Top 5 Automation Opportunities in the Source-to-Pay Cycle

By Ilija Urginic, Commercial Solutions Director, Proactis

Source-to-Pay (S2P) is a complete end-to-end process that begins with sourcing products or services and ends with completing payment. Manual procurement processes are hamstrung by human errors, zero spend visibility, manual approvals, duplicate payments, and siloed processes that lead to inefficiencies, high risk, and maverick purchasing. The primary aim of automating the S2P cycle is to build value by creating an efficient supply chain.

Automation in the S2P process makes your organisation more productive. It’s for businesses that are looking to automate low-value tasks and want to improve efficiency and reduce costs.

Step-by-Step Approach to Transforming Your Source-to-Pay Process
But where do you start? Is it a full S2P overhaul? Or do you start small and then expand the scope? What will provide the most value for your business?

Have you already automated your sourcing process? Or your invoice management process? Or another aspect? Great, but there may be opportunities for further automation. Or if you are lacking automation entirely, you can start with one part of the process before expanding into an entire Source-to-Pay automation transformation.

Read on to understand your options and how you can identify what will drive the most value.

1. Supplier Management: Identifying and evaluating suppliers
Gathering information from your supplier base can be labor-intensive. It takes a lot of time and effort to coordinate gathering information from different suppliers manually. Maintaining material specifications and interpreting shipment inventory and production data from your suppliers can be a tedious exercise.

This is an excellent way of how automation can solve your supply chain inefficiencies. With a great supplier relationship management solution, all information is gathered in one place for easy accessibility. An automated S2P process limits the time taken to complete tasks, hence avoiding unplanned buying from unvetted suppliers.

2. Sourcing: Conducting sourcing activities (RFI, RFP, RFQ)
A supply management platform makes conducting sourcing activities a seamless experience. Sending price inquiries and product requests automatically is simple and efficient.

First, you need to be able to automatically disseminate a request for information (RFI) when gathering information from potential suppliers. A Sourcing system gathers and processes all information from eligible suppliers on their products, services and general business information.

When you distribute a request for proposal (RFP), you are simply asking for a broad description of their services. After that, you can move on to create a request for quotation (RFQ) and send it to vendors so they can quote prices. Again, when automated, the whole process is quick and straightforward. An RFQ allows you to choose the best supply option and even screen additional vendors to see if they can meet your business needs.

Choosing the right supplier isn’t easy. You have to review numerous documents, and possibly review product samples, and assess suppliers with a scorecard before selecting a single supplier. When done manually, this process can take weeks or even months.

The process may be more complicated if you find multiple suppliers with similar offerings. To make the right decision, you need to determine a variety of factors and go beyond features and functions. Automating the S2P process makes it easier to make this decision. With all supplier information in one portal, an automated system ranks the suppliers from top to bottom and takes the manual work and subjectivity out of the decision-making process.

Sourcing solutions help organisations easily identify the right supplier and move on with creating a contract. Reliable solutions can step up the game further to manage the contract, while also monitoring supplier performance to track any compliance issues or risks.

3. Requisition to Purchase Orders: Managing orders
You need a robust platform that can easily manage your outbound orders effortlessly. Otherwise, much of your time may be spent handling purchase orders, ship notices, receipts and invoices.

Once you have a contract, you can place orders under that contract's terms. An automated solution can provide a simple online catalog and ordering process that ensures accurate and concise purchase orders, along with the necessary approvals.

4. Invoice Management: Automating Accounts Payable
Receiving and handling paper invoices can be another time-consuming and costly process. Automated invoice reconciliation reduces the labor-intensive process by scanning paper documents such as POs, invoices, and quotes. Also, it stores these documents securely so that any authorised person can access them easily.

Once your goods or services have been supplied, an Accounts Payable solution can match the purchase orders to the invoices, helping to avoid instances of overcharging or even undercharging. It also makes the process of authorisations simpler.

5. Approval Workflows: Authorisation and release of payments
The traditional process of authorising and releasing payments for received supplies is very complex, having to pass through various authorisations and signatories. Tracking authorisations via email and spreadsheets can cause duplicate payments and lengthy delays in approvals, resulting in delayed payments that may hurt your relationship with suppliers.

Automated solutions that are integrated with your finance or ERP system help reduce the time it takes before payments can be made. Different users can log in, confirm receipts, and approve payments for it to be paid in a timely manner.

Each business differs in its needs, so it takes an understanding of where you are today and where you want to go to determine the correct automation journey and how each process can enhance the business.
If you are considering a full S2P implementation, consider the step- to-step approach which could be less risky and help tackle the hurdles of change management.

Starting off with automation in one area or several areas would be the most rewarding, and result in minimal disruption on your business. Speak to an expert to learn more about where you need to start.

Read more about the benefits of automation in the Source-to-Pay cycle