What Slows Down Your Source-to-Pay Process (And How a Unified AI-Powered Technology Can Help)

Does your business rely on different systems for different procurement processes? 

One system is designed for sourcing and supplier selection while another is used for contract creation and management. And yet another system is designed for evaluating supplier performance. 

Meanwhile, accounts payable uses a different system for checking and processing invoices. 

Why do you have to work with multiple systems? When these disconnected systems show different data, which one can you trust? And perhaps most importantly, how can you get complete visibility of the end-to-end process from sourcing to payment? 

You need a system that can connect all these disparate processes. That’s where source-to-pay (S2P) technology comes into play. 

What is the S2P Process? 

S2P covers the entire scope of procurement operations -- right from demand identification, sourcing and supplier selection to contract management, supplier performance management, invoice processing and payment. 

The integration of sourcing, procurement and accounts payable enhances transparency in the process and allows different teams to seamlessly work together. 

A strategic extension of procure-to-pay (P2P) that begins with the requisition of goods and services, S2P begins much earlier in the procurement cycle. 

It includes all activities that are done between identifying a need and closing a deal with a supplier. This can include sourcing, finding and evaluating suppliers, negotiating prices and contract terms, and procurement. 

Key Challenges in S2P 

Manual, time-consuming tasks and approvals slow down the S2P process, with different teams working in functional silos. 

Sourcing, procurement and accounts payable teams often work on different systems and data. This means that data is scattered across multiple systems and there is a high possibility of inconsistencies and errors. 

Identifying the right supplier is a key challenge in the process. 

When processes are manual, this can involve a lot of paperwork and assessment of proposals and quotations. 

Managing a diverse supplier base also poses a challenge for teams. Managing supplier contracts, monitoring performance as well as onboarding new suppliers can be overwhelming and take up a lot of time for internal teams. 

When suppliers share invoices, they are checked and validated against original purchase orders and goods receipts. Slow approvals and a comprehensive matching process often leads to payment delays and can hurt relationships with suppliers. 

P2P or S2P: What is Right for Your Business? 

P2P is more suited for businesses that source their goods and services from the same suppliers. However, if you are looking to move away from a static list of suppliers, S2P can be the right choice for your business. The reasons for changing suppliers can be varied. You may be looking to diversify your supplier base or onboard new vendors for some raw materials. 

With a S2P process, you can drive healthy competition and encourage suppliers to offer attractive pricing and terms. You can also engage in post-purchase evaluation and evaluate supplier performance against predefined KPIs such as pricing, delivery, product quality and compliance. This can help you determine if suppliers are performing as per expectations. 

Leveraging S2P Technology 

Advancements in technology have allowed businesses to automate the S2P cycle. For example, technology can perform several routine tasks in supplier onboarding. During payment processing, optical character recognition (OCR) can scan and transform paper invoices into their digital versions and expedite approval and payment. 

From sourcing and supplier selection to contract management, inventory management and invoice processing, S2P can streamline end-to-end workflows and eliminate the need for separate modules for specific functions. There is one platform, one database and one collaborative workspace for all users. 

By bringing together all sourcing and procurement processes in a single integrated solution, S2P solutions enable seamless flow of data across the source-to-pay process, enhancing visibility into upstream and downstream processes. 

They can quickly analyze complex datasets and provide valuable insights to improve processes. You can gain comprehensive visibility into spend data and identify potential savings opportunities. 

With an end-to-end procurement technology platform, you can get more value out of your contracts. As the contract becomes an inherent part of the process, there is little chance of deviation. 

You can work closely with your suppliers and identify potential bottlenecks before they can impact operations. You can also create new templates or models for sourcing without having to start afresh and do everything from scratch every time. 

How to Succeed 

The deployment of a unified, easy-to-use S2P technology is vital to project implementation. But, in many ways, the success of an S2P model will also depend on the optimum involvement of different teams within the business. The right level of cross-functional collaboration and involvement is as crucial to successful implementation as choosing the right technology and external suppliers. 

To achieve such a level of collaboration, you must clearly define the project objectives at the outset, showcasing the benefits of S2P software to all internal teams and stakeholders. 

The adoption of the right S2P technology can provide the right start to the project. At the same time, you need to prepare the workforce, build initial momentum and offer technical support throughout the transition.