Achieving Optimal Results With A Source-To-Pay Solution
Direct Vs Indirect Sourcing
Direct sourcing involves buying products and services that are used in the production of companies goods or to manage an internal department. This type of sourcing is particularly useful for operations that require specialized knowledge, propriety parts, non-standard services, or materials that are not available in the open market. Indirect sourcing, on the other hand, consists of items and services consumed in order to facilitate the support or delivery of companies goods or services. Indirect sourcing activities may include acquiring cleaning supplies, office furniture, legal services, or IT contracts.
Step 2: Understanding the Benefits of Sourcing Strategies
Establishing the right sourcing strategies allows companies to achieve cost savings through bulk purchasing, streamline their supplier base, simplify the procurement process, monitor accounts payable, and attain greater supplier transparency. By leveraging both direct and indirect sourcing strategies through well-designed procurement system, companies can benefit from total cost savings, performance improvements, and supplier diversity.
Step 3: Implementing S2P Solution
A S2P solution can reduce costs and streamline operational processes, helping companiesucceed in both direct and indirect sourcing initiatives. The platform offers benefits that span companies entire sourcing strategy, such as easing the procurement workflow, improving the supplier onboarding process, and simplifying the contract lifecycle. S2P solution also provides the ability to create standard processes for the selection of vendors, setting up order profiles, and tracking invoices.
Step 4: Benefiting from Automations
An automated S2P solution eliminates the manual work associated with direct and indirect sourcing while also providing visibility into inventory levels, allowing executives to make real-time decisions that are supported by up-to-date information. By automating tedious and labour-intensive tasks, S2P solutions free up resources and make it easier to manage the entire procurement process. Companies may also benefit from improved accuracy and compliance, reducing their audit burden.
Step 5: Utilizing Analytics Tools
A good S2P platform includes an analytics suite to provide insights into the total spend and provide users with valuable metrics such as the number of vendors contracted and the purchasing frequency. The reporting capabilities of sophisticated S2P solution can help company identify discrepancies in the sourcing process or track supplier performance. By monitoring the data generated by the analytics suite, companies can easily spot problem areas and make appropriate changes.
Conclusion
With comprehensive S2P solution, executives have the opportunity to enhance the effectiveness of their direct and indirect sourcing strategy. By leveraging automations and analytics, organizations can reduce costs, streamline procurement processes, and maintain supplier relationships. Additionally, by establishing the right direct and indirect sourcing procedures, companies can take advantage of the efficiencies of S2P solution, improve supplier diversity, and optimize the total spend.
