So, what is s2p?
Glad you asked.
Source to pay is one of the core processes alongside procure-to-pay that procurement teams rely on to ensure raw materials and required services are available as and when needed.
Understanding the S2P life cycle is vitally important as it will assist you in devising a strong procurement strategy, improve operational efficiency, spend analysis, mitigate costs, and streamline operations.
Defining Source to Pay (S2P)
When it comes to defining the meaning of what is s2p we don’t have to look far.
The Chartered Institute of Procurement & Supply (CIPS) has provided us with a clear definition.
Source to pay is a comprehensive procurement process that includes strategic sourcing, purchasing, supplier management, performance management, spend management, and accounts payable.
The process can be subdivided into five major steps:
· Sourcing suppliers
· Vetting vendors
· Contract management
· Accounts payable
Let us explore in greater depth each of these steps.
1. Sourcing Suppliers
This is the very first step in the source-to-pay process.
Which suppliers will you engage? Which vendors have the best rates? Who can deliver on time? These are just some of the questions that procurement teams need to be answered.
In order to obtain answers to these queries, they issue out Requests For Information (RFIs), Requests for Proposals (RFPs), and Requests for Quotes (RFQs).
Thanks to ProcurePort, procurement teams can engage a host of vendors through e-sourcing RFX templates and receive answers via a centralized portal.
After receiving information from the various vendors, procurement teams move onto the next step which involves inviting suppliers to an e-auction.
These auctions have a two-fold purpose: to establish the vendors’ price points for their raw materials and or services, and also to discover how competitive suppliers can be.
It is clear to see that a dedicated platform is required in order for this bidding to take place. Fortunately, such platforms exist.
Robust reverse online auction software such as that provided by ProcurePort certainly makes life easier. This solution gives procurement teams auction visibility, real-time bidding access, and automatic vendor scoring.
3. Vetting Vendors
With the e-auctions completed procurement teams can sit down to aggregate scores and evaluate the results.
Suitably qualified vendors are then chosen based on the information they supplied in their RFx proposals and their price points as established during the e-auctions.
What are procurement teams looking for when evaluating vendors?
The quality of their raw materials, reputation, pricing, whether minimum order quantities can be delivered, and ease of doing business just to mention a few metrics.
A list of good matches is then curated and procurement teams move forward with contract negotiations.
4. Contract Management
Before issuing the contracts, the procurement teams may wish to have final discussions to ensure that they are on the same page with the identified vendor(s).
This negotiation phase and the eventual signing of the contracts is part and parcel of another procurement process known as contract management.
Contracts are drawn up that put down in writing the services and or raw materials the supplier will provide, when these materials are needed, delivery dates, payment terms and conditions, and clauses about a breach of contract.
Get an upper hand when it comes to contract management by using ProcurePort’s contracting software.
5. Accounts Payable
The last step in the s2p process involves the vendor supplying the goods to the buyer and sending an invoice.
The buyer inspects the goods and if all is well forwards the invoice to the finance department for payment.
Source to pay is a process that’s foundational for enterprises. Having a good grasp of what is entailed in S2P gives procurement teams the ability to come up with strong procurement strategies.
The more you know about source to pay, the better your sourcing efforts.
What’s more, you don’t have to rely on legacy systems on your procurement journey.
With partners like ProcurePort who provide robust procurement solutions such as supplier management software and RFX templates, you can simplify the overall s2p process.
Get more done efficiently.
If you would like to discuss source to pay software with a consultant, or to schedule a demo of our solutions, contact us today.