I left off the Purchasing Challenges series last week with Part 4 talking about the issue of strategic versus tactical Purchasing focus. This post is about one of the banes of the Procurement field - rogue spending.
Rogue spending, also called maverick spending, is when end users:
- Buy from vendors not on the Purchasing Department's approved vendor list
- Buy non-approved items from an approved vendor
Rogue spending has several negative consequences:
- Erosion of savings
- Weakens company's standing with approved vendors
- Lessens morale of Purchasing employees
Employees become rogue spenders for two reasons. They either don't know any better or they are purposefully going out on their own.
The first reason can be solved by constant communication with end users and educating them when honest violations of policy occur.
The second category is tougher to solve. For those who willingly violate Purchasing policy, the company should institute a strict non-reimbursement policy. How many employees would be second time offenders if they literally had to pay for their own willful mistakes the first time?
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