What is the effect of maverick spending on an organization?

What is the effect of maverick spending on an organization?

• A. Increased negotiation leverage
• B. Lower procurement costs
• C. Difficulty in supplier management
• D. Enhanced supplier relationships

Answer: (C)

Maverick spending refers to unauthorized purchases made by employees outside of the established procurement processes of an organization. This often leads to the organization facing difficulties in managing suppliers effectively. When employees engage in maverick spending, they may select suppliers that are not part of the approved vendor list, which can result in inconsistent pricing and quality of goods and services being procured. This lack of coordination complicates supplier management since it becomes challenging to track who is buying what from which suppliers. Additionally, this may lead to fragmented relationships with suppliers, as different employees may interact with different vendors without a coherent organizational strategy. As a result of maverick spending, organizations may struggle to ensure compliance with contracts, maintain quality standards, and consolidate their supplier base, all of which hinder effective supplier relationship management. Thus, the impact of maverick spending creates obstacles in managing suppliers efficiently, making it the correct answer in this context.

Maverick spending refers to unauthorized purchases made by employees outside of the established procurement processes of an organization. This often leads to the organization facing difficulties in managing suppliers effectively.

When employees engage in maverick spending, they may select suppliers that are not part of the approved vendor list, which can result in inconsistent pricing and quality of goods and services being procured. This lack of coordination complicates supplier management since it becomes challenging to track who is buying what from which suppliers. Additionally, this may lead to fragmented relationships with suppliers, as different employees may interact with different vendors without a coherent organizational strategy.

As a result of maverick spending, organizations may struggle to ensure compliance with contracts, maintain quality standards, and consolidate their supplier base, all of which hinder effective supplier relationship management. Thus, the impact of maverick spending creates obstacles in managing suppliers efficiently, making it the correct answer in this context.