Maverick Spend Analysis User Guide

Maverick Spend can be intentional when individuals simply refuse to follow the proper procurement process. It can also be accidental, due to miscommunication in your supply chain, poorly structured workflow practices or a lack of effective procure-to-pay (P2P) processes.

Maverick Spend can harm your business organisation by creating unauthorized expenditures, creating log jams in your workflow, and draining resources. Understanding Maverick Spend is the first step to identifying and eliminating it. The Rosslyn Platform will allow you to rein in the strays and improve your business organistion’s efficiency to help improve the bottom line.

It is important to understand the root causes of Maverick Spend:

• Without effective communication of best practices and proper supplier management, your employees might dismiss modest or everyday purchases as too minuscule to have any serious effect on the bottom line. So, instead of following procedures, they engage in Maverick buying.
• If management is constantly focusing all their attention on purchases above a certain value threshold, employees might see anything under that line as free from the constraints of the approval process. This is especially true of corporate policy permits a percentage of spend to remain unmanaged, or even worse, management believes unmanaged spend is inevitable.
• It is all too easy for employees to rely on their own devices if your business organisation does not have a formal P2P process in place for smaller transactions – or if the current process is overly complicated, time-consuming, or does not integrate with the system for large purchases.
• Without well-established policy and centralised procurement, your business organization might have overlapping or redundant contracts on any number of items.
• If Maverick buying already has a firm grip on your business organization, you might have so many vendors and supply chain challenges that management sees the cure (fixing the problem) as more costly than the disease. This has the unintended effect of letting the problem grow even worse as time marches on.

The potential effects of Maverick Spend

• Excess Vendors. Too many cooks spoil the broth, and too many vendors bring costly redundancies and contract issues to an already crowded table.
• Inferior Goods at Higher Prices. Maverick buyers are unlikely to use preferred suppliers, and as a result, the goods, and services they receive simply will not match the approved suppliers’ timeliness, quality, price, efficiency, or customer support.
• Contract Crises. When suppliers are unmanaged, it is all too easy for contracts to conflict, exposing your organisation to compliance risks.
• Transaction Overload. Unmonitored and invisible, rogue spending creates a high volume of unnecessary transactions and generates additional processing fees.
• Wasted Work Hours. When procurement professionals are putting out fires and chasing down transactions or suppliers, they are not planning or building value for the organisation.
• Lost-Value. Beyond the monetary costs that come with contract conflicts, overtime, and processing fees, maverick spend also reduces efficiency, hampers financial planning, and creates conflict. Supplier relationships and interdepartmental cooperation can both be damaged.

Analysing Maverick Spend

Navigate to the Purchase Order and Contracts dashboard, under the Maverick Spend section.

In the 'Spend by Maverick Status' chart, select ‘Maverick’ from the Doughnut chart and apply the filter, which will update all charts in this dashboard.

Select a Dimension as the target you intend to analyse.  In the example below, the ‘Financial and Insurance Services’ category and the Supplier ‘Bank of New York’ (with a Maverick Spend of £211.67M) have been selected as filters

Maverick Spend Analysis Example

In the example above, the total Maverick Spend value is based on the fact that spend has occurred outside of Purchase Order and Contract.  In other words, there has been uncontrolled spend with this Supplier, which has resulted in Maverick Spend.

On the left of the ‘Maverick Spend’ sheet you will see a ‘What If…….’ analysis tool. This tool will produce potential savings based on shifting Maverick Spend to a more managed process, either by introducing Purchase Order control or control through Contracts.

In this example of using the ‘What If……’ analysis tool, the intention is to shift (reduce) the value of Maverick Spend by 50%.  In the course of doing so, a 12% ‘Expected Cost Reduction’ is anticipated.

Using the ‘What If……’ analysis tool, type in the ‘Shift %’ box 50. Then, type in the ‘Expected cost Reduction %’ box 12. ) Remember to click outside of the text boxes once you have typed in the ‘What If……’ values.)

This example indicates that based on the ‘What If……’ values entered by the user, a Potential Savings value of £12.73M has been identified. The Potential Savings value is based on the value of historical spend with this Supplier, within the Rosslyn Platform. 

If the spend with this Supplier continues over a comparable timeframe to the data selected, the Potential Savings value is that which could be expected should the managed processes be put in place.