Facing inflation and decreased sales due to the pandemic, organizations today require robust procurement tech stack updates. While everyone's opinion differs on where to start this overhaul, one thing is clear: a company can't implement an entire Source‑to‑Pay (S2P) solution at once. So, the question remains: where should you start? You might think that Strategic Sourcing would be the natural starting point. It identifies what you need, who will supply it, the price, and where it will come from. It also fulfills basic requirements, identifies value quickly, and is relatively easy for senior buyers to understand. But hold your horses. While Strategic Sourcing might seem like the optimal first step, it isn't.
Contrary to what many experts advise, the best place to start is with e‑Procurement. Here's why:
- Realization of Value: The goal of procurement is not just identifying value, but realizing it. Strategic Sourcing might identify potential value, but e‑Procurement brings this value to life, ensuring that organizations pay contracted rates for products and services.
- Comprehensive Coverage: While Strategic Sourcing often targets high-dollar or strategic categories, e‑Procurement can be used for all purchases, not just those sourced or under contract. This helps manage and control all spend categories, reducing overspending.
e‑Procurement brings uncontrolled spend under control the day it's implemented, which enables your buyers to focus on ensuring high-dollar orders are for approved, needed products/services at approved rates. This can result in a 30-40% improvement in savings realization. The key is to first get your e‑Procurement up and running, then move on to Strategic Sourcing and advanced Analytics. The day e-Procurement is operational is the day you start getting your strategic sourcing platform up and running.
However, this doesn't undermine the importance of other elements such as Spend Analysis, Supplier Relationship Management, and Contract Lifecycle Management. It's crucial to understand that while these factors hold immense importance, they don't supersede the need for having e‑Procurement at the core of your procurement activities.
In conclusion, every organization has different needs, but one thing remains constant: e‑Procurement should be the first step in your S2P journey unless you already have a good enough e‑Procurement system in place. From here, you can move on to fulfill your organization's greatest needs, effectively initiating your Source‑to‑Pay journey.
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