A source to pay process, or S2P, is a more comprehensive and robust version of a procure-to-pay process. While procure-to-pay processes usually begin with identifying internal needs and submitting departmental requisitions, the source to pay process takes this a step further and adds a higher-level element into the procurement operation. Rather than beginning with departmental requests and ending with accounting procedures like payroll, the source to pay process begins with a supplier-side conversation.
While there are many similarities between the P2P and S2P, understanding the distinctions is important to building a comprehensive procurement strategy.
The general theory behind a source to pay processes is to utilize big data, sophisticated technology, and networking capabilities. Big data provides the necessary information that procurement teams need to make informed decisions and proceed with specific suppliers. Networking makes these supplier-conversations regarding contracts possible, and it’s all housed within sophisticated and elegant software. These elements are all aimed at bolstering and streamlining the procurement operation. Integrating a source to pay process creates powerful and long-lasting supplier relationships, offers deeper insight into product sourcing channels, and elevated transparency into the procurement process.
Benefits of an Integrated Source to Pay Process
As with procure to pay, there is a myriad of far-reaching benefits that result from an integrated source to pay process. These benefits range from boosting efficiency, to developing strong supplier relationships, and even shortening the delivery process in some cases. When well-developed, they can elevate a procurement team to the next level, leading to a natural growth in business and a significant increase in efficiency. In today’s industry, specifically, there is an emphasis on the strength of a company’s supply chain, as the world is rocked by the global pandemic. Source to pay processes are becoming a staple in the procurement industry as the benefits outweigh the cost.
Supplier Management: The backbone of any source to pay process is in the supplier management functionality. These allow for more in-depth supplier sourcing which in turn creates a more secure and reliable supply-chain that is less susceptible to a volatile market. Additionally, effective source to pay processes allow companies to filter out suppliers that don’t meet industry standards, regulatory standards, or company codes of conduct. The supplier risk-analysis is a feature that offers companies rich data on a supplier’s potential long-term stability, leading to informed, data-driven decisions. This feature considers elements like currency exchanges, interest rates, financial stability, current marketplace standings and much more.
Contracting: Another timesaving, efficiency-boosting feature that integrating a source to pay process provides is faster supplier communications and onboarding procedures. While more and more companies are beginning to recognize the importance of having a secured supply-chain – especially amidst the international pandemic – there is still a lot of unnecessary time and money spent on the supplier-negotiation process. With source to pay solutions, procurement teams can rely on automated tasks, algorithms, and big data to streamline these processes. This also can shorten the delivery cycle and create more efficiency throughout the entire product sourcing process.
Purchasing: Product purchasing is usually the last step in a source to pay process. However, it can be an arduous task to get there. Procurement teams are busy enough as it is without having to negotiate back and forth with suppliers. Having to supplement those supply chains with off-contract purchases is inconvenient, untimely, and expensive. A source to pay process ensures that established supply-chains can cover the bulk of demand and enable procurement teams to more swiftly on-board new suppliers when it does become necessary to make a unique off-contract or one-time purchase.
Getting the most out of your procurement team means equipping them with the most powerful and updated software available. ProcurePort offers robust and feature-packed procurement solutions. The software meets needs in the source to pay and procure to pay processes, enabling companies to streamline procedures related to product sourcing and procurement, ultimately leading to greater efficiencies, higher savings, and a more effective procurement team.