procurement cost control

How to control and prevent unnecessary costs in the procurement process?

Thoughtful and well-strategically designed management of the procurement process is essential for reducing costs, improving transparency and better alignment with all other areas of the company’s operations. Cost control is precisely one of the biggest challenges for procurement, because it is what is put before it as a task in most cases. Procurement is often met with the so-called Maverick Spend means uncontrolled procurement activities that bypass standard procurement procedures and rules. Most company directors are not even aware of how much money is actually spent on such expenses. We will suggest some steps you can take to control and prevent Maverick Spend so that your company’s money goes to the right places and you are unburdened.

  1. Education of the entire company on procurement procedures

Educating employees about procurement policies and procedures is critical to preventing Maverick Spend. People are often not even aware that they are creating a problem, because what is ‘just’ for them, they usually get much more. And we know that people cannot act according to something they are not familiar with or do not know. Therefore, organize internal training to raise awareness of the importance of following procurement procedures, approving requests and cooperating with the procurement department. Point out the consequences of uncontrolled spending such as financial losses and legal problems. This will help employees understand procurement processes and make informed decisions when spending company funds.

  1. A clearly established approval process in the procurement process

Establish a clear process for approving purchase requests to prevent unauthorized spending. Define roles and responsibilities in the approval process, set approval limits depending on the value and type of procurement, and ensure transparency. A clear approval procedure will give employees a ‘framework’, so everyone will think carefully before sending a request. Communicate the procedure to all employees so that they are familiar with the rules.

  1. Implementation of technological solutions

Implement procurement software, such as our procurement process software solution Ensolva, which enables tracking and monitoring of procurement activities. With such software, you can very easily access reports on consumption, monitor cost trends, identify irregularities and get a clearer picture of your company’s procurement. This data will help you see where Maverick Spend is happening and enable you to take timely steps accordingly to prevent further unauthorized spending. Procurement software also makes it easier to track procurement processes, automate the approval process and improve overall procurement management.

  1. Better cooperation with suppliers

Achieve better collaboration with suppliers to achieve better terms and thereby reduce uncontrolled costs. Communicate regularly and openly with suppliers about procurement goals, expectations and policies they need to adhere to. This kind of cooperation will give you a greater opportunity to negotiate more favorable procurement conditions, bigger discounts and better compliance with your standards.

  1. Continuous Monitoring and Evaluation

Controlling and preventing Maverick Spend is not a simple task and it is difficult to achieve it ‘overnight’. It is necessary to regularly monitor and evaluate the results of procurement processes to see if new cases of uncontrolled spending appear. Analyze cost data, track trends and weaknesses, and adjust strategy. Continuous monitoring allows you to react in time to new cases of uncontrolled spending and optimize the procurement process.

Control and prevention of unnecessary costs are key to cost regulation, transparency and better efficiency of the procurement process. Employee training, a clear approval process, implementation of technological solutions, better cooperation with suppliers and continuous monitoring and evaluation will help you prevent uncontrolled spending and realize the maximum potential of your procurement.

Don’t let your company suffer from uncontrolled procurement costs. Feel free to contact us and discover why Ensolva is the ideal solution for your procurement needs!


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