Let’s face it – procurement in heavy trucking dealerships can often feel like navigating a complex maze. Just when you think you’re on the right track, a wrong turn can lead to unapproved spending, derailing your budget and causing major issues.
Maverick spending, or rogue purchasing outside established processes, can sneak up on even the most diligent dealerships. This type of spending can account for a massive 80% of an organization's total spend. Imagine paying premium prices for parts simply because they're sourced from non-approved vendors! The consequences of maverick spending include higher costs, less control, limited visibility, compliance headaches, and an increased risk of fraud.
How can you avoid these financial pitfalls?
Maverick spending often occurs due to gaps in technology or organizational culture. Your team might not be fully aware of the procurement process, or they might not understand the far-reaching effects of bypassing it. Clear policies are essential for overcoming these challenges.
For example, imagine a service manager decides to get parts from a local supplier on the fly, skipping the procurement guidelines. It might seem like a quicker solution, but it usually ends up costing more and missing out on bulk discounts from approved suppliers.
Surprisingly, 75% of procurement professionals point to a lack of self-service or guided buying tools as a significant reason for these off-the-grid purchases. Let’s be honest: old habits die hard. Even with clear policies, non-compliance and resistance to change can still be issues.
Burnout also plays a role. Last year, 86% of procurement professionals reported feeling overworked, and only 52% felt they had the resources they needed. It’s no wonder nearly a quarter admitted to cutting corners, with 22% making purchases outside approved suppliers. Picture a parts manager, swamped during a busy month, skipping the system to speed things up. This is a recipe for skyrocketing costs and lost control.
First things first – it’s time to figure out where and how often maverick spending happens in your dealership. Dive into your spending data to identify transactions that fall outside approved contracts. This detective work helps you estimate both immediate and long-term costs of unmanaged spending.
Identify the usual suspects – team members who frequently engage in maverick spending. With this information, you can focus your efforts on the areas that need the most attention.
If your dealership’s procurement process feels more like a winding road than a straight path, it’s time to map it out. Update your policies as needed and ensure that everyone knows the route.
Your procurement policy should be a comprehensive guide, covering approvals, preferred vendors, budget limits, and more. Clearly specify who can add new vendors, set threshold amounts for manager approval, and establish a review process for non-contract spending. Regular reviews and updates will keep these policies effective and relevant.
Effective training is crucial for preventing rogue purchases. Many instances of maverick spending occur because employees are unclear about their roles in the procurement process. Training should cover policy details, the importance of compliance, and the necessity of making all purchases through approved channels.
Well-trained employees are more likely to stick to the process, which can significantly reduce maverick spending. A comprehensive training program can cut down on maverick spending within months as employees become more familiar with the procurement process and gain confidence in following it.
Automation is your co-pilot in reducing unauthorized spending while streamlining workflows and improving compliance. Workflow automation software, paired with a user-friendly web form builder, can help standardize your procurement processes and enhance compliance.
Start with a branded purchase order requisition form, which is much easier to track than email or verbal requests. Customize workflows to match your dealership’s policies for better control over maverick spending.
Automation can route approvals automatically based on set rules. For example, purchase orders over $10,000 can be routed to a manager for approval, while smaller amounts can bypass this step. You can also set up exceptions for those times when a manager is out of the office.
By implementing automation, you can shorten procurement cycle times and make a significant dent in maverick spending. Employees will appreciate the streamlined process, allowing them to focus on their main responsibilities instead of getting bogged down in paperwork.
Regularly monitor the procurement process to spot instances of maverick spending and take corrective action as needed. Workflow software integrated with your DMS can track spending patterns, revealing cost-saving opportunities and areas for process improvement.
If the data shows a high rate of maverick spending in a specific department, addressing the unique needs of that department can lead to better control and reduced unauthorized spending.
Taking control of maverick spending is crucial for procurement professionals in the heavy truck dealer industry. A well-rounded approach – clear policies, effective training, and automation – can help you gain control over spending and reduce costs.
To tackle maverick spending and streamline your procurement process, check out DocuPhase’s workflow automation software and electronic web forms builder. Schedule a demo with our team today to explore how we can help you achieve security and compliance in your dealership’s operations.