Reference no: EM133351683

The eProcurement department for a large electronics distributor had a customer who funneled 90% of their spend with the supplier through their eProcurement system. This is an incredible percentage of spend through eProcurement; however, the company wasn't satisfied. They wanted 100%. This customer had one dedicated category manager assigned to them. As she reviewed the purchases from them, she discovered that certain engineers were consistently buying the same items outside the eProcurement system. When the category manager approached one of the engineers, the conversation went something like this:

Category Manager: I see that you purchased this item outside of our eProcurement system.

Engineer: Yes, yes I did.

Category Manager: Why?

Engineer: I called our sales representative and was able to negotiate a better price on the item. I saved $100.00 on the item, but since it was a different price than the one listed in our eProcurement catalog, I had to process it manually. Isn't that great that I was able to save $100?

Category Manager: Yeah, great. It cost the company $300.00 to manually process the order to achieve your $100 in "savings."

What would be the best option to eliminate the need for this maverick spend?

Create C-level review of all non-contract or outside supplier network spend.

Design a system to allow the engineers to electronically request a quote for items through their eProcurement system and then add that quoted item to their electronic catalog.

Cut off all spending from Engineering.

Nothing, outside-the-box ideas drive innovation and result in enormous successes.