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Leveraging S2P Technology for Enhancing Procurement

Digital technology is disrupting every industry and business function. Maturing technologies such as machine learning and the Internet of Things, and emerging technologies such as blockchain and virtual reality, are changing consumer experience and business operating model.

An organization needs to adopt digital technology and application to drive business innovation and competitiveness. Similarly, surviving in digital reality requires procurement function to move beyond bottom-line efficiency. This article discusses the Source-to-Pay (S2P) technology and explains how it  further enhances the procurement processes, that bring the best value for businesses.

The impact of S2P Technology

Source-to-Pay (S2P) covers the full spectrum of the procurement value stream. It encompasses category management, strategic sourcing, contract management, Procure-to-Pay (P2P) and supplier management. S2P technology consists of Robotic Process Automation (RPA), Artificial Intelligence (AI), Big Data Analytics and Internet of Thing (IoT), which natively build into a cloud system.

S2P technology does not only incorporate what P2P technology can offer, but it also includes a couple of advanced capabilities. These capabilities include automating sourcing activities, a solution to risk avoidance, action enabled data analytics and an improved intuitive supplier management module. Procurement that adopts this end-to-end technology will be empowered to streamline the effective procurement practices within S2P.

S2P technology also drives the following benefits:

  • Easy integration refers to a seamless effort to integrate with all primary Enterprise Resource Planning (ERP).
  • Compliance assurance refers to a unified platform that enables greater control over the S2P process and improves policy compliance.
  • Enhanced spend visibility refers to 360 views of spend visibility throughout the purchasing cycle.
  • Efficiency improvement refers to complete process automation that eliminates paperwork and increases productivity.
  • Cost reduction refers to an integrated process to avoid delays and errors.
  • Resource optimization refers to the automation of repetitive tasks that free up resources and focus on strategic tasks that drive more value.
  • A unified S2P platform accelerates digital transformation and elevates the procurement functions in generating more strategic value and drive tangible impacts within the organization.

S2P Technology in Category Management

Spend analysis functionality in S2P technology not only focusing on spend visibility but also developing trends and performing analysis to identify saving opportunities. It converts potential saving opportunities into structured saving projects with clearly defined milestones and performance metrics. S2P technology provides a single source of truth dataset of one category, capable of developing meaningful market insights on a real-time basis and turning supply market capabilities into values of business deals. 

Action-enabled analytics built upon a strong foundation of a data lake is minimal. This data lake comprises myriad data from internal and external data. Examples of internal data are from ERP system, supplier master data, payment and contracting information. Examples of external data are financial risks, social media news, indices, market disruption, tariff, etc. The effective data lake equips with the ability to dynamically adding a data source, automate extracting, transforming and loading process, ensuring all data are up to date and accessible at all time.

One of the advantages of S2P technology in category management is to retrieve instant price, benchmarking based on current market supply and demand, volume, currency position. Should-cost modelling generated based on supplier efficiency, labour rate, raw materials cost, the prediction of spending by categories, using richer insight to create an effective category strategy are no longer a mission impossible.

S2P Technology in Strategic Sourcing

Sourcing tool in S2P technology supports more than just publishing RFx and running auctions. It performs screening and shortlisting a new supplier or suppliers that already registered in the database and proposing relevant data to consider in an RFx proposal.

S2P technology can seamlessly run multiple lots of auction concurrently or in a pre-set sequence. An organization can create a standard sourcing template based on business guidelines and apply it for any sourcing events. It saves times and efforts in launching a new RFx event. Therefore, improving efficiency and productivity.

Cost cannot be the only focus in bid evaluation. The trade-offs between service level, quality, availability and supply risk are also the principle of considerations. S2P technology derives the total cost of ownership, considering volume discount, service level, and quality, also perform risk evaluation and recommend winning bid.

S2P technology enabling instant target price generation based on actual evaluation and market price benchmarks. This capability stimulates more competitions, helps the organization to achieve better pricing than what the market can offer.

Each sourcing event links to a savings project. At the end of every sourcing event, the actual performance is captured and measured against targets, and then the savings report is published to all stakeholders.

The S2P technology also provides an in-platform analytics dashboard that offers a 360-degree view of past and current sourcing events across the organization. It allows performance reviewed against the sourcing strategy and enables timely actions to drive better results.

Lastly, with the winning bids and suppliers, S2P technology can “flip” a sourcing event into a contract, ensuring it is structured based upon the agreed terms and bringing that spend under management.

S2P Technology in Contract Management

Contract management capability in S2P technology offers complete control over the documents throughout the entire life cycle. An intuitive system interface allows procurement and legal professional to export an appropriate standard template into the contract from a pre-approved clause library. The suppliers will have access to review and amend the document if permission granted. The platform also allows collaborative editing, redlining, side-by-side comparison and version control for stakeholders and attorney review. All the editing recorded are with a complete audit trail. Digital signatures from both supplier and internal stakeholders accelerate the contract administration and approval process. Thereby eliminating paperwork and improve efficiency. S2P technology has all the contract documents securely stored on a cloud platform in a central repository that allows accessibility anytime, anywhere, on any device. Integration with legacy ERP can be customized either for contract migrations or automatically captures contract made from the S2P technology platform into the legacy ERP system.

The intelligent dashboard provides real-time contract status from imminent, live, renewal to expired, show contract utilization and compliance, supplier performance metrics that enable early actionable alerts to those that need further attention. At the end of the contract administration, S2P technology allows the functionality to push the approved contractual terms and prices into online catalogues. It facilitates compliant purchases transitioning to the next P2P cycle.

S2P Technology in Procure-to-Pay

P2P capabilities in S2P technology provides functionality from item search to invoice matching and payment approval. Intelligent software enables a guided buying experience that allows users to select the best-fit channel for items that are in the requisition. User can shop directly from contract or blanket order and from hosted or punchout catalogues. Smart P2P tool also compares product or services across different suppliers, fills shopping carts and places an order in just a couple of clicks. After the sourcing event completed, the winning bid push into a purchase requisition seamlessly. High quantities or high-value items in the purchase requisition that require a sourcing event can be sent for RFx for biddings within the same platform, then push back to requisition to complete the P2P Processes.


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References

A.T. Kearney. (2019). “Nearly everything you’ve been told about procurement analytics is wrong”. Retrieved from https://www.kearney.com/procurement/article/?/a/nearly-everything-you-ve-been-told-about-procurement-analytics-is-wrong, accessed 20/3/2021.

Capgemini Invent. (2020). “Digital Procurement Research: 2020-2021”. Retrieved from https://www.capgemini.com/resources/digital-procurement-research-2020-2021, accessed 20/3/2021.

Chris Lim SiaoYian, DPSM. (2020). “Spend Data Analytics for Effective Procurement”. Retrieved from: https://publication.sipmm.edu.sg/spend-data-analytics-effective-procurement, accessed 20/3/2021.

Cynthis Wong Mei Kuen, ADPSM. (2021). “Key Success Factors for Sustainable Procurement”. Retrieved from SIPMM: https://publication.sipmm.edu.sg/key-success-factors-sustainable-procurement, accessed 20/3/2021.

GEP. (2020). “Unified Source-to-Pay Software”. Retrieved from https://www.gep.com/software/gep-smart/procurement-software/smart-source-to-pay-technology, accessed 28/3/2021.

Jaggaer. (2021). “Source to Pay: The Real Value for Purchasing”. Retrieved from https://www.jaggaer.com/blog/source-to-pay-the-real-value-for-purchasing/, accessed 28/3/2021.

Mckinsey& Company. (2021). “Five themes can help procurement shape recovery in the next normal”. Retrieved from: https://www.mckinsey.com/business-functions/operations/our-insights/five-themes-can-help-procurement-shape-recovery-in-the-next-normal#, accessed 29/3/2021.

Wong Kok Fu, ADPSM. (2019). “Internet-of-Thing (IoT) Applications for Digital Procurement”. Retrieved from: https://publication.sipmm.edu.sg/internet-of-thing-iot-applications-digital-procurement, accessed 20/3/2021.

Leong Sheau Fen, ADPSM
Leong Sheau Fen, ADPSM
Leong Sheau Fen has extensive years of experience in the industries of semiconductors, electronics, and Oil and Gas. She began her career as an engineer and later switched to procurement out of passion. Sheau Fen holds a Bachelor degree from Nanyang Technological University and she is a member of the Singapore Institute of Purchasing and Materials Management (SIPMM). She completed Advanced Diploma in Procurement and Supply Management (ADPSM) on April 2021 at SIPMM Institute.
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