In procurement, Source to Pay (S2P) is the end-to-end process that encompasses all activities from identifying a need for goods or services to making the final payment to suppliers. It’s a streamlined approach that integrates sourcing, purchasing, and payment processes to enhance efficiency, reduce costs, and improve supplier relationships.
Sourcing: This involves identifying business needs, defining requirements, and finding suitable suppliers. Procurement teams conduct market research, issue Requests for Proposals (RFPs) or Requests for Quotes (RFQs), and evaluate potential vendors based on quality, cost, and reliability.
Supplier Selection and Contracting: Once suppliers are evaluated, the best fit is selected, and contracts are negotiated. This step ensures terms like pricing, delivery schedules, and compliance requirements are clearly defined.
Purchase Requisition and Order: When a need arises, employees submit purchase requisitions. Upon approval, a purchase order (PO) is issued to the supplier, formalizing the request for goods or services.
Receiving and Inspection: After delivery, the goods or services are verified against the PO to ensure they meet specifications. Any discrepancies are addressed with the supplier.
Invoicing and Payment: The supplier submits an invoice, which is matched against the PO and delivery receipt (a process called three-way matching). Once validated, payment is processed according to the agreed terms.
Efficiency: S2P streamlines workflows by automating repetitive tasks like invoice processing and PO creation, reducing manual errors.
Cost Savings: Better supplier negotiations and spend visibility help organizations optimize budgets.
Compliance: S2P ensures adherence to internal policies and external regulations, minimizing risks.
Data Insights: Modern S2P platforms provide analytics to track spending patterns, supplier performance, and process bottlenecks.
Many organizations leverage S2P software like Lasso to digitize and automate the process. These tools integrate with ERP systems, offering real-time visibility, e-procurement capabilities, and seamless payment processing.
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