Quantifying The Benefits Of Source-To-Pay Solutions
PROCUREMENT METRICS
Organizational success depends heavily on the efficient management of procurement processes, something that most of the time involves significant amounts of resources. Business leaders often find they have to prioritize their investments in order to optimize the ROI on their projects. Solutions that enable the creation of procurement metrics can provide the necessary evidence needed to forecast investments, track spend, measure performance, and understand risks across different categories of spend.
Source-to-Pay (S2P) technology is one of several pathways to developing procurement metrics. This article presents step-by-step outline for properly utilizing S2P solution and reaping the associated benefits.
Step 1: Research and Select Suitable Platform
businesses should begin by assessing the wide range of S2P platforms on the market. Criteria for evaluating the options should include the platform’s features, security, investment cost and scalability. Having established the increase the organization can expect in cost savings, efficiency, productivity and governance, the decision makers can move on to the next step.
Step 2: Establish Key Performance Indicators
The organizationshould define Key Performance Indicators (KPI) in way that best matches the alignment of short-term and long-term objectives. Examples of KPIs include Supply Spend, Number of Repeat Purchases, Time to Purchase and Logistics Spend.
Step 3: Coordinate the Data
In order to successfully track the KPIs identified in Step across categories of spend, the organizationshould create standardized system to coordinate all relevant data and support the capture of additional metrics. From this process, correlations between metrics can be drawn and further analyzed to better explain performance data.
Step 4: Ensure Accessibility and Usability
It is important that the chosen S2P solution is easy to use and accessible across the organization. Adopting technology-driven process for procurement metrics should not impose great deal of additional work on employees rather it ishould make their job easier by automating repetitive tasks so they can focus on more critical areas.
Step 5: Utilize Visualizations and Reporting Tools
The S2P platform should allow for the clear visualization of metrics, including the ability to drill down in reports to identify trends and exceptions. This can be implemented in the form of charts and tables, graphical or numerical presentations (or any combination thereof).
Step 6: Leverage Spend Analysis
The resulting analytics and spend reporting should be used to produce collaborative insights that can steer decisions towards areas of optimized performance. This step should be adopted to investigate the data collected and identify improvement opportunities, helping to further understand the effectiveness of the S2P solution.
Step 7: Monitor and Act on Results
Business leaders should monitor the performance of the KPIs to evaluate their ability to measure the success of procurement. Any identified changes should be incorporated into the strategy, leading to further actionable insights that can direct an organizations activities towards improved efficiency and cost management.
Conclusion
S2P provides far-reaching net benefits and should therefore be one of the first investments businesseshould consider whenever procurement metrics program is in need. The seven outlined steps can be used to effectively implement source-to-pay solutions and reap the associated rewards.
