May 01, 2018
Show me the money: Making source-to-pay work harder, unlock procurement value
By: Keith Hausmann

Many procurement organizations use some form of source-to-pay. Too often, however, it’s a disjointed process that sinks money into the wrong places and leaves untapped value that could be better applied to growing and competing in the digital business era.

Boosting the bottom line

Think about it in simple terms: What are you getting out of source-to-pay? If you’re not seeing the benefits – including greater agility, “touchless” transactions, speed-to-value, data-driven decisions, better stakeholder experiences, and positive results on the bottom line – then your source-to-pay is not working hard enough, or smart enough.

The opportunity to extract significant value by optimizing source-to-pay processes is not wishful thinking. This is real value that goes beyond optimizing isolated parts of procurement. It is about becoming a more intelligent business and reducing operating costs at the same time.

Smashing the silos

The dynamics of business over the last several decades have encouraged, even rewarded, success in silos. But driving the next layer of value in source-to-pay demands continuity that comes from a holistic approach. It means creating and identifying savings early in the planning stages and ensuring that value is captured all the way from purchase to okay-to-pay. Because if the loop is never closed, saving evaporate.

Companies that master continuity increase sourcing savings, improve efficiency, strengthen compliance, and increase working capital. This takes a mindset shift and a laser focus on addressing root causes of process inefficiency and missed opportunities in source-to-pay.

This is end-to-end process reinvention, not a band aid. The collective benefits upstream and downstream create a multiplier effect that’s impossible to achieve fixing point-in-time problems. This big picture view is so important because source-to-pay is a series of interdependent tasks and steps that are often managed in isolation. Thus, the silos. Each step has distinct results and outcomes that trigger what happens next. That’s why cohesive management and oversight make all the difference.

Imagine what’s possible with $100M in recovered value from source-to-pay processes.


Focusing on outcomes

High performers know this well. They are great a making informed decisions, not processing. They prioritize insight into what’s happening over the ins-and-outs of how transactions get completed. They zero-in on the levers that influence the outcomes they want and how those levers influence end-to-end processing.

Take a company with $1 billion in spend with suppliers. There is a 5X multiplier between disjointed and holistic source-to-pay processes. With a holistic approach, companies can increase the spend profile with more spend under management. They can maximize the yield with analytics and market intelligence for better negotiating power. They can also close the loop with a process grounded in smarter technology and process excellence to capture savings. With sourcing, procurement and accounts payable working together, they realize better compliance too.

This is a no-brainer—increased savings potential on an already expanded spend profile. What’s more, this is spend outside the procurement operating budget. So it brings value across the organization, not just in procurement and finance.

Holistic, intelligent source-to-pay also improves stakeholder experiences. Leaders get the total transparency they need to make better decisions. Budget holders see Procurement as a provider of value. Employees enjoy Amazon-inspired experiences. And suppliers, which are essential to the ecosystem, get the support they need.

New value is waiting

For most companies, there is not another core process that’s so ripe with opportunity to influence spending and operational costs. With a truly end-to-end approach to source to pay, companies can jumpstart new value creation and growth at a time when they need it the most. There is every reason to get started now.

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