Leader: How much do you spend?

Half of businesses surveyed in new research this week admitted they only have minimal control over who buys what within their organisation and that millions are being wasted on spending 'black holes'.

It seems that while the procurement and purchasing department is busy saving precision pennies on bulk staple and pencil orders, vast unknown sums are being thrown at consulting services, travel, and temporary staff by individual heads of departments such as marketing and IT.

The problem is that the purchasing department not involved in these decisions and that makes its job of controlling expenditure across the company more difficult.

Admittedly the survey was sponsored by e-procurement company Ariba, which rather handily claims to have a solution to the problem, but the company, along with the London Business School says it is a business process issue that first needs to be resolved. And it all comes down to internal politics.

The purchasing department often does not have a representative on the board, where the CEO prefers instead to listen to advice from his colleagues in finance, sales and marketing. Meanwhile the IT department doesn't talk to purchasing either, which means that like it or not the head of purchasing usually has to make do with making sense of data from the ERP system.

Which all sounds like a bit of a mess – not to mention a waste of money that is costing firms hundreds of millions of pounds each year, according to the research.

The lesson is that the purchasing department needs to be more involved, and at a higher level, in buying decisions. That does not necessarily mean a specialist or best-of-breed e-procurement system is the answer. While it undoubtedly it may benefit some businesses, the priority should be to sort out the business processes around buying decisions across the organisation.

Then again when you find out exactly how much you have been spending on consultants you might just wish you hadn't.