Source-to-Pay (S2P) to identify new potential vendors to meet demand for new products

Rather than existing as a separate process distinct from Procure-to-Pay (P2P), S2P can be a prelude to it. It benefits from the use of the SRM that supports supply chain management and vendor relationship management.

S2P can provide insights based on the data it collects and analyzes. Procurement teams can leverage the information to perform vendor evaluation and on-boarding, contract management, and strategic sourcing.

S2P processes are summarized as follows:

  • Demand: A need for new goods and services, or better pricing and terms on existing ones, is identified.
  • Sourcing: Using data analysis based on factors such as current market trends, historic spend, and overall organizational goals for product development, potential vendors are identified and evaluated. Promising candidates can be on-boarded for collection of vendor master data and interaction with the buyer’s procurement software and workflows.
  • Tender Documentation Preparation: Tender documentation, such as requests for proposal (RFP) or requests for quote (RFQ) is prepared, reviewed and approved for distribution.
  • Tender Bidding: Suppliers are invited to submit the required bids. Interested suppliers participate in the bidding process.
  • Tender Evaluation and Announcement: Proposals/bids submitted by the suppliers are evaluated by the tender evaluation committee for suitability, and winner(s) is chosen.
  • Contract Negotiation: For vendors who will be added to the procurement software as a preferred vendor with a relationship extending beyond the current bid, the buyer negotiates to establish optimal contract terms and pricing.
  • Contract Creation, Review, and Approval: Once the parties have reached an agreement, the contract is created, reviewed by both parties’ for legal and informational accuracy and completeness, and signed.
  • P2P: The procure-to-pay process can now be executed as normal, with optimal pricing and payment terms for the goods and services required.

Over time, the entire supply chain can be integrated based on S2P Kanban, with every vendor, and every transaction, part of the automated workflows and real-time data management that drives continuous improvement.

Effective procurement can reduce costs, improve quality
and develop relationships with strategic suppliers.
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