How to Reduce Procurement Maverick Spend in Australia
Every Australian organisation with a procurement function has a maverick spend problem. Most of them do not know how large it is.
Maverick spend — purchasing that occurs outside approved channels, preferred supplier agreements, or established procurement processes — is one of the most persistent and quietly expensive problems in procurement. It is persistent because it is driven by structural and behavioural factors that do not resolve themselves. It is expensive because the costs compound: not just the premium paid on individual off-contract purchases, but the erosion of volume commitments that underpin negotiated pricing, the compliance and risk exposure that unmanaged supplier relationships create, and the procurement capacity consumed managing unauthorised transactions that should never have occurred.
Maverick spend costs organisations 5–16% of negotiated savings annually. SUPLARI For an organisation managing $200M in external spend that has negotiated 10% in savings through strategic sourcing, maverick spend at the lower end of that range is eroding $1–3M of those savings every year — silently, without appearing in any procurement performance report.
This article explains what maverick spend is, what drives it, how to measure it, and how to reduce it in a way that is sustainable — without building a procurement function that the business works around rather than with.
What Maverick Spend Is — and What It Is Not
Maverick spend is sometimes used as a catch-all for any purchasing the procurement team does not like. That framing is both imprecise and counterproductive — it conflates different problems that require different solutions, and it positions procurement as an authority function rather than a value-creation one.
A more useful definition: maverick spend is purchasing that bypasses established procurement governance — approved supplier lists, contracted terms, purchase order processes, or delegation of authority frameworks — in a way that creates cost, compliance, or risk consequences for the organisation.
It is worth distinguishing maverick spend from two related concepts that are often confused with it:
Tail spend is low-value, high-transaction-volume purchasing — the long tail of spend categories that individually represent small amounts but collectively account for a significant share of transaction volume. Tail spend is not inherently maverick; it becomes a problem when it is unmanaged. Much of the solution to tail spend is structural (procurement catalogues, corporate card programmes, simplified approval processes for low-value items) rather than compliance-focused.
Uncontracted spend is purchasing in categories that procurement has not yet addressed through a sourcing process — not because the buyer is bypassing a contract, but because no contract exists. This is a gap in procurement coverage, not a behavioural compliance issue. The solution is to extend procurement coverage to those categories, not to treat the buyer as non-compliant.
Maverick spend in the strict sense is purchasing that bypasses governance that exists and applies. That distinction matters because it determines the right intervention: structural fixes for tail spend and coverage gaps, behavioural and governance interventions for genuine maverick spend.
What Maverick Spend Actually Looks Like
Maverick spend manifests in several distinct patterns, each with slightly different causes and solutions.
Off-contract purchasing from non-approved suppliers. A manager engages a supplier that is not on the approved vendor list — because they have an existing relationship, because the approved supplier is perceived as slow or difficult, or because they do not know the approved supplier exists. The purchase may be perfectly reasonable on its own terms; the problem is that it fragments volume away from contracted suppliers, undermines the commercial terms those contracts are based on, and creates an unmanaged supplier relationship with no performance or compliance oversight.
Bypassing the purchase order process. Goods or services are received and invoiced before a purchase order has been raised — or never go through a PO at all. This is sometimes called "invoice before PO" or "three-way match failure." It is common in operational environments where managers are prioritising speed over process, and in organisations where the P2P process is perceived as burdensome for low-value purchases. The financial consequence is that the spend is invisible to procurement until the invoice arrives.
Non-preferred supplier selection within a category under contract. The organisation has a preferred supplier agreement for a category, but individual purchasers use alternative suppliers within the same category — either because they do not know about the preferred arrangement, because the preferred supplier is not meeting their needs, or because the category contract does not adequately cover their specific requirements. This is the subtlest form of maverick spend and the hardest to detect without good spend data.
Specification drift and non-standard purchasing. Purchasers buy variants or specifications that are not covered by contracted arrangements — often because the specifications in the contract do not match operational requirements, or because individual managers have preferences for specific products or brands that fall outside the contracted range.
Why Maverick Spend Happens: The Root Causes
Treating maverick spend primarily as a behavioural problem — people not following the rules — misdiagnoses the issue and leads to solutions (more policy, more enforcement) that do not work. The evidence consistently shows that maverick spend is driven primarily by structural factors, not by deliberate non-compliance.
Procurement processes are too slow or complex for the purchase at hand. When a manager needs something urgently and the procurement approval process takes two weeks, they will find a faster route. When a low-value purchase requires the same approval process as a $500K contract, the process is disproportionate to the risk. Procurement processes that are not calibrated to the size and urgency of different purchases create systematic incentives for workarounds.
Approved supplier lists are incomplete or inaccessible. If operational managers do not know who the approved suppliers are — because the approved vendor list is not published, not up to date, or not easily accessible from the purchasing system — they will default to suppliers they already know. The problem is not non-compliance; it is that the approved pathway is not clear enough to follow.
Contracted suppliers are not meeting operational needs. When approved suppliers consistently underperform on lead times, product range, service quality, or responsiveness, buyers will look elsewhere. This is rational behaviour. If procurement's response is to enforce compliance with a supplier that is failing, it will lose the business's confidence. The right response is to fix the supplier performance problem.
Decentralised purchasing authority without category governance. When individual business units, cost centres, or sites have purchasing authority and no overarching category strategy, each makes its own supplier selections. The aggregate result is a fragmented, unmanaged supplier base — not because anyone intended it, but because there was no structure to prevent it.
No visibility into the problem. Many organisations do not measure maverick spend. They have no systematic way of identifying off-contract purchasing, no purchase price variance tracking, and no spend analytics that flags non-approved supplier transactions. Without visibility, there is no feedback loop — purchasers do not know their behaviour is a problem, and procurement cannot intervene.
Measuring Maverick Spend
The starting point for any reduction programme is measurement: understanding the current scale of the problem, where it is concentrated, and what it is costing.
Maverick spend measurement requires spend analysis — the same analytical foundation that underpins strategic sourcing and supplier rationalisation. The specific metrics that quantify maverick spend include:
Purchase order coverage rate. What percentage of total spend is covered by a purchase order that was raised before the invoice? Low PO coverage is a direct proxy for off-process purchasing. World-class procurement organisations target PO coverage above 90% for non-tail spend. Many Australian organisations, when they first measure it, find PO coverage in the 60–75% range.
Preferred supplier compliance rate. For categories with contracted preferred supplier arrangements, what percentage of spend in that category goes to preferred suppliers? Compliance rates below 80–85% indicate significant off-contract purchasing. Rates below 70% suggest either that the contract is not meeting operational needs, or that contract awareness is low.
Supplier count relative to spend. A high number of active suppliers relative to total spend is a strong signal of maverick spend — it indicates that purchasing is fragmented across many suppliers, most of which have not been through a sourcing process. As a rough benchmark, an organisation with $100M in indirect spend should be actively transacting with considerably fewer than 500 suppliers if procurement is functioning well.
Purchase price variance. Comparing the actual price paid for goods and services against contracted rates reveals where off-contract purchasing is occurring and what premium is being paid. Systematic positive PPV — paying more than contracted prices — is a direct financial measure of maverick spend cost.
The Six-Lever Reduction Programme
Reducing maverick spend requires addressing its root causes, not just enforcing compliance. The most effective programmes work across six levers simultaneously.
Lever 1: Make the Approved Path Easier Than the Alternative
The single most effective lever for reducing maverick spend is making the compliant purchasing path more convenient than the non-compliant one. This means: a searchable, up-to-date approved supplier catalogue accessible from the purchasing system; simplified approval workflows for low-value purchases (one-click approval below $500, automated below $200); clear guidance on which suppliers to use for common categories; and a responsive procurement helpdesk that resolves category queries quickly enough that buyers do not default to their own solutions.
If the procurement process is harder to use than simply calling a supplier directly, buyers will call the supplier directly. The answer is not more enforcement — it is a better process.
Lever 2: Calibrate Governance to Risk
Most organisations apply the same procurement process to a $50,000 IT services engagement and a $500 catering order. This is both inefficient and counterproductive: it creates friction on low-risk purchases that drives workarounds, while consuming procurement capacity on transactions that do not warrant it.
A tiered governance model — in which approval requirements, sourcing process obligations, and contract requirements scale with the value and risk of the purchase — reduces friction on low-value items while maintaining rigour on material ones. Common thresholds in Australian organisations range from simplified self-approval for purchases below $1,000–$2,000, through manager approval for $2,000–$20,000, to procurement involvement above $20,000 and formal sourcing for categories above $100,000–$250,000. The right thresholds depend on the organisation's spend profile and risk appetite.
Lever 3: Fix the Suppliers, Not Just the Behaviour
Where maverick spend is concentrated in categories where preferred suppliers exist but are underused, investigate why. In many cases, the preferred supplier is not meeting the operational requirements that drove the off-contract behaviour. Fixing that supplier performance problem — through active contract management, KPI reviews, or a resourcing event if the supplier cannot improve — will reduce maverick spend more effectively than compliance enforcement.
Lever 4: Extend Contract Coverage to High-Maverick Categories
Many categories generate maverick spend not because buyers are bypassing contracts, but because contracts do not exist. Identifying the categories with the highest off-contract spend and sequencing them into a sourcing programme directly reduces maverick spend by creating the compliant pathway that currently does not exist. This is the structural fix for uncontracted spend.
Lever 5: Build Spend Visibility and Reporting
Maverick spend that is not visible cannot be managed. Building the reporting infrastructure to track PO coverage by business unit, preferred supplier compliance by category, and purchase price variance by supplier gives procurement the data needed to identify problems, target interventions, and demonstrate improvement.
Regular reporting of these metrics to business unit leaders — not just to procurement — creates accountability. When a business unit head can see that their team's PO coverage is 62% against an organisational target of 90%, that is a management conversation. When it is only visible inside the procurement team, it is a procurement problem.
Lever 6: Engage, Don't Enforce
The least effective approach to maverick spend reduction is a compliance crackdown without accompanying process improvement. Sending emails reminding people to follow procurement policy, threatening consequences for off-contract purchasing, or adding approval steps to existing processes — without making the compliant path easier — typically produces short-term compliance improvement followed by creative workarounds.
Engagement works better: making sure business unit leaders understand why procurement compliance matters (the direct cost to their budgets of off-contract purchasing, not just to the organisation in the abstract), involving them in designing the supplier panels and processes for their categories, and recognising teams that improve their compliance metrics. Procurement that behaves as a business partner rather than a compliance function gets better outcomes — because buyers choose to use it rather than work around it.
The Australian Context: Specific Pressure Points
Several factors make maverick spend a particularly persistent challenge for Australian organisations.
Geographic complexity. Multi-site organisations operating across large distances — national retailers, health networks, mining and resources companies, government agencies with regional offices — face structural challenges in enforcing centralised supplier arrangements. A preferred supplier that is strong in Melbourne and Sydney may have inconsistent service quality in regional Queensland or Western Australia, creating legitimate operational reasons for local workarounds.
Operational urgency in time-critical sectors. Sectors like hospitality, health, manufacturing, and construction have genuine operational urgencies — a kitchen running out of a critical ingredient, a facility requiring urgent maintenance, a production line needing immediate spare parts — where the cost of following a two-day procurement approval process exceeds the cost of the off-contract purchase. Procurement governance in these sectors needs to be designed with operational realities in mind, not just theoretical best practice.
Procurement maturity gaps. Many Australian organisations, particularly in the mid-market and in sectors that have not historically had strong procurement functions, are in the early stages of building procurement capability. In these organisations, approved supplier lists are incomplete, contract coverage is partial, and procurement processes are not yet embedded in operational behaviour. Maverick spend reduction in this context is about building the foundation, not enforcing compliance with a system that does not yet exist.
How Trace Consultants Can Help
At Trace Consultants, maverick spend reduction is typically one workstream within a broader Procurement engagement — not a standalone exercise. The reason is that maverick spend is usually a symptom of procurement gaps: incomplete contract coverage, inadequate preferred supplier panels, overly complex processes, or insufficient spend visibility. Fixing the symptom without addressing the underlying structure produces temporary improvement that does not sustain.
We bring spend analytics capability to identify the scale and distribution of maverick spend, procurement operating model design expertise to address the structural causes, category management capability to build the contract coverage that eliminates the gaps, and process improvement skills to design the governance framework that makes compliant purchasing the easy path.
We work across retail, property and hospitality, health and aged care, FMCG and manufacturing, and government — sectors where the balance between operational urgency and procurement governance is a live tension, and where getting that balance right requires sector knowledge as much as procurement methodology.
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Where to Start
The first step is measurement. If you do not know your PO coverage rate, your preferred supplier compliance rate by category, or your purchase price variance, you do not have a clear picture of the problem. A spend analysis — two to four weeks — will quantify the maverick spend exposure and identify where it is most concentrated.
From there, the highest-value interventions can be prioritised: typically a combination of process simplification, contract coverage extension in high-maverick categories, and supplier performance remediation where off-contract behaviour is driven by supplier failure rather than policy non-compliance.
The organisations that reduce maverick spend sustainably are the ones that treat it as a systems problem, not a behaviour problem. The behaviour follows the system. Fix the system.
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