Having Source-to-Settle capability involves having more than Source-to-Contract and Procure-to-Pay solution modules. As explained in our last post, 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 Source-to-Settle solution is integrated end-to-end.
For example, due to the existence of multiple, disconnected solutions which rely on multiple, disconnected databases, there are huge accuracy issues.
First of all, there is a proliferation of manual errors due to duplicate data entry. When data has to be manually re-entered into other systems, or selected for export and import to other systems, human error always creeps into the process. The average error rate for keystroke entry is approximately 1%, as tabulated by Raymond R. Panko at the University of Hawaii, and this human error can be very costly. For example, assume the contract pricing for laser cartridges has been erroneously entered into the Procurement system as $70 a unit when it should be $60 a unit. Further assume that the organization buys 1,000 of these a year and that the old rate was $69.95. If the Procurement system has a tolerance of error of 0.1%, then it will never detect if the Supplier continues to charge the old rate and the organization will overspend by $11,940. Now assume that the organization buys 10,000 units a year and all of a sudden the organization is out $119,400!
But this is just the tip of the iceberg. With multiple systems, there is no single version of the truth. So, if there is disagreement between the P2P and the ERP system, which system is correct? And which system do you run the analysis on to identify the target categories for sourcing? It makes a difference. The greatest value comes from identifying the category with the greatest opportunity. And that can only be done with complete, accurate data.