior, maverick spend the money spent that way. In practice the two terms are often used interchangeably.
Is maverick spending the same as rogue spending?
Yes, the terms mean the same thing. Some companies use tail spend for a related but different idea: the many small purchases from rarely used suppliers, which may or may not follow the process.
Is maverick buying illegal?
Not as such. It usually breaks internal purchasing policies. In regulated industries or the public sector, buying outside tendering or compliance rules can have further consequences.
How high is maverick spend typically?
That depends heavily on industry, material group and procurement maturity. Only your own measurement is reliable. Start with the share of invoices without a PO in indirect procurement.
Does e-procurement help against maverick buying?
Yes, if the system is easier than the detour. An e-procurement system with good catalogs and fast approvals removes the most common reason for maverick buying. A cumbersome system makes it worse.
Next step
Ovenca Procure is our software for indirect procurement. Employees search across all catalogs and punchout shops as in an online shop and enter everything else as free text. Procurement approves, and the requisition goes to SAP or your other ERP system. If you want to make the official ordering route easier, talk to us.
