You know what items you need but don’t always have a clue where to buy them and what to pay for it?

“Source to Pay” (S2P) is a comprehensive approach to managing the entire procurement process within a supply chain, encompassing all activities from the initial sourcing of goods or services to the final payment to suppliers. This end-to-end process involves multiple stages and stakeholders, each playing a crucial role in ensuring the efficient and effective procurement of goods and services. Here’s an overview of the 8 key components of the source to pay process:

1. Sourcing:

The process begins with identifying the need for goods or services and sourcing suitable suppliers or vendors. This involves gathering requirements, conducting market research, issuing requests for proposals (RFPs) or requests for quotations (RFQs), evaluating supplier proposals, and negotiating contracts.

2. Contract Management:

Once suppliers are selected, contracts are negotiated and established to formalize the terms and conditions of the agreement. Contract management involves ensuring compliance with contract terms, monitoring supplier performance, and managing any changes or amendments to the contract throughout its lifecycle.

3. Purchase Requisition:

When goods or services are needed, internal stakeholders generate purchase requisitions to initiate the procurement process. These requisitions specify the quantity, specifications, and delivery requirements of the items to be purchased.

4. Purchase Order:

Based on approved purchase requisitions, purchase orders are created and sent to suppliers to formalize the purchase agreement. Purchase orders outline the details of the order, including item descriptions, quantities, prices, delivery dates, and terms of payment.

5. Receipt and Inspection:

Upon delivery of goods or completion of services, the receiving department verifies the receipt of the items and inspects them for quality and conformity to specifications. Any discrepancies or issues are documented and addressed with the supplier.

6. Invoice Processing:

Suppliers submit invoices for payment based on the terms outlined in the purchase order or contract. Invoices are reviewed, validated, and processed for payment, ensuring accuracy and compliance with contractual agreements.

7. Payment:

Once invoices are approved, payments are issued to suppliers based on the agreed-upon terms and payment schedule. Payment methods may vary, including electronic funds transfer, checks, or other forms of payment.

8. Spend Analysis and Reporting:

Throughout the source to pay process, data is collected and analyzed to monitor procurement performance, track spending patterns, identify cost-saving opportunities, and generate insights for decision-making. Reporting tools and dashboards provide stakeholders with visibility into procurement metrics and key performance indicators (KPIs).

By implementing a comprehensive source to pay process in collaboration with organizations like GIS International organizations can streamline their procurement operations, enhance transparency and compliance, optimize supplier relationships, and drive cost savings throughout the supply chain.

We help create an integrated approach facilitating a better collaboration between internal stakeholders and external suppliers with a series of clear advantages from improved efficiency to overall performance in procurement and supply chain management. Reach out to GIS International to find out more and get in touch with us here.