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Author's profile photo Himanshu Sewalkar
Himanshu Sewalkar
September 2, 2021 2 minute read

Intelligent Spend Management : Optimize source-to-contract cycle time

Quick recap : We learnt the why and what of the Intelligent Spend Management. Then I described how “best-run” companies move from just the standard operating procedures to best practices when it comes to sourcing & procurement.

Today, let us pivot into a specific process of “Source and contract”.

At SAP, we envision different processes and components of Intelligent Spend Management as you see below.

 

Source & Contract teams focus on the following key activities :

  1. Define & create the category strategy
  2. Identify and source material & services needs
  3. Finally, negotiate and manage contracts with trading partners

..but the ultimate goal of every Chief procurement officer is “Optimize source-to-contract cycle time” as that provides the required agility for the rest of the organizational units.

To maintain a robust procurement policy, organizations need a solid contract management process. With traditional procedures, contracts are often stored outside of the procurement and accounts payable systems, making it difficult to deploy lifecycle compliance measures.
By bringing the entire source-to-contract cycle into an intelligent spend enterprise, organizations can increase efficiency of the contracting cycle and improve compliance to policies. This means that all tracking of the contract pricing, service levels, key performance indicators, and termination dates is no longer a manual process.
Elimination of these cumbersome and labor-intensive efforts brings about a decrease in the risk of human error, lower operational workload, and lower administrative costs.
Together with SAP, Dabur (an Indian company focused on healthcare) now has one centralized sourcing platform that manages over 350 sourcing events a year covering 100% of their spend.
The speed of negotiation has improved substantially and there is greater transparency and simpler compliance management.

I would like to conclude today with the following…

“55% Lower maverick spend for organizations where contracts are shared with employees and suppliers for collaboration, such as for red-lining and versioning”  – SAP Performance Benchmarks & Estimates

Let me know what are other drivers to reduce the source-to-contract cycle time.

P.S.

If you are interested, you can read the entire source to pay value paper at one go here.

You may also wish to learn how our vision to value methodology links your vision for the future and SAP technology innovations to tangible business outcomes.

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