Control Maverick & Class C Spend: Optimization Strategies

Maverick & Tail Spend: Optimization Strategies for Better Spend Control

In today’s complex business world, companies constantly seek ways to optimize operations and maximize profitability. Yet, an often-underestimated spend category can undermine these efforts: maverick and Class C spend. While seemingly minor or low-value, these purchases significantly impact cost control and operational efficiency.

Have you ever encountered unplanned purchases made outside established procedures, or noticed a proliferation of small vendors for generic needs? If these situations sound familiar, you’re dealing with maverick and Class C spend. Far from minor inconveniences, these practices generate significant hidden costs, reduce spend visibility, and can even strain relationships with strategic suppliers.

This Weproc expert article aims to demystify these spend categories, uncover their root causes, and reveal their devastating impact on company cash flow and productivity. More importantly, we’ll share proven strategies and concrete solutions to not only control unplanned spending but also transform it into an opportunity for optimization and overall efficiency improvement. From streamlining your supplier portfolio to implementing Procure-to-Pay (P2P) solutions, prepare to regain control of your generic spend and unlock unforeseen savings potential.

Understanding Maverick and Class C Spend

Before diving into optimization strategies, it’s essential to understand what “maverick spend” and “Class C spend” entail. While often used interchangeably, they refer to complementary realities that, together, pose a major challenge for the procurement function.

Defining Maverick Spend

Maverick spend, sometimes called “rogue spend” or “non-compliant spend,” refers to products and services acquired by a company outside established procurement channels and policies. These are spontaneous purchases, often made urgently, without involving the procurement department or approved suppliers.

Their main characteristics include:

• Unplanned and irregular: They occur unexpectedly to meet an immediate, unplanned need.
• Non-compliance with procurement policy: They bypass internal procedures, negotiated contracts, and approved supplier lists.
• Urgency: The imperative nature of the need often pushes employees to act quickly, without always evaluating long-term implications.
• Difficulty in identification: Scattered throughout the organization, these purchases are complex for procurement teams to track and analyze, making optimization challenging. Over half of indirect procurement professionals cite them as a major issue.

Imagine a marketing department buying last-minute supplies from a consumer e-commerce site, or a technical department ordering a specific part from a new supplier without approval. These scenarios perfectly illustrate maverick spend, practices that, when combined, can erode a company’s budget control.

Class C Spend: The Pareto Principle

To better understand the dynamics of maverick spend, it’s essential to introduce the concept of Class C spend, which directly stems from the famous Pareto Principle, or the 80/20 rule. Applied to procurement, this principle states that approximately 20% of suppliers or 20% of spend accounts for 80% of a company’s total procurement value. The remaining 80% of suppliers or 80% of spend then represent only 20% of the value.

Class C spend is found in this “long tail.” It is characterized by:

• Low unit value: The cost of each item or service is generally low.
• High volume of items or transactions: Although individually inexpensive, these purchases are numerous and diverse.
• Non-strategic nature: They do not concern the company’s core business and do not have a major direct impact on its competitiveness or revenue.
• Genericity: They include a wide range of office supplies, consumables, small tools, minor IT services, or various general expenses, used by many departments.

The correlation between Class C spend and maverick spend is strong and almost systematic. Indeed, the very nature of Class C purchases – their low unit value, wide diversity, non-strategic character, and dispersion across departments – makes them particularly vulnerable to maverick purchasing practices. Employees tend to perceive these small expenses as negligible and less subject to rules, leading them to bypass established processes, especially in urgent situations.

Thus, Class C purchases often become the primary drivers of maverick spend. Their optimization should not be overlooked, as controlling this “mass” of small expenses can lead to substantial savings and improve overall company productivity by addressing the hidden costs they generate.

Why These Purchases Are Problematic for Businesses

While the definition of maverick and Class C spend is clear, the extent of their impact on a company’s financial and operational health is often underestimated. These seemingly innocuous practices actually hide major challenges that can slow growth, erode margins, and harm overall efficiency.

Root Causes of Lack of Control

Understanding why maverick spend persists is the first step toward controlling it. Several internal and external factors contribute to this situation:

• Lack of clarity and communication regarding internal procurement policies: Employees are often not fully informed about the company’s purchasing policies and procedures. Without clear, accessible, and regularly communicated guidelines, they may unintentionally make purchasing decisions without consulting the dedicated department, believing they are doing the right thing or simply unaware of the rules. A poorly defined or overly complex policy invites circumvention.
• Absence of approved or suitable suppliers: In some cases, the company may not have approved suppliers capable of meeting an employee’s very specific or occasional needs. Faced with an urgent need not covered by the existing panel, the employee turns to an external solution, initiating a maverick purchase. This gap in approved supplier offerings is a powerful driver of non-compliance.
• Overly long official approval times and cumbersome purchasing processes: The company’s official purchasing process, while necessary for compliance and control, can sometimes be perceived as too slow and bureaucratic to meet urgent needs. When an employee needs an item or service quickly to avoid interrupting their work, the temptation to bypass the process to get it faster is strong. This slowness is often one of the main causes of “necessity-driven” maverick spend.

These factors often combine to create an environment conducive to uncontrolled purchases, where employees’ good intentions to perform their tasks clash with the constraints of a procurement system perceived as rigid or unsuitable.

Financial and Operational Impacts

The consequences of maverick and Class C spend extend far beyond simple non-compliance. They impact multiple levels of the company, generating significant hidden costs and operational inefficiencies:

• “Out-of-control” purchases: These expenses are often made with unapproved suppliers, through unapproved channels, and at non-negotiated prices. The company loses all visibility and negotiation power, which can lead to significant overspending and inconsistent service quality.
• High administrative costs: This is one of the most underestimated impacts. Maverick and Class C spend alone account for a significant portion of indirect administrative costs. Indeed, each small purchase, made from a new, unapproved supplier, involves a multitude of tasks: supplier creation in the system, managing individual orders, processing scattered invoices, managing deliveries, and tracking payments. This fragmentation generates colossal work for administrative and finance departments, increasing administrative costs by up to 80% of total indirect costs according to some studies. This is a disproportionate workload compared to the unit value of the items purchased.
• Loss of economies of scale and negotiation power: By scattering purchases across multiple suppliers without consolidation, the company foregoes the ability to negotiate volume discounts. Each purchase is treated as an isolated transaction, without benefiting from the leverage that a centralized approach could offer.
• Breakdown of trust and degradation of supplier relationships: Approved suppliers, with whom contracts and advantageous terms have been negotiated, may feel disengaged if a significant portion of purchases bypasses them. This can harm the partnership, affect the quality of products or services provided in the long run, and make future agreement negotiations more difficult.
• Non-compliance risks and audit issues: Uncontrolled purchases can expose the company to risks of regulatory non-compliance, fraud, or problems during internal and external audits, particularly in the absence of clear spend traceability.

In summary, these “off-track” purchases may seem harmless individually, but their accumulation creates a real financial drain and operational complexity that heavily impacts the company’s overall performance.

Key Strategies for Spend Optimization

Faced with the challenges of maverick and Class C spend, proactive and well-structured strategies are essential. The goal is not only to reduce direct expenses but, more importantly, to minimize hidden administrative costs and restore control over the entire procurement cycle.

Streamline Your Supplier Portfolio

The first step toward controlled Class C spend management is to drastically streamline your supplier base. A large number of suppliers for similar or generic items is a major source of administrative complexity and lost savings.

Here’s how to proceed:

1. Conduct a precise inventory: Collect detailed information from all departments in your company to get an exhaustive list of suppliers you work with, even for the smallest expenses. This is often a revealing exercise about the scale of the problem.
2. Identify redundancies: Analyze your list to pinpoint suppliers offering similar products or services. A non-recurring supplier with a limited range and unattractive commercial terms is an ideal candidate for consolidation or replacement.
3. Reduce the number of active suppliers: The goal is to significantly reduce your active supplier count. Concentrating orders on a limited number of partners not only simplifies administrative management but also increases your negotiation power.
4. Increase spend visibility: Fewer suppliers mean clearer and more focused information flows, making it easier to track expenses and identify savings opportunities.
5. Negotiate better rates through volume: By consolidating your purchases with a reduced number of suppliers, you increase order volumes with each of them, giving you powerful leverage to negotiate more favorable rates, additional discounts, and better service terms.

Streamlining isn’t just about reduction; it’s a strategy aimed at optimizing the value provided by each partner and simplifying your operations. Here’s an illustrative example of the benefits of streamlining:

Consolidate with a “Tail Spend” Supplier

Once the supplier portfolio is streamlined, the next step is to designate one or a few “tail spend” suppliers responsible for covering a large portion of Class C needs. The goal is to centralize these dispersed purchases as much as possible with a strategic partner.

The criteria for choosing this key partner are crucial:

1. Extensive product and service range: The supplier must be able to offer an extremely broad catalog, covering most of your Class C item needs (office supplies, IT consumables, small maintenance equipment, etc.). This “one-stop shop” drastically simplifies the process for your employees.
2. Wide geographical coverage: If your company operates across multiple sites or regions, the supplier must be able to provide delivery and service throughout your territory. This allows for centralized ordering across the entire company.
3. Quality of relationship and collaboration: Given the complexity of managing Class C spend data, a supplier who provides detailed and well-organized information on your consumption is an invaluable asset. A true partner actively collaborates to help you optimize your processes.
4. Long-term exclusivity negotiation: In exchange for significant order volumes and exclusivity over a procurement category, you can negotiate particularly advantageous commercial terms, substantial discounts, and value-added services (free shipping, simplified returns management, etc.).

This approach transforms the “long tail” of Class C spend from an administrative headache into a streamlined, efficient, and economically advantageous process.

Optimize Delivery Processes

Beyond supplier selection, optimizing deliveries represents a significant savings lever for Class C spend. Every delivery has a cost and an impact. Mastering this process directly contributes to reducing hidden costs and improving the company’s image.

Areas for improvement include:

1. Analyze delivery frequency: Review how often deliveries are made to your sites (per week, per month). Consolidating orders can reduce the total number of deliveries, generating substantial savings in shipping costs and reception/unloading time for your teams. Data from your transport provider is valuable for this analysis.
2. Work to reduce the error rate: Delivery errors (wrong recipient, incorrect timing, damaged products, incorrect quantities) lead to recovery costs, delays, and dissatisfaction. Identify recurring problems and implement solutions with your suppliers and carriers. This can involve better communication of delivery addresses, precise time slots, or more robust packaging.
3. Strengthen eco-responsible image: Optimizing delivery routes and reducing the number of transports directly impacts your company’s carbon footprint. By adopting more environmentally friendly practices, you not only save money but also enhance your brand image with your customers, partners, and employees. It’s a “win-win” situation for your company and the planet.

The implementation of these strategies requires rigorous monitoring and close collaboration with your suppliers. It is a continuous improvement process that will ultimately generate tangible benefits.

Class C Spend Optimization Process

1. Audit & Analysis

Identify maverick and Class C spend, collect supplier and expense data.

2. Streamlining

Reduce the number of active suppliers for better visibility.

3. Consolidation

Select “tail spend” suppliers to centralize orders.

4. Logistics Optimization

Improve delivery frequencies and reliability.

Technology Leverage and Change Management

Implementing strategies for optimizing Class C and maverick spend requires adequate technological support and rigorous change management. Technology provides the tools for centralization and automation, while human support ensures the adoption and sustainability of new practices.

Implement Procure-to-Pay (P2P) Solutions

Procure-to-Pay (P2P) solutions have become indispensable tools for companies looking to regain control of their spending. A P2P platform centralizes the entire procurement cycle, from initial requisition to invoicing and payment.

The advantages of such a system are numerous:

• Increased centralization and visibility: All purchases, including Class C spend, go through a single platform. This offers total real-time visibility into expenses, suppliers, and budgets.
• Significant reduction in administrative costs: Automating manual tasks (order entry, invoice matching, approvals) drastically reduces the time spent by administrative and procurement teams, freeing up resources for higher-value activities. Processes are simplified, and errors minimized.
• Improved compliance: A P2P solution natively integrates the company’s procurement policies. Employees can only order from approved suppliers, at negotiated prices, and according to defined approval procedures. This significantly reduces the risks of maverick spend and ensures compliance with internal and external rules.
• Streamlined approval processes: Purchase requisitions are automatically routed to the right people for approval, accelerating the cycle and avoiding delays that encourage maverick purchases.
• Spend analysis and decision support: The platform collects valuable data on purchasing habits, allowing procurement departments to identify new optimization opportunities, renegotiate with suppliers, or adapt procurement policies.

Software like Weproc is a relevant example of a P2P solution that provides this automation and streamlining of the procurement process. By offering a centralized and intuitive platform, Weproc enables employees to make their purchase requisitions in full compliance, access approved supplier catalogs, and track their expenses. In doing so, it reduces the risks of maverick spend and ensures more fluid and transparent procurement management, transforming a constraint into a true strategic advantage.

Supporting Employees: The Key to Success

Implementing a P2P solution or new procurement strategies alone is not enough. Success primarily depends on employee buy-in and involvement. Change management is an essential pillar of this transformation.

Here are the key actions for successful support:

1. Educate and raise employee awareness: It is crucial to explain the importance of procurement management and the risks associated with maverick and Class C spend. Regular communication campaigns, training workshops, and practical guides can help employees understand the stakes (hidden costs, efficiency, compliance) and show how new procedures benefit everyone. The goal is to transform resistance to change into a collective understanding of common interest.
2. Gain active support and involvement from management: Leadership plays a crucial role. If management understands the importance of controlling these purchases and actively supports efforts to do so, it sends a strong message to the entire organization. Management’s example is a powerful catalyst for change.
3. Collaborate with suppliers to facilitate the transition: Involve your key suppliers in the process. If they are aware of the new procedures (especially via a P2P platform), they can become allies, facilitating transactions and helping promote compliance among your teams. A good partnership with suppliers, especially those in the “tail spend” category, is essential for a smooth transition.
4. Simplify processes and tools: Ensure that new procedures and tools are as simple and intuitive as possible. A complex or difficult-to-access system will inevitably encourage employees to revert to old habits. Ergonomics and ease of use are decisive factors for adoption.

By investing in technology and providing human support for this transformation, companies can not only control their maverick and Class C spend but also establish a more responsible and efficient procurement culture.

Benefits of Controlled Management

Implementing strategies for optimizing maverick and Class C spend is not merely an administrative constraint; it’s a strategic approach that yields tangible and lasting benefits for the company.

• Drastic reduction in hidden costs and substantial savings: By controlling maverick spend, streamlining the supplier portfolio, and consolidating Class C expenses, companies can significantly reduce administrative costs related to fragmented procurement management and benefit from better pricing terms. These often-unsuspected savings can amount to millions of euros for large organizations.
• Improved productivity and operational efficiency: Centralization and automation via P2P solutions free up procurement and administrative teams from repetitive, low-value tasks. They can then focus on more strategic initiatives, such as innovation, supplier relationship management, or negotiating strategic purchases. Employees, in turn, benefit from simplified and faster purchasing processes.
• Enhanced compliance and risk reduction: Clear procurement policies and P2P tools ensure adherence to internal procedures and regulations. This reduces the risks of fraud, audits, and non-compliance, providing greater peace of mind for the company.
• Optimized supplier relationships: By working with a streamlined panel of suppliers and offering consolidated volumes, the company establishes stronger, more mutually beneficial partnerships, fostering innovation and service quality.
• Transforming a challenge into a strategic opportunity: What was perceived as a “problem” becomes a performance lever. By controlling these expenses, the company gains agility, transparency, and control – major assets in a competitive economic environment.

In summary, investing in the management of maverick and Class C spend is investing in the financial health and sustainability of the company. It’s transforming a source of value leakage into a driver of growth and efficiency.

Maverick and Class C spend, often considered secondary due to their low unit value, actually represent a major challenge for businesses. Their hidden administrative costs, impact on spend visibility, and loss of negotiation power make them an issue no organization can afford to ignore.

However, as we’ve demonstrated, this is not an insurmountable problem. With a clear understanding of the stakes and the adoption of targeted strategies—such as streamlining the supplier portfolio, consolidating with “tail spend” partners, and optimizing logistics processes—it is entirely possible to regain control.

Technology, embodied by robust and intuitive Procure-to-Pay solutions like Weproc, plays a central role in this transformation. These platforms offer the automation, centralization, and compliance needed to shift from reactive, fragmented management to a proactive, strategic approach. But beyond technology, people remain at the heart of success: support, awareness, and employee involvement guarantee the successful and sustainable adoption of new practices.

By embracing these strategies, your company will not only reduce its expenses; it will gain agility, efficiency, and transparency. Maverick and Class C spend will then transform from a burden into a powerful catalyst for optimization and overall performance. Don’t wait to turn this challenge into a strategic opportunity for your organization.