ERP or Source-to-Pay Platform: A Decision-Making Guide

Companies have traditionally been using enterprise resource planning (ERP) software for procurement, but ERP doesn’t live up to changing business circumstances and a dynamic marketplace.

To resolve these challenges and meet the demands of today’s procurement operations and supply chain management , chief procurement officers need a more effective procurement software platform : source-to-pay.

If you are a procurement leader and are pondering putting in place an enterprise procurement software platform, bear in mind that a unified procurement system scores points over ERP software in several ways.

According to a Forrester expert interviewed by GEP, a source-to-pay system, or supplier value management software (SVM), offers several advantages over ERPs.

Many companies use ERP systems for process efficiency and for coordination between their business functions. For organizations striving to be more resilient and to grow in a challenging environment of supply chain disruptions , functions such as sourcing and procurement require a depth and functionality that go beyond what a typical ERP system provides.

Greater Visibility: Real-Time Access to Procurement Data

ERPs offer some off-the-shelf procurement functions that promise to get the job done.

However, on closer analysis, it becomes clear that most ERPs are designed to provide basic procurement capabilities only.

ERPs struggle to generate accurate spend analysis and visibility reports so important in procurement to identify savings opportunities.

For instance, for ERP users, even an urgent report that a CPO needs to have visibility of the total spend with a supplier isn’t easy to come by for a contract renewal. This is where a modern SaaS-based platform is required to fill gaps in purchasing functionality. Modern platforms outside of an ERP produce reliable spend analytics through strategic sourcing and maverick spend reduction, as well as by identifying cost savings opportunities in real time.

A supplier value management or source-to-pay software , an example of such a platform, provides real-time data on spend, savings, suppliers, bill of materials, etc. This enables procurement to get deeper insights from across all sourcing processes for faster and accurate decision-making. S2P systems offer several advantages over ERP systems in terms of strategic sourcing . They offer a more sophisticated event management system than ERP systems.

This includes features such as configurable response templates, which allow procurement teams to create templates that suppliers can use to respond to requests for information (RFIs) or requests for quotations (RFQs). This can save time and effort for both procurement teams and suppliers. S2P systems offer a more efficient and effective e-auction system than ERP systems.

This includes features such as real-time bidding, allowing suppliers to bid on contracts in real time, a process that can help to ensure that the best price is secured for a contract.

If you are seeking to improve the efficiency and effectiveness of your strategic sourcing processes, then an S2P system would be worth considering.

More Effective Supplier Relationship Management

An S2P platform helps procurement teams to manage supplier relationships more effectively. It provides a 360-degree view of suppliers, including their performance, compliance, and certifications.

This allows enterprises to make better decisions about which suppliers to work with and how to manage their relationships. An S2P platform provides a collaborative platform where procurement teams can work together with suppliers. This can help to improve communication and integrity and resolve issues more quickly. An S2P platform can also automate many of the tasks involved in SRM. This can free up procurement teams to focus on more strategic activities.

Ultimately, the decision of whether to choose an ERP or S2P system is complex. However, by understanding the basic differences between these two kinds of platforms, you can make an informed decision that is appropriate for your company.

To know more about how a modern procurement platform outside of ERP systems enables organizations to adapt to a dynamic marketplace, download our bulletin, ERP or Modern Source-to-Pay Platform?