Top 10 benefits & challenges in source-to-pay automation
Source-to-pay (S2P) is a vast and complex function. It spans a variety of processes including purchasing, accounts payable, finance, and legal departments. S2P ultimately influences how an organisation spends.
While S2P’s all-encompassing nature provides a unique and broad opportunity for optimisation and value generation. However, Corcentric emphasises that failure to optimise this process can instead result in unnecessary spend and value leaks.
When it comes to automating the S2P process, Corcentric explains that there are typically two options:
- Non-integrated modules: “Disparate components for each step of the S2P process, from sourcing, right through to payment (and everything in between).”
- Integrated S2P suites: “One platform which spans the whole S2P process, with a single database, where multiple departments can access the same data from different perspectives.”
Five key areas where value leaks in S2P
Lack of compliance
Corcentric reports that around 50% of all value leakage in the S2P process comes from a lack of compliance. This can often occur when there are multiple systems joined together.
“With multiple, disparate, systems in the S2P process, company policy for compliance ends up sitting with each department, for compliance to their specific system or set of systems, rather than being managed at a higher level across one entire platform,” commented Corcentric.
This makes it harder to have visibility across one holistic system, as well as identify and address non-compliance.
With different systems often requiring back and forth communication between each system, organisations can end up with duplicated data and manual translations of content from one place to another.
Having one platform also reduces training time and the risk of disruption if more people are trained on the same platform. It also reduces the need to check data consistency between systems.
Having a single platform provides greater visibility, assurance and continuity ensuring that negotiated savings are reflected in the real purchase value, purchase order and payment.
“Benchmarks and metrics are a requirement to keep S2P processes on track for optimal efficiency, but these are more effective when applied to measure end-to-end performance, than when applied to each step in the process. The extra overhead of knitting together performance measurement and control for each step in the process is a cost in itself as well as a hindrance to more effective cost control across the process,” commented Corcentric.
Money can also be wasted on additional training, management and licensing of multiple systems.
“Each system may have been set up at different times, by different people with different business objectives in mind. Functionality may well be optimised for each step in the process, but collaboration between users or process owners for each step can prove challenging if data is structured or labelled in different ways in each system,” Corcentric explained.
This can make it a challenge to engage and access necessary stakeholders at each element of the S2P process.
Poor data visibility
Ultimately it is hard for an organisation to report on all activities across the entire S2P process if they lack the data at each stage or the data doesn’t match.
“Data labelling and synchronisation between each step in the S2P process, as well as with the underlying ERP system, should allow for real-time analysis and control. However, it can be a full-time job to extract, cleanse and then import this data into a business intelligence tool for insight and reporting,” commented Corcentric.
Five ways S2P platforms can create value
Running on one platform, any deviations can be analysed across the whole system at a glance to identify any deviations. This provides the function with a single source of truth and no opportunities or temptation to workaround aspects of the process.
“Streamlined workflow encourages users to comply with best practice for the S2P process. With each user accessing via their own login, insight into any non-compliance is more readily available, allowing for targeted training and management to maximise compliance,” commented Corcentric.
Harnessing an S2P platform can help organisations automatically create contracts from sourcing events and ensure they are adhered to throughout the process.
“Linking different aspects of the S2P process together allows for workflow automation and saves time. With a single S2P platform, there is a considerable reduction in time spent onboarding, checking, and synchronising data between systems,” said Corcentric.
Adding: “One platform means less time spent training users on different platforms, and less manual effort at each step in the process. Your S2P process becomes less about data entry time and more about decision time.”
Greater control of spend
Having a single platform can help organisations to enforce savings with automation. “Discounts negotiated in contracts are automatically flowed through to procurement, and rebate thresholds can be managed and met with greater certainty,” commented Corcentric.
Having one set of data means organisations can easily input this into a supplier performance management system, enhancing spend control, and achieving true visibility across the process.
With one platform, all functions of the S2P process can collaborate with confidence that they are on the same page.
Corcentric comments that because they are all speaking the same language, organisations can benefit from “improved stakeholder engagement and greater capacity for interaction between departments.”
Corcentric added: “Whilst each business function may access a different aspect of the same system, the connectivity between each function allows for clearer communication and greater collaboration.”
Data and process visibility
Making the right decisions requires an organisation to have all the facts. A single S2P platform enables cross-functional KPIs and reporting capabilities without the need for a business intelligence expert.
“[Having] a 360-degree view of what is going on with each supplier. Finance teams can quickly determine business process performance and make decisions to optimise spend as a direct result [...] when business requirements change, the reports for related insight are more easily adjusted if they rely on data from one source, rather than going deep into each step to extract and combine data for new reporting requirements.”