The ultimate source to pay (S2P) process guide for 2023

1
(No Transcript)
2
The Ultimate source to pay (S2P) process guide
for 2023
Procurement in any business has a direct
influence on the overall savings. A streamlined
procurement procedure makes it feasible to buy
high-quality products at affordable prices. The
procurement source-to-pay process includes steps
including vendor evaluation, contracting,
supplier identification, and payment for products
provided. 
What is Source to pay?
The source to pay process (S2P) comprises of all
the procurement tasks that involve the vendor and
the organization. The initial phase in the
source-to-pay process is choosing the best
supplier, and the final step is paying the
provider. The entire sourcing and procurement
process for identifying, assessing, and
negotiating with suppliers of goods or services,
finalizing contracts with vendor payment, is
another way to define the source to pay
concept. The source-to-pay process involves
tactical procurement tasks like spending
assessment, purchasing, contract management, and
supplier management as well as concluding tasks
like purchase order processing, electronic
procurement, accounts payable, invoice
automation, and payment processes.
3

• When is a source-to-pay system used by a company?
• A source-to-pay system might be helpful for
  organizations that need to evaluate new vendors
  who offer better purchasing terms, lower costs,
  or new commodities that are not supplied by
  existing vendors.
• What are the advantages of a source-to-pay system
  for your business?
• The benefits of a source-to-pay system are
• Centralizes the whole supply chain to increase
  the efficiency of procurement
• Creates a single sourcing platform that combines
  key procurement processes
• Promotes adherence to regulations, contracts, and
  procedures
• Aids in improving the consistency and accuracy of
  business forecasting
• Facilitates accurate expenditure analysis
• Collaboration between suppliers and businesses is
  improved
• Assesses supplier performance against standards
  and benchmarks such as pricing, deliveries,
  invoicing cycle time and other crucial
  performance indicators.
• A streamlined source-to-pay procedure improves
  spending and procurement visibility. Source to
  Pay combines purchases across business units
  rather than treating procurement as a collection
  of unrelated jobs in order to boost performance,
  create business value, and enhance expenditure
  analysis.

4
Standard Source to Pay process flow Source-to-pay
process can be laborious and time-consuming
without a sound plan. The source-to-pay life
cycle includes the processes listed below
5
1) Discovering Suppliers Finding potential
suppliers is the first phase in the S2P
lifecycle. Researching the market extensively is
necessary to select the ideal supplier. The
sourcing team members will send out the RFIs
(requests for information), RFPs (requests for
proposals), and probably RFQs (requests for
quotes) to prospective vendors. Some businesses
utilize templates to quickly collect vendor
information. E-auctions are a commonly used
strategy that sourcing teams use to find the
greatest prices on products and raw materials.
E-auctioning is a more efficient way to find
reputable and cost-effective vendors. 2)
Evaluation and Screening of Vendors The RFX
vendor data and the e-auction results aid the
sourcing team in screening the vendors to
identify good matches. Finding the right balance
between product affordability and making a profit
is the key to effective sourcing. For the
business to turn a profit, the raw materials must
be affordable. Suppliers are assessed based on
their pricing, minimum order quantities, delivery
timeframes, and other criteria in addition to
their quality. Negotiations happens once the
sourcing team selects the ideal buyer. 3)
Contracting and Negotiating The sourcing team
may choose to work with only two or three vendors
after analysing the vendor information from
multiple vendors. The goal of the contracting and
negotiation process is to select the best
provider. Businesses are constantly looking for
methods to keep production costs low throughout
the supply chain, and the ideal place to do so is
during the sourcing stage. Purchasing costs for
goods can be significantly reduced when larger
quantities are sourced. Contracts must be issued
after a specific price and order volume
evaluation.
6
4) Purchase Order According to the agreed upon
cost and quantity of the items, the purchase
order is issued. The purchase order becomes a
legal document once the vendor accepts it. It
includes every clause of the agreement between
the business and the vendor. 5) Products
Delivery and Payment This completes the
source-to-pay procedure. To guarantee that the
received items are in accordance with the
purchase order, the information in the goods
received note is compared to that in the PO. At
this point, the quality of the received goods is
also examined. Payment to the seller is processed
once the verification is finished. As per the
business requirements, a shipping and payment
process is set up to make sure verification and
on-time payment and delivery. The timely delivery
of raw materials and the continuity of production
operations are ensured by adhering to a delivery
and payment schedule. The complete source-to-pay
process can be efficiently automated with cloud
procurement software, which saves time as well as
effort. An extensive range of functions is
provided by a source-to-pay software throughout
the procurement cycle.
7
Automating the Source to Pay Cycle Nearly half of
the source-to-pay process might be efficiently
automated using current technologies. By removing
duplication and redundancy, the numerous
source-to-pay products on the market are intended
to streamline the source-to-pay process. The S2P
solutions contribute to higher savings, lower
prices, and more chances to investigate new
value-add sources. As per the McKinsey reports,
digitizing the source-to-pay process can decrease
spending by almost 3.5. The scope for automating
the complete source-to-pay procedure is about 56
of the tasks in the workflow. The more
transactional aspects of the S2P process,
especially the placing and receiving of orders,
were determined to have the greatest potential
for automation. Around 88 of the tasks can be
digitized and about 93 of the activities in
payment processing. Additionally, 47 of the
supplier selection workflow and negotiation
activities can be automated. An important
business decision is selecting the appropriate
automation technologies for the
source-to-contract process flow. The first and
most crucial step for businesses is to decide
which processes of the procurement process can be
completely automated. For each task in the
source-to-pay process, it is important to
determine the level of automation that is
currently in place and to correlate it to what is
technically feasible. The team can calculate the
benefit of bridging this gap. The analysis is
based on changes in compliance, cycle durations,
and payment conditions at each step, as well as
the number of tasks that can be automated.
Businesses that are considering automation should
make careful and targeted decisions on using the
right technology for digitizing the S2P workflow
because the digital world is always changing.