Dividing the Procurement organization into a strategic and operational part is very common. However, it is still common to find that the process interface between these two parts has not been considered to the extent it deserves, resulting in two separate processes and disconnected information flow between. When the strategic sourcing process forms a closed loop with the operational Procurement process both are being enriched by each other and enable Procurement Done Right.
A core Procurement process is the Source-to-Pay (S2P) process. This process can be divided into two main parts, Source-to-Contract (S2C) and Procure-to-Pay (P2P), that are interconnected by Contract Lifecycle Management (CLM) as a third part.
S2C is the strategic sourcing process that starts with a demand and ends with a supplier agreement. It is key for the Procurement organization that handles the demand to make a thorough analysis of what is needed to be bought. To be able to do this insight into what has been bought previously, from whom and how is needed. The details of this information need can be derived from the operational P2P-process with lots of data points.
P2P is the operational Procurement process that starts with a requisition and ends with a supplier payment. A requisition should be issued towards a supplier contract. To enable this at the end of the S2P process there needs to be a clear handover to secure an implementation of the supplier contracts that enables end-users to raise requisitions.
Contract Lifecycle Management (CLM)
CLM is the process for handling the supplier agreement. The starting point for this process is the ending of the S2P-process when a supplier agreement is created. This should then link to the P2P-process and enable requisitions and purchase orders.