This may be a part needed for a new product line but it can also be the need for new or better pricing or better terms than what exists with current suppliers. DemandĪ business need has been identified. Source-to-pay goes beyond submitting and collecting RFPs to prospective suppliers or vendors-it supports a strategic identification process through data analytics, promoting business needs before they impact operation and improving the selection process before decisions are finalized. Each new business need kicks off a process that requires hours of manual input and potentially forces procurement teams to compromise on availability through a current supplier base rather than engaging in strategic sourcing. These initial steps in the sourcing process are traditionally manual, involving complex RFx compilation and review. Source-to-pay adds on the steps leading up to procurement by utilizing automation for vendor sourcing and selection, in addition to existing procurement automation, providing a competitive advantage in the digital age. Procurement automation focuses on the purchase order cycle, fulfilling the steps from order submission to invoice processing. Source-to-pay and procure-to-pay operate in tandem. How is source-to-pay different from procure-to-pay? With the use of software that relies on big data, technology, and digital networks, S2P dramatically improves efficiency when choosing, negotiating with, and onboarding new suppliers or vendors. Specifically, S2P seeks to automate laborious manual steps in the sourcing process. Source-to-pay (S2P) is the end-to-end process of assessing current vendors and vetting new vendors through automation, taking strategic applications of digital procurement further by including sourcing. As consumer expectations for fast turnarounds increase, businesses need faster sourcing to meet demand. In fact, it has been developing for the last twenty years following a published article by the ERP platform Oracle who saw e-procurement as an opportunity for all businesses to streamline interrelated activities around procurement that otherwise relied on slow-moving practices. Research and development, quality assurances, negotiations, language barriers-each of these factors can contribute to sourcing timeframes.įor these reasons, businesses turn to automation and big data to overcome and minimize less than ideal lead times, bringing products and services to clients faster and more efficiently. Sourcing a new vendor or product has traditionally occurred over long windows of time, sometimes years.
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