Spend channels are essential methods for purchasing and receiving goods and services at the right price and on time. Different categories of purchases require distinct approaches. For example, if ZZZ, Inc. needed to buy computer equipment for all their staff, they could choose to purchase it outright from their catalog, use a statement of work, or enter into an online agreement. These three options are examples of spend channels.
Spend channels are crucial for establishing an efficient and effective Procure-to-Pay (P2P) process. They help organizations achieve savings through the enforced utilization of contracts, standardize and streamline transactional processes, enhance spend visibility, and improve control and compliance. Other examples of spend channels include Material Requirements Planning (MRP), Purchase Orders (Catalog, Free Text, Limit Item, Service Order), Non-PO, and Outline Agreements.
Selecting the appropriate spend channel is as important as choosing the right supplier or product to ensure efficient and effective procurement of goods and services. The Spend Channels card displays how each category is purchased.
Alex, the lead category manager, can define how a particular channel impacts the purchasing process of a category or subcategory. The category manager administrator is responsible for defining the departments for the categories and subcategories. They can search for a specific spend channel by entering the name, department, or spend channel in the search bar. Additionally, they can use the filter icon to search by department or spend channel.
In this simulation, you’ll assume the role of Alex Reed, the lead category manager. Alex has been assigned the task of creating the Consultancy Service Spend Channel for a Statement of Work.