WORDS: Ben Smerin
By fully optimising their source to pay (S2P) solution and processes, organisations can make a huge impact to their bottom line by knowing what they are spending their money on at the point of purchase rather than the point of invoice receipt.
The results are significant and the benefits far-reaching – yet many organisations don’t have a S2P system or, if they do, they are failing to maximise the benefits.
Among the challenges facing businesses without an effective S2P solution in place include difficulty controlling the purchasing process; deeply inefficient transaction processing capabilities; and a lack of spend visibility and reporting methods to manage the external supply base and internal stakeholders. In such circumstances, organisations are likely to have trouble locking in savings following a sourcing activity.
Companies that put S2P and accompanying processes into effect are, on the other hand, likely to gain a significant advantage over their competitors. Increased spend under management; enhanced visibility over spend, supplier and internal stakeholder behaviours; and end-to-end control of activities subsequently reducing risk or fraud, are just some of the potential benefits on offer. So, what’s holding companies back?
Foisting systems on an organisation rarely brings the results hoped for and invariably leads to poor adoption.
A collaborative approach to success
In the past, S2P solutions have been considered costly and complex to implement. But recent consolidation across the S2P provider landscape has meant solutions are becoming accessible, modular and relatively straightforward to adopt. The ideal scenario is to see procurement and finance aligned and working together to choose and implement a solution, after all, procurement is responsible for external spend while finance processes the transactions. The more common scenario, however, is for finance to select an ERP system or similar software without necessarily engaging procurement or other key stakeholders. Foisting systems on an organisation rarely brings the results hoped for and invariably leads to poor adoption.
The S2P journey can be a catalyst for positive internal change due to the fact that it touches most functions within an organisation from procurement and finance to operations and IT. But to achieve the required results, an internal change management programme is crucial. One of the key reasons for the collapse of such projects is failure to drive the use and importance of the system into the organisation. People are more likely to embrace a new S2P solution if it is intuitive to use and properly integrated within the business.
Meanwhile, better oversight over spend, supplier and internal stakeholder actions can be used to drive savings, control cost and create more complex and innovative supplier-partnering relationships. Companies should think about the complexity of their supply chains and the technology interface required to get a handle on spend. While the primary focus should be on suppliers with which organisations spend large amounts of money, the fragmented long tail of small-spend suppliers shouldn’t be overlooked.
One of the key reasons for the collapse of such projects is failure to drive the use and importance of the system into the organisation.
The S2P process is critical to the effective running of all organisations but it should be viewed as a continuous cycle of improvement. Often, companies implement systems and then assume the process is finished but S2P is a process you must constantly review to reap the full benefits. The right technology solution implemented correctly offers the opportunity for huge potential benefits for all organisaitons.
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If you are looking to implement a S2P system in your organisation or believe there is scope to do more with your existing system, explore our Strategic Sourcing Service.