The procurement process represents a pivotal function that directly impacts an organization’s bottom line. Businesses across industries employ source-to-pay solutions to identify and align with key suppliers, purchase goods, monitor procurement metrics, and manage spending. Automating and digitizing the source-to-pay activities can help businesses maintain strict budgetary control and efficient spend management while addressing the sometimes-troubling aspects of operations, purchasing, and supply chain management.
Digital source-to-pay offers comprehensive, technology-driven processes that organizations use to manage their procurement operations, from identifying sourcing needs to final payment execution. This end-to-end process involves several stages, all facilitated by digital technology. Digital source-to-pay services holistically integrates all aspects of an organization’s procurement operations. It enhances efficiency, transparency, and control.
Getting Started with Digital S2P
Many organizations understand the benefits of digging out from the mounds of paperwork stifling their productivity. Transitioning from manual source-to-pay, however, can be daunting. Businesses can start slowly, even digitizing a few links in the S2P chain at a time, integrating new components as they progress will go a long way in de-siloing your company:
- Start with a compelling business case detailing the hard cost savings and soft benefits that can be achieved. This will encourage organization-wide buy-in.
- Assembly your team and resources, including source-to-pay software. Select a platform that best fits your needs, infrastructure, and budget.
- Integrate your S2P platform with your ERP and other systems to establish a centralized platform for all procurement-related activities.
- Identify the paths of least resistance to digitation. Accomplish these tasks quickly to demonstrate quick wins and build momentum.
- Collaborate with suppliers to emphasize the mutual benefits of digitization such as shorter payment cycles, improved ordering, and more precise communication. Explore the possibility of sharing digital platforms with key supply chain partners.
Whether you outsource your digitation project to a source-to-pay services partner or undertake the mission internally, every aspect of the S2P workflow can be a goldmine of cost saving, productivity, and efficiency.
- Supplier Selection: Digital sourcing platforms provide intelligent filters to search supplier databases and shortlist vendors that meet specified criteria for capabilities, certifications, pricing, lead times, and other metrics. Built-in questionnaires and self-service supplier portals facilitate online response submissions that can be graded against requirements with RPA.
- Requisition: In a digital scenario, requestors simply select the items they need from pre-loaded catalogs of contracted supplies. Automated validations check for duplicate orders, preferred suppliers, lower-priced vendors, and required approvals before submitting to workflow.
- Approval: Source-to-pay software route requisitions to designated managers based on factors like budget codes, spend limits, categories, and other business rules. The system alerts approvers when requests are pending so they can sign off digitally.
- Ordering: Connecting digital requisitions to supplier ERPs and e-procurement modules allows touchless order creation and transmission. Converting approved requests to purchase orders eliminates rekeying time and errors.
- Delivery & Invoicing: Integrating with supplier electronic data interchange and tracking provides real-time transparency into shipment states. Digital S2P matches goods receipt data from RFID/barcodes on shipment items to invoices and POs to confirm accuracy and trigger invoices or flag discrepancies – no more three-way manual matching.
- Payment: Digital source-to-pay aligns with finance and accounting software to enable touchless, on-time transmission of supplier payments. Invoices, payment terms, available discounts, and other data flow from procurement to accounts payable so discounts can be applied.
As businesses strive to gain a competitive edge, the need for digitizing the S2P process becomes increasingly evident. Businesses that hesitate will sacrifice visibility and control over procurement operations. Supplier relationships may suffer, workflows will remain sub-optimal, and rogue spending could spin out of control. Here’s what’s at stake:
- Higher Cost: Eschewing the use of digital data analytics, strategic sourcing events, supplier discovery platforms, and spot buying tools doom organizations to paying higher unit prices and total cost of ownership. The inability to track spending and identify opportunities to negotiate better contracts, consolidate suppliers, and shift volume to lower-cost vendors directly impacts the bottom line.
- Contract Non-compliance: Without access to source-to-pay digital platforms and software, organizations cannot access contract templates and clause libraries. The result is non-standardized agreement language and processes and disintegrated catalogs and contract value limits that allow downstream employees ignore negotiated terms by extending purchases beyond approved items, prices, and vendors.
- Process Inefficiencies: Manual workflows and purchase order generation drag the buying process so employees must hit the paper trail to cross-check which items and vendors are off-limits. Un-digitized purchase orders must be re-entered into inventory management and accounting applications, introducing tedious and repetitive manual input.
- Human Error: Manual source-to-pay processing creates significant workload for AP teams, which inevitably leads to keying errors in purchases and invoice processing. Digitizing the source-to-pay process drastically reduces exceptions by removing manual data entry and paperwork. This improves accuracy and frees up employee time.
- Cash Mismanagement: Manual source-to-pay forgoes solutions like tools like supply chain finance, dynamic discounting, and card programs that optimize cash flow and capture early-payment discounts. Manual intervention is required when suppliers email rather than submit invoices digitally. Reconciling invoices, purchase orders, and receipts by hand is a recipe for disaster.
SDI has developed a hybrid S2P platform that leverages our supplier partners’ entire product lines and processes. No matter where your organization sits on the source-to-pay maturity scale, we can assist in introduction the automation and efficiencies that clear the path to maximum strategic value. We can streamline your MRO procurement, rein-in tail spend, and maximize compliance with contracts and your specific sourcing rules.
Contact SDI to learn how we can deliver all the benefits digitized S2P has to offer.