The Source-to-Pay Process in the Era of Digitalization

Posted by Negotiatus on December 12, 2018 at 2:35 PM

Source-to-pay encompasses activities that obtain goods and services from other companies. The process covers parts of procure-to-pay steps up until vendor management. However, it goes a step beyond conventional purchase-to-pay steps because source-to-pay heavily improves upon the transactional processes associated with procurement.


According to the McKinsey Global Institute, procurement activities that account for 46 percent of U.S. employees' time could be automated using already-established technologies that have proven results. Using automation greatly alleviates many of the burdensome steps that take place during the course of the procurement process. Here's everything you need to know.

Overview of source-to-pay

Source-to-pay, also known as S2P, is the process of using software to improve procurement practices. It centralizes the entire process, making it inclusive of the complete end-to-end development that takes place within the procurement cycle.

It also encompasses each step of your company's procurement process, including:

  • Spend analysis and management.
  • Strategic sourcing.
  • Vendor management.
  • Purchases of goods or services.
  • Performance management.
  • Issuing purchase payments.

Investing in source-to-pay means you'll have access to deeper analytics and can help an organization to avoid many of the traditional problems that come within procure-to-pay processes. According to some statistics, approximately just half of businesses have a centralized procurement process.

Your organization can fall into the half that enjoys streamlined processes by using source-to-pay to digitize procurement. Through automation, your organization could experience lower procurement costs, higher efficiency, cost reductions and increased opportunities, helping to capitalize on the overall value of your procurement strategy.

The source-to-pay process in the frame of digital transformation

Digitization through software is transforming how businesses conduct the procurement process. Handling many of the steps manually is time-consuming and cumbersome, and also leaves room for some level of human error and biased decision-making.

Consider how digitization can increase efficiency in your procurement process.

  • Specifications are entered in an analytics-based sourcing system.
  • The system interprets the document and draws up a request for quotation.
  • Quotes are automatically reviewed.
  • Sourcing system can monitor top suppliers.

Allowing source-to-pay software to manage these aspects of procurement leads to cost savings and an ability to allocate your human resources towards other important tasks.

Impact of technology on the source-to-pay process

As technology continues to be integrated into the procurement process, you can expect tech such as cloud-based eProcurement, artificial intelligence, predictive analysis and robotic process automation to become the norm.

Artificial intelligence has already been having a massive impact on organizations because of its unique ability to resolve data quality issues, increasing the value of data. Robotic process automation is an emerging technology that is likely going to transform procurement because it uses simple rules to imitate recurrent tasks that humans use when running software.

Reducing human intervention is probably the largest impact technology has on the source-to-pay process. Aside from allowing your team to focus on core processes, as opposed to the mundane processes associated with procurement, there are also many other benefits that come with automation.

  • Streamlines and simplifies procurement, making the process move faster.
  • Provides deep analytical ability to identify vendors.
  • Extracts pertinent data found within the procurement process, giving leadership better decision-making capabilities.
  • Speeds up purchasing and payment processes.
  • Reduces the potential for fraud because automation makes segregation of duties an easier process while simultaneously allowing for more individuals to review each procurement step.
  • Increases accountability and transparency for everyone across the organization.
  • Offers digital audit trails and provides businesses with more mobility to meet compliance regulations. If any inconsistencies or irregularities should occur, they'll be immediately identified and can be quickly rectified.
  • Accelerates the realization of cost savings, allowing businesses to enjoy putting more money back into their budgets.

A Deloitte survey of 480 procurement leaders showed respondents believe automation and robotics will increase to 88 percent by 2020, with 93 percent saying it'll occur by 2025. High-tech mechanization is having a sweeping impact across industrial practices and procurement is no exception.

To get started, companies should strive to identify what areas of their procurement process would be better suited for automation and move forward from this point.

While digitization is having a significant effect on processes such as procurement, it can be hard to sort through the multitude of available purchasing solutions. Every organization wants to increase profits while reducing spending in their procurement processes.

Automation can help you to achieve both objectives and connecting with a reliable partner, such as Negotiatus, can help ease the process.

Topics: source-to-pay, procurement