What is the source-to-pay process?
The source-to-pay process is an extension of the procure-to-pay process. It begins as an organization attempts to find suppliers. This process also involves strategic procurement activities, including sourcing, spend management, risk assessment, contract management, etc. It concludes as payment is dispatched to a supplier.
The S2P process initiates as a demand to enlist an external supplier arises. The procurement team identifies and locates the potential vendors after ensuring they comply with the organization’s standards. This involves looking in detail through their past performance and the risks associated with them. The suitable suppliers are then consolidated, and the company invites them to raise bids through RFQs or RFPs.
Negotiation and contract management are key to sourcing activities as well. Procurement teams have to identify suppliers of value that perform well and work toward establishing long-term, mutually beneficial relations with them. Performance tracking through KPIs is also essential in the S2P process. Vendor management software brings all such activities to one platform and automates them.
The rest of the S2P process includes the P2P cycle: PRs are raised, POs are opened to selected vendors, three-way matching is performed after the receipt of goods, and the payment is dispatched per the sale’s invoice.