Published on March 13, 2014
Reasons Why Source-to-Pay Automation is Good for your Company9Fine tuning the procurement symphony
2020 Establish savings foundation Visibility and awareness First wave savings Strategic sourcing Compliance tracking Become a services provider and value integrator Global capability Finance alignment Source to pay integration Commodity and volatility management Risk programs Build sustainable transformation Category leadership Advanced sourcing Procurement systems Talent infusion Performance tracking Today Yesterday A radical rethink about procurement Arbiter of risk, reward and creativity At the nexus of ﬁnance, operations and supply chain Talent-rich Risk forecasters Global supply and demand perspective Idea generators and innovators Source: Charting the course - Why procurement must transform itself by 2020 by Deloitte. Reasons Why Source-to-Pay Automation is Good for your Company9
The procurement landscape is constantly evolving due to the volatile environment businesses operate in, changing political and economic conditions, legal regulations, natural calamities, etc. As highlighted in the Deloitte report, (refer to the above diagram) the role of procurement has changed over the years – from being primarily associated with savings to being a catalyst in bringing sustainable transformations and adding value to the organization. The report further goes on to say, “Technology can help make procurement the organizational nexus of shared information to drive both administrative and forward-looking activities”. Other interesting facts: As per the Gartner report, Magic Quadrant for Strategic Sourcing Application Suites 2013, there is an increased interest in solution suites as opposed to single point solutions. As per the recent Pulse of Procurement 2013 study, 70% of European procurement organizations are deploying solution combinations or integrated solution suites. So how is source-to-pay automation a good thing for your organization? How can it help ﬁne-tune the procurement symphony (process)? The remainder of the e-book explores the reasons why your organization management should consider it.
$ Single supplier Spending ﬂow Supplier performance Contracts Smart data One of the key issues highlighted in the Enterprise Key Issues Study 2013 by The Hackett Group is “Obtaining insights, intelligence and actionable strategies from data generated by procurement activities.” Procurement activities generate a lot of data, be it about suppliers, categories, buyers, organization-wide spend, etc. This data cannot be used for strategic purposes unless it is turned into “smart” data. Therefore, it is important to have a source-to-pay solution suite that processes data at every level, be it supplier selection, sourcing activity, or the overall spend classiﬁcation, and analyzes and presents it in ways that help procurement executives make critical decisions. For instance, management wants to review the relationship with an incumbent supplier who contributes to the majority of spend in the automobile parts category. An automated source-to-pay system enables tracking the various aspects of your relationship with the supplier as shown below. This information would help the management decide if the new contract should be awarded to the same supplier or if there is a need to ﬁnd a new one. 1
Spend Analysis Strategic Sourcing Supplier Mgt Financial Savings Mgt Procure To Pay Contract Mgt DASH BOARDS COMMON MASTER DATA ERP VI WE ONE 2 Seamless ﬂow of information Modern source-to-pay technology integrates smoothly with the other technology platforms/ERP, facilitating a structured process. Procurement solutions can leverage existing web service technology or other available options to manage integration with ERP systems. Having an integrated source-to-pay automation ensures seamless ﬂow of information at various stages in the procurement process, as highlighted in the graphic. It's a key to view information from different phases of procurement at a single place..
Better visibility The CPO / procurement executives have better visibility into the organization's spend patterns and the utilization of contract terms, or track the performance of incumbent suppliers – all just a few clicks away. 3
Standardizing and streamlining the procurement process More often than not, procurement processes are fragmented. This is eliminated by deploying source-to-pay technology which standardizes and streamlines the entire procurement process. The procurement execs can conveniently get all the required information, be it about a particular supplier's performance, or the updated contract with the incumbent supplier, or spend in the MRO category. For instance, contracts deﬁne the SLAs that suppliers need to meet. These SLAs can be linked to the supplier performance solution, which is used to track and manage supplier performance. This would help procurement executives track if an SLA is honored, and at the same time judge supplier performance with SLA. 4
$ Higher savings With higher visibility and control over different facets of the procurement process, like sourcing activity, supplier evaluation and selection, contract terms compliance, overall spend etc., the organization can easily identify the bottlenecks and take prompt measures to resolve them. This helps in cutting costs and leads to higher savings. Here is an example of how it works: A contract with JKL supplier states that if purchase value is within 0.5 – 1 million, the supplier would offer a 2% discount, and if it exceeds 1 million, the discount would increase to 5%. In order for the procurement executives to track if these terms are met or not, the contract management solution can be linked to e- procurement. In such a scenario, every time a PO is raised for JKL suppliers, which doesn't include the discount, an alert is sent to highlight this. In the absence of such automation, the procurement executives are more likely to miss out on the savings due. 5
6 Reduction of cycle time Technology helps reduce efforts in terms of time and resources. A well deﬁned and streamlined procurement process is easy to manage and provides output in a shorter time frame. For instance, An organization analyzes spend for automobile parts and identiﬁes the spend pattern and the suppliers involved, Conducts an online sourcing event, inviting suppliers from around the globe and selects the most competitive supplier Authors the contract, using already available templates and gets them approved from the internal and external stakeholders In collaboration with supplier, determines the KPIs and tracks the supplier's performance When every aspect of procurement is automated, it helps reduce the overall time and effort.
Enhanced data security Fragmented data is vulnerable. Automating the procurement process ensures data security through user-based access deﬁned at different levels of the process and can protect certain documents/folders containing sensitive information. 7
Improved compliance A process that is easy and well deﬁned has a higher compliance rate than a process that is scattered and unclear. As mentioned earlier, automation helps streamline the procurement process and thus improves the compliance rate. 8
Risk Management If the contracts are not well tracked, it adds to the organization's risk if legal regulations are not met. If supplier background is not thoroughly checked, it adds to the organization's risk. If the overall spend is not analyzed, it adds to the organization's risk, and if a paper- based invoice is misplaced, it adds to the organization's risk. When all these facets of the procurement process are closely tracked, the risk factor plummets. 9
Z About Zycus NORTH AMERICA Princeton: 103 Carnegie Center, Suite 201 Princeton, NJ 08540 Ph: 609-799-5664 Chicago: 5600 N River Road, Suite 800 Rosemont, IL 60018 Ph: 847-993-3180 Atlanta: 555 North Point Center East; 4th Floor, Alpharetta, GA 30022 Ph: 678-366-5000 EUROPE London: Office No 335,400 Thames Valley Park Drive, Thames Valley Park, Reading, Berkshire, RG6 1PT Ph: +44 (0) 1189 637 493 Mumbai: Plot No. GJ – 07, Seepz++, Seepz SEZ, Andheri (East), Mumbai - 400 096 Ph: +91-22-66407676ASIA Zycus is dedicated to positioning procurement at the heart of business performance. With our spirit of innovation and a passion to help procurement create even greater business advantages, we have evolved our portfolio to a complete Source-to-Pay suite of procurement performance solutions which includes - Spend Analysis, eSourcing, Contract Management, Supplier Management, Financial Savings Management, and Procure-to-Pay. Behind every Zycus solution stands an organization that possesses deep, detailed procurement expertise and a sharp focus on being responsive to customers. We are a large — 600+ and growing — company with a physical presence in virtually every major region of the globe. We see each customer as a partner in innovation and no client is too small to deserve our attention. With more than 200 solution deployments among Global 1000 clients, we search the world continually for procurement practices proven to drive competitive business performance. We incorporate these practices into easy-to-use solutions that give procurement teams the power to get moving quickly — from any point of departure — and to continue innovating and pushing business and procurement performance to new heights. FINANCIAL SAVINGS MANAGEMENT SUPPLIER MANAGEMENT CONTRACT MANAGEMENT SPEND ANALYSIS E-SOURCING PROCURE- TO-PAY ZYCUS SOURCE-TO-PAY SUITE
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