What is Source to contract?
Source to contract (S2C) refers to the set of procurement processes that come into play while sourcing a product or service. The process of source to contract starts with analyzing the requirement, developing a sourcing strategy, contract negotiations, contract implementation, and supplier performance management.
How is Source to contract affected during a crisis?
As we witnessed during the Covid-19 pandemic, companies were unprepared for and were severely affected by the unexpected occurrence. Supply chains were severely disrupted on a global scale as countries closed their borders.
Contracting was also impacted as employees could no longer come to the office and conduct paperwork. Organizations that were future-ready quickly adopted the digitalization of business. However, those who were not prepared found themselves moving out of business.
As we stand today, business executives, especially procurement leaders, have to maintain business operations, fulfill urgent demands, and mitigate supplier challenges against a backdrop of significant disruption to their teams, their people, and their local communities.
Procurement leaders now need to pay attention to the medium-term security of the supply base, unlocking funds intelligently, and building resilience for the future.
Here is Zycus’ 5-step checklist for effectively managing the Source to contract process when calamity strikes:
1] Smart Spend Analysis
Start by getting the most out of your spend analytics solution. While small companies rely on home-grown tools and larger organizations use legacy ERP-based spend analytics solutions, they realize the need for a dedicated procurement solution only after such tools have either reached a stage of saturation or failed.
As a result, the expectations from a 3rd party provider are reasonably high. The onus of realizing the potential of the solution lies in the teams responsible for implementation. For most vendors, this implementation team is either another partner company or a completely unrelated entity.
Therefore, there is a massive loss in translation between what the management conceptualized and the solution’s value. The simplest way to mitigate this risk is to opt for a vendor with a built-in implementation department. This ensures that 40% of problems are solved before they even come up.
2] Collaborative Sourcing
When sourcing leaders, procurement professionals, and suppliers come together, they make sourcing collaborative. Collaborative sourcing is not devaluing traditional sourcing approaches but the embedding of more robust category strategies, more penetrating views of supply markets to enable stronger supplier relationships.
It helps create long term mutually beneficial relationships with priority suppliers. Its cost-effectiveness and greater standardization ensure a competitive advantage for the buying organizations.
The industry you operate in and the organizational maturity determine your approach to collaborative sourcing.
3] Astute Contract Risk Management
What happens after the contract awarding phase is most significant because it could move your entire procurement process in another direction. Contract management plays an essential role in maintaining an effective and competitive supply chain.
Learn More: Zycus iContract Solution;
More often than not, procurement professionals give more weightage to finding suppliers and negotiating the terms and conditions compared to managing contracts. To derive maximum benefits from an existing contract, it should be monitored closely throughout its lifecycle.
This can be done by identifying risks posed by the contract and include terms and conditions. This will help protect one from any impending threat of monitory loss. Contract risk management becomes especially relevant in today’s pandemic era as companies struggle with force majeure clauses.
4] Artificial Intelligence
In the last week of December 2019, the Coronavirus Disease 2019 (COVID-19) crippled the Wuhan manufacturing hub in China. A.I-driven specialized procurement solutions can help firms build interconnected digital supply networks (DSNs), enabling dynamic, flexible, and efficient planning and execution.
As linear supply chains evolve into interconnected DSNs, A.I. can augment procurement expert’s knowledge by giving them additional insights based on analysis of extremely complex and large sets of data to solve traditional problems.
The key to success lies in leveraging A.I early on in the value chain to help align procurement and suppliers and achieve operational excellence.
5] Electronic Signatures
An electronic signature refers to data in electronic form, which is used by the signer to sign. It provides a secure and accurate identification method for the signatory and a seamless transaction.
It provides the same legal standing as a handwritten signature as long as it adheres to the specific regulations’ requirements (e.g., eIDAS in the European Union, NIST-DSS in the USA, or ZertES in Switzerland).
The global digital signature market is expected to register an incremental growth of USD 2.77 billion, witnessing a CAGR of over 27% during 2020-2024, according to the latest market research analysis by Technavio.
Add to this the global pandemic situation, and it is understood why companies are rushing towards electronic signatures. Paper signatures cause unnecessary delays. Also, when supplies are urgently required waiting a week for a paper signature does not make sense.
Every stage in the procurement process relies heavily on documentation and approval. From initial purchase requisition and requests for quotations through to comparative bid analysis, contracts, purchase orders, and goods received notes – each component of the procurement process needs to be read, policy-checked, administered, approved, and filed as documents make their way through the supply chain.
The entire process can be brought to a grinding halt if there is a delay in getting a signature on any one of these important documents. Business inefficiency impacts the bottom line, which affects the company’s ability to compete.
A recent Deloitte survey revealed that 37% of Chief Procurement Officers are looking to invest in contract management solutions in the next 12 months.
With electronic signatures sending, tracking, receiving, and accessing documents from anywhere becomes easy. Even if managers work remotely, the approval process isn’t held up, as documents can be signed electronically.
Companies relying on paper signatures struggle with uncertainty during crises. Zycus helps ease the situation with Certinal – Zycus’ A.I. powered solution for business on the go.
The benefits of Certinal are:
Certinal is powered by the latest Artificial Intelligence technology to aid fast decision making by reviewing the document summary. This ensures greater accuracy by auto-positioning signature fields, and mitigates risk by showing key highlights and risk areas.
Certinal captures detailed audit trail of all fields including data fields, attachment, notes, assignment to each recipient, optional or mandatory, values entered, cancel, declining reason, and date/time of the recipient activity.
Electronic signatures provide the same legal standing as handwritten signatures as long as they adhere to the requirements of the relevant countries’ specific regulations. Certinal is certified to meet stringent regulatory and security requirements to ensure a seal of trust.