We all know the importance of having both Sourcing and Procurement solutions as neither solution on its own is sufficient to enable an organization to extract the savings and value inherent in each sourcing and procurement project. For example, the savings that result from the best negotiated contracts in the world as a result of an intense strategic sourcing project will never be realized when a lack of good procurement processes and systems results in over 30% maverick spend. Similarly, the best procurement processes and systems in the world are useless if the organization is unable to take advantage of the data and inherent efficiencies to source better contracts next time around.
However, if an organization wants to achieve the best results, just having both solutions is not enough. Certain categories of savings and value only materialize when the solution is integrated end-to-end. What do we mean by this?
Consider the situation that occurs when an organization has separate Source-to-Contract (S2C) and Procure-to-Pay (P2P) solutions. In this situation, what typically happens is there are two code-bases, relying on three separate databases, that rely on the ERP, the Vendor Master database it controls, and the Inventory Master database the ERP connects to, which is generally under the control of the Logistics and Warehouse Management solution.
In this situation, in order to accomplish a task, the Supply Management professional may need to consult three databases to find the information she needs, use two completely different workflows to issue an RFQ and then issue a PO, and use two completely different solutions to extract the relevant transactions for analysis and do the analysis. It’s not efficient, and, moreover, since data has to be entered in (at least) two different solutions, it’s error prone. As a result, the organization is missing out on up to sixteen different efficiencies and benefits that would otherwise be available to it.