Enhancing Process Compliance with Buying Channels

Working on many different Business cases every year, I noticed a general trend in getting a grip on tail spend management. The main issue is always the same and in a nutshell: lack of control due to lack of visibility due to lack of defined and followed process due to lack of compliance due to…  lack of (appropriate) Buying Channels!

So, what are those buying channels?

buying channels are variation of a generic , one-fits-all « S2P process ». Buying channels are customised & specific S2P processes providing the right balance between efficiency and control. Buying channels are adapted to specific segments of spend, segments being defined by the spend category, its size, occurrence, price volatility etc. Buying channels, to be successful, need at least to be adopted by requestors. Tracking requestors’ satisfaction with proposed buying channels is key for two reasons:

  • Ensure best Compliance,
  • Continuous improvement

There are 4 main types of buying channels:

“Hands free” buying  channel: This is the most efficient channel, to be enabled when processes don’t require procurement involvement since the request is either issued by self service purchasing or by an automatic MRP process

  • Catalogue purchasing
  • MRP-run in ERP system
  • Contract call-offs by an e-Procurement system

Customised Buying channel : This is the second most efficient channel, to be used when appropriate category specific solutions (either in-house or 3rd party) are providing a customized solution fully adapted the the specificities of the Category with a right balance between control and efficiency

  • Temporary labor management systems
  • Travel management systems
  • Vendor Managed inventory systems

Buyer assisted Buying channel : This should be the channel by default if you want at least to keep spend visibility. This is when no automation has been implemented. Category Managers shall be involved to identify the right source of supply, preferred suppliers, black-list suppliers, fix a price and/or issue a purchase order to the supplier. Sourcing activities range from simple spot buys to strategic sourcing

  • Free text request in ERP or e-Procurement system
  • Request based on Framework orders
  • One off purchase like capital expenditure for example

Valid buying without PO channel : This channel is used when the request value is below a certain treshold or configured as such in the ERP system

  • Valid Purchases without PO invoices
  • Pcards
  • Expenses
  • Office supply

 

As a mean of illustration, you’ll find below a developped list of different and effective buying channels:


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