Spot Buy: What It Is and How to Manage It

A spot buy is a one-time purchase outside the catalog and framework agreement. The need arises at short notice, the item is not part of any stored range, and often the supplier is new to your company as well. Individually, these purchases are small. Taken together, however, they tie up a lot of work in procurement and accounting, because every single purchase goes through the full ordering process.

This article explains where spot buys come from and how companies usually handle them today. We then show how you can decide in three steps which route fits which order.

At a Glance

• A spot buy is a one-time purchase for which there is neither a catalog nor a framework agreement.
• Typical triggers are unplanned spare parts, projects, special parts and shortages at the regular supplier.
• If you create a new supplier for every spot buy, each one-off order costs around €500 in process costs.
• Through a fixed creditor, spot buys run without new supplier onboarding, with an invoice for each order.

What Is a Spot Buy?

The term comes from English and is related to the spot market. "Spot" stands for an immediate purchase at the current price, without a long-term agreement. In procurement, a spot buy therefore means a purchase that happens exactly once, or so rarely that a fixed supply relationship is not worth it.

Two routes work without a spot buy. Your users order catalog items via punchout directly in the procurement system. Your procurement team negotiated the prices beforehand. With a framework agreement, the supplier and terms are also fixed, even if the item is not in any catalog.

Spot buys also occur with raw materials and production material. This article covers indirect procurement. That includes everything that does not go into your own product: spare parts, tools, services. In German usage, spot buys are usually called one-off requirements or one-off orders. Our article on process optimization for one-off requirements describes why these orders in particular create so much work.

When a Spot Buy Arises: Four Typical Triggers

Spot buys arise where planned demand ends, and in practice four situations come up particularly often:

1. Unplanned spare parts. A machine breaks down, and the right part is not in stock. Maintenance needs it quickly, often from a dealer your company has never worked with.
2. Projects and events. A conversion, a trade fair or a pilot requires material that nobody needs afterwards.
3. Special parts and custom-made items. Some parts are only available from a single provider, others are made by a workshop to a specific drawing.
4. Shortages at the regular supplier. If the framework agreement supplier cannot deliver, the item has to come from somewhere else at short notice.

In all four cases, the order does not fit into a catalog or framework agreement, because the requirement is new or one-off, or the agreed supplier cannot deliver.

How Companies Handle Spot Buys Today

There are usually three routes for spot buys.

Create a new supplier. Procurement obtains a quote, master data management sets the supplier up as a creditor, and accounting checks and pays the invoice. For a purchase of a few hundred euros, your company thus goes through the full process of a new supply relationship, even though it often never needs this supplier again.

In the conventional process, such a one-off order costs around €500 in process costs, as our comparison of the routes for one-off orders calculates.

Credit card. With the company credit card, the purchase is quick. However, it bypasses the order in the system. Accounting therefore has to collect and assign the receipts afterwards, and card limits restrict what can be bought this way.

CpD account. A CpD account, a one-time vendor account that collects suppliers used only once, saves a separate master record. In return, it lacks the controls attached to a master record, such as the sanctions screening of the supplier and the check of its bank details.

If the official route takes too long, departments often buy completely outside procurement. Our article shows how to prevent maverick buying without making purchasing harder for your users or checking every purchase individually.

Spot Buy, Catalog or Framework Agreement: Deciding in Three Steps

Two questions in a fixed order clarify whether an order really is a spot buy, and the diagram shows the three steps using a purchase requisition from maintenance as an example.

Step 1: Is the item in the catalog? If yes, the user orders via "Catalog (punchout)" directly in the procurement system. That is the cheapest route, because price and supplier are already fixed.

Step 2: Is there a framework agreement? If so, the order goes to the "Framework agreement supplier", even if the item is not in the catalog, because the agreement already fixes the supplier and terms. Framework agreements often cover entire product categories. If the framework agreement supplier cannot deliver, the order still moves on to step 3.

Step 3: No to both. Then "Otherwise: spot buy" applies. From here, the route determines the effort: "Create a new supplier", "Credit card", "CpD account" or an order through a fixed creditor.

The three steps also show you where a catalog or framework agreement is missing. If the same item turns up as a spot buy several times a year, it is no longer a one-off requirement and belongs in a catalog or framework agreement.

How Spot Buys Run Through a Fixed Creditor

The fourth route takes the effort out of the spot buy without removing controls. In the Single Creditor Model, Pedlar, the service provider behind the model, is this fixed creditor:

• Set up once as a creditor: Pedlar is set up in your ERP as a creditor once. You no longer create new suppliers for spot buys.
• Order, payment and invoice through Pedlar: Pedlar orders from the supplier in its own name and pays it. The supplier delivers directly to your site.
• Invoice per order: You receive an invoice from Pedlar for each order. Your contract partner is Pedlar, including for returns and warranty.

You still choose the item and supplier yourself and send the order by e-mail to bestellungen@pedlar.de, with the quote attached or a link to the product. If your company uses SAP Ariba, Coupa or another system with cXML or OCI punchout, you order through Pedlar Intake directly in the procurement system.

In Pedlar Intake, the shopping cart follows your approval rules like any other order.

Pedlar takes over the sanctions screening that the CpD account lacks. Every night, Pedlar checks its suppliers against the official sanctions lists of the EU, the US and the UK.

The table compares the four routes for spot buys side by side.

According to Pedlar's calculation, this reduces the process costs of a one-off order by up to 85%. Our article on ordering without supplier onboarding shows the process step by step.

Frequently Asked Questions

Is every spot buy maverick buying? No. A spot buy is a legitimate purchase. It only becomes maverick buying when it bypasses procurement rules, for example without an order or approval.

What is the difference between a spot buy and a one-off order? In practice, both terms mean the same thing. Spot buy is the English technical term, while one-off order and one-off requirement are more common in German procurement.

Does every spot buy need a new supplier? No. With a fixed creditor like Pedlar, you can also order from new providers without setting them up in your ERP.

Who approves a spot buy? Your internal approval rules determine that. If you order through Pedlar Intake, the shopping cart goes through approval in your procurement system like any other order.

Find out how the Single Creditor Model handles spot buys without new supplier onboarding: Book a call →