One of the best things a company can do to get the most out of their source-to-pay process is to hire an SAP Ariba consultant to help them establish a platform that will not only help them to optimize their spending habits but also source the best vendors that are available for the needs of the company. Beyond hiring a consultant the only alternative is if the company has an expert guru on board that will help them to get the most out of every cent that comes into and goes out of the company.
The Art of Source-to-Pay
Businesses depend on the way that their finances flow in and out of the company. If the company is spending more money than it is bringing in, there is a huge problem. Of course, companies that make less than they spend do not last long.
The structure of the procurement process of any company has the power to make or break the entire establishment. The process between finding and obtaining worthy sources through getting the goods or services and paying for them can be optimized and tweaked in one direction or another to better direct spending and buying.
One of the best ways to gain incredible sources is to allow powerful software to sift through tons of data and find the very best sources possible for the company.
Sourcing is not an easy task because it takes a lot of energy and time to search through available sources and compare the best to the best. However, when the element of artificial intelligence and powerful software comes into the picture, everything gets done faster and more efficiently.
The source-to-pay process does not have to be daunting and unpleasant. Software that uses the internet and the resources available to it in order to discover, compare, contact, and intimate contracts is ever-evolving and makes business much easier.
The Aspect of Planning
One of the largest mistakes that companies make is that they fail to plan their entire source-to-pay process before it takes place. Whether it is a monthly cycle, bi-monthly, or even weekly, there is no reason to not take a little while to pause and look at the whole process so that anybody can see where there are ways to improve or ways to cut down on costs and raise efficiency.
Whether or not there is a software platform involved with the procurement department, the humans of the company should all be on the same page and understand what is really going on with the spending practices of the business.
When the company takes time to plan out the entire operation they can sit down and get a clear vision of:
- Existing sources
- Potential for better sources
- Excess spending
- Good spending
- Potential investment opportunities
When a team of thinkers gets together and looks at a plan, each person will have their own vision of how the steps of the process should take place. Planning things out gives the team an opportunity to learn each other’s points of view and possibly learn from differing opinions.
Source and Vendor Management
Discovering great sources, then being able to manage those sources is a lot of work. One of the best ways to maximize the efficiency of a company is to get reliable sources that offer deals and incentives. Between getting price cuts and obtaining high-quality goods and services the potential for the success of the business greatly increases.
For example, if the company is paying full price for an item that it sells, or offers in packages to clients – or whatever – but a vendor makes a deal that if the company buys 100 of that same item there will be a 15% discount and a 30% discount if they buy over 1,000. Something along those lines.
If the company is already going to buy that item and has the capacity to purchase it in bulk, there is no reason not to take advantage of a 15% or even 30% discount.
Now, if 15 of the vendors offer the same deal, or something similar, but there are time constraints and expiration dates, how does one keep track of all of it?
Using high-tech software that is equipped with vendor management capabilities gives the company the upper hand when it comes to staying on track with offers, specials, contractual agreements, and every other type of situation that has to do with specific sources.
The days of paper ledgers and huge filing cabinets are pretty much over. A software platform that is built to take care of the procurement issues of a company will have the kind of functionality it takes to run a large business with potentially millions of clients.
Keeping Options Open
One of the worst things a company can do is close doors to future opportunities. Of course, in the instance of straight-out theft or deception, there is no choice but to cut ties with a source or a vendor, but because of minor differences, there is only a need for a break or a time out.
In addition to keeping the communication lines open for potential vendors, it is always a great idea to continue to search for better sources with better prices and deals for future reference. The reason why contracts have expiration dates on them is so that both parties do have an option to leave the contract if they want to.
When it comes time to renew a contract, if you have a better source available for your needs it is beneficial to the business to go for the source that offers the most benefits to the company. Personal ties and sentimental connections are not good for business.
Continually searching for, and reaching out to potential sources is not only a good investment of time for the business but for the future of the business as well.
Fundamentals of Spending
The four basic steps for all companies that wish to have successful source-to-pay processes are:
Although this may seem like it’s missing something, this is actually the barebones recipe for success. We already discussed how important it is to plan out the process for each cycle. We talked about the importance of quality sources. Once these two are underway it will be time to make the orders and pay for the goods, services, or both goods and services.
The part about this that is most beneficial to the business is that once the contracts have been established and the deals have been agreed upon the savings start. However, it is most important to monitor every step of the buying process so that you make sure that the prices that were agreed upon in the contracts are being honored at the time of checkout.
One of the biggest mistakes a company can make is to underestimate the power of communication. When everybody involved with the buying and ordering and paying for goods and services is aware of any sales, deals, specials, and price drops because of a vendor special everybody can know where the savings are happening.
If a company promises to sell an item at a lowered price but does not tell the rest of the company that the deal was made, nobody knows that there is a deal, and the purchaser ends up paying full price. It is important to make sure that the pricing matches the pricing of the deal, or the business could end up losing a lot of money and not even be aware of it until it is too late.