Everything About Source-to-pay Process Automation

• Procurement,Sourcing

Source-to-pay is a procurement process that covers contacting suppliers, negotiating with them, contracting them to makes supplies, and finally, taking delivery of the products they have to offer.

The source-to-pay process uses technology to connect suppliers and their customers throughout the entire procurement process to ensure faster communication. Unlike the P2P process where the emphasis lies on purchasing supplies from vendors, all the way to their delivery and payment, source-to-pay takes a more holistic approach, covering the procurement lifecycle end-to-end.

And like all things procurement, the more you can automate your source-to-pay process, the better. Automated source-to-pay empowers your organization to streamline the procurement process, unlock cost savings, minimize supply risk, and reduce maverick spending.

In this article, we’ll dive into why and how you can automate your source-to-pay process to unlock all these benefits.

Benefits of leveraging source-to-pay

Leveraging the source-to-pay process brings your procurement under one cohesive roof. As a result, it’s easy to track leakages, discover opportunities for growth, forecast growth avenues, and ensure compliance with relevant regulations.

Here’s a breakdown of those benefits source-to-pay can bring your organization—especially when automated.

Save money at every level of the procurement journey

Unlike procure-to-pay where you intend to channel orders to existing suppliers, source-to-pay goes all out to seek out new suppliers, often from a huge database. Here’s where it gets interesting (and profitable) for your business.

Under the source-to-pay system, you’re typically bringing your business to a huge number of potential suppliers, asking them to bid for your business (if you’re making volume purchases), and unlocking value by getting vendors to compete. This can significantly reduce your procurement spend and even offer you access to higher-quality supplies.

Further, by gluing your procurement process together, it becomes easier automating manual tasks, saving employees the time required to manually perform tasks in your workflow, and unlocking even more savings on your spend budget.

Ensure compliance with industry regulations, internal policies, and contract agreements

One of the big headaches with unregulated procurement is that you can’t keep anyone compliant—until their mistake causes significant loss. Say, after purchasing supplies that are incompatible with your internal processes, you’ll have to send them back to the suppliers, apologize profusely, and send the employee concerned down to HR for a nice little chat.

On the other hand, an automated source-to-pay system can be designed with regulations built in to prevent policy or contract violations before they happen.

In other words, an automated source-to-pay system eliminates the need for employees to memorize or try remembering your policies since enforcement is built-in.

Improve collaboration throughout the procurement process

A source-to-pay system brings everyone—internal and external—on the same page and makes it easier to reach agreements faster. From your general counsel who signs off on contracts to the department head estimating how much supplies they’ll need per quarter, an automated system makes it easier for everyone to collaborate vs. having to manually pass around the docs via email.

Diversify and minimize supply risk

Another benefit of leveraging source-to-pay within your organization is that it helps you spread supplier risk and build a resilient supply chain. Like we saw during the new normal, businesses that had a primarily procure-to-pay disposition had their operations tampered with as some of their suppliers went out of business or were forced to lock down in their respective countries.

That’s exactly where a source-to-pay system would have come in handy. Given the vendor marketplaces it gives you access to, it’s easier to quickly connect to alternative suppliers that can help you stabilize vs. trying to put out fires when you’ve already taken a hit.

In that sense, source-to-pay procurement is a no-brainer for any business looking to stay above water in turbulent times.

Manage your procurement in one source of truth

Above all, what source-to-pay procurement does is to give you one source of truth where you can manage it all. From that first touch with potential vendors until you’re vetting invoices and paying them, a source-to-pay solution empowers you to build a combined solution where data flows freely.

And why do you need that? A lot of reasons, actually.

For one, a unified system makes your data flow together making it easier to see the big picture with reporting. Likewise, it’s easier automating your procurement when it’s all built into one place vs. stringing together several tools with Zapier.

In conclusion, source-to-pay empowers you to unlock value through procurement so that your procurement moves from being just a business support function to a revenue driver.

Top 5 source-to-pay processes every business should automate

Like in the procure-to-pay process, the source-to-pay process is likewise segmented into individual processes, which when combined, works together to deliver the unique advantages of source-to-pay.

And automating these individual processes is key to unlocking the potential the source-to-pay system offers.

Here are 5 source-to-pay processes you can start automating for better outcomes with your organization’s procurement.

  • Sourcing

Sourcing is the most critical part of the procurement process. It’s where expectations are set, your budget is stretched, and where you set the stage for how your relationship with your suppliers will run. Miss it and you’ve already set up yourself for a turbulent relationship throughout the customer-vendor relationship.

Now, instead of manually scouring LinkedIn or Google for suppliers, an automated sourcing solution can help you engage thousands of potential suppliers, hold discussions with hundreds of them, and carefully vet them, all in one platform.

Automated sourcing empowers you to spread your net wider, increasing the chances of catching suppliers offering a mix of great quality, competitive prices, and compliance with your internal policies.

  • Purchase requisition

The purchase requisition process is often highlighted in the procure-to-pay process since it’s where demand is created. It doesn’t just disappear under a source-to-pay model either.

Automating purchase requisition cuts out the need for employees or departments to go back and forth with the procurement department over email. Using a collaborative tool (like Kissflow Procurement Cloud) everyone within the organization can stay on the same page and reach agreements faster.

And the faster you can get requisitions out of the door, the faster you can get the supplies you need for internal operations, avoid disruption, and operate your organization more efficiently.

  • Purchase ordering

When purchase requisitions are made, their next stop is at the procurement department where they’re vetted before being passed on to suppliers as purchase orders. The purchase ordering process can be automated to eliminate manual work and reduce the time procurement staff spend on it.

  • Vendor management

Managing vendors involves all the work done in keeping suppliers compliant with the terms stipulated in the contract. Automated vendor management can vet suppliers’ performance over time, saving the need for manual work, and automatically inform when there’s increased supply risk associated with any particular vendor.

  • Contract management

From drafting to signing off on contracts, or even adjusting them, automating contract management is a must if source-to-pay must work as one cohesive process.

If you’re looking to automate your procurement process, stringing together different tools just won’t do. You need one tool that combines:

  • Communications and collaboration around the entire process
  • Streamlined, digital payments
  • Custom workflows with powerful automation
  • Purchase requisitions and orders, and
  • A robust vendor management suite

Kissflow Procurement Cloud is designed as the all-in-one procurement solution for businesses that want simplicity and power. Take Kissflow for a spin here.