Operations in Source to Pay (S2P) Cycle

International Research Journal of Engineering and Technology (IRJET) e-ISSN: 2395-0056
Volume: 09 Issue: 08 | Aug 2022 www.irjet.net p-ISSN: 2395-0072
© 2022, IRJET | Impact Factor value: 7.529 | ISO 9001:2008 Certified Journal | Page 1344
Operations in Source to Pay (S2P) Cycle
Atharva Gaikwad
Student, Dept. Industrial and Production Engineeering,
Vishwakarma Institute of Technology, Maharashtra, India
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Abstract - It is becoming more critical than ever for
inefficient procurement systems to devise initiatives and map
out a strategic approach through which intelligent
procurement processes can be incorporated, in order to reach
better performance and reduce sourcing costs. Having a clear
understanding of the streamlined procurement process would
result in increased stakeholder engagement and improved
supplier management, thus increased productivity.
The different departments in a company mustensurethatthey
work in unison and are clear abouttheorganizationalgoalsas
accomplishing one purpose using different methods could
make tasks challenging. Integrating the various departments
and synchronizing their functions while preserving the
organization's services, leads to increased visibility and
flexible relationships between supplier and management.
Key Words: Sourcing,ProcurementIndustry,SupplyChain,
Turnaround Time (TAT), Services, Suppliers, Customer
Satisfaction
INTRODUCTION
As procurement plays a significant effect on an
organization's bottom line, the procurement challenges and
difficulties must be identified and overcome. While
developing a solid procurement strategy, the future
implications of each step and procedure must be well
thought out. Risk mitigation, inaccurate data, and supplier
management issues are a few challenges that can directly
impact the bottom line of an organization.
A resilient supply chain refers to the system which is
dynamic and robust as in that it’ll be equipped with
alternative strategies and methodologies in cases of various
disruptions. A resilient system is highly organized and will
have plans to cope in cases of crisis and problems. A 3-stage
review method should be followed in order to create and
build a resilient yet robust supply chain:
 Planning the review
 Conducting the review
 Reporting and dissemination
Procurement is viewed from a broader perspective than just
implementing,evaluating,andcontrollingpurchasedecisions.
The scope of procurement also encompasses the
management of both suppliers and resources. For this very
reason; procurement has an edge in volatile markets. With
procurement functions managing both internal (such as
suppliers’ capacity, logistics data, pricing and discounts, and
new products information), and external (product or service
cost, time frames of delivery, product quality, and general
supply decisions, such as supplier selection and supplier
relationship) functions, eventually making the decision
making by the managers easier due to the cross functioning
of procurement and other functions as mentioned.
In summary, procurement has been proven to be an
important function, responsible for increased
competitiveness even within an unstable or volatile
environment.
Beyond building reliance and robust systems, companies
should also focus on developing different new and
alternative systems rather than channelling the entire
resource means into developing a single-method plan; this
allows the system to have more options and reduces the
chances for reliability on a single factor. One suchexampleis
to develop virtual warehouses on specifically developed
platforms which will allow the companies to share data on
their inventories and stock. Though it might be complicated
to set up it can be achieved through a useful approach
towards technical support.
Steps in P2P Cycle of ProcMart
1. A request is received from the client. it consists of
the required items, its quantity and specifications.
A mail acknowledgement is sent to the client against the
request

2. The requirements is then posted inthecompanysoftware
under the clients name and other information.
The sellers for the required items are identified from the
company database or from the Internet (IndiaMart)
3.The RFQ is sent to relevant sellers at least 3 quotations are
collected for price comparison and minimum lead time.
4.The quotation consists of available items, prices,HSN code
and other details about the order and payment information
5.The received quotation from the seller is processed in the
software adding all the relevant information and most
importantly applying company margin on the prices for the
products.
This quotation is sent to the respective client for the
purchase order.
6. When the quotation is approved by the purchase
department of the buyer they generate a purchase order
accepting the quoted prices and delivery time.
This purchase order is punched in the software
Now a seller po is to be created and to be sent to the seller,
which confirms the order at his end.
Next the seller payment is requested through the software
which is to be approved by the manager and is paid to the
seller according to his payment terms discussed before.
Different types of payment terms:
1. Credit payment (7 to 45 days)
2. Bank transfer

3. Cash
4. Cheque
Routing Orders
A Routing Order is received from the client whichconsists of
the Seller information itself.
The Margin on these orders are pre-discussed with the
Clients and differs with every buyer.
Only the payment is done through ProcMart.
An additional discount from the seller resultsinmoreprofits
and margins.
A timely follow-up is important in such orders.
Rate Contract
These items are regularly needed to the buyer hence the
margins on them are fixed and standardised.
Because these are regularly shipped these are stockedinthe
company warehouse to avoid the delay of getting it from the
vendors.
Steps Involved in Operations of Strategic Procurement:
1. Material Requirement is generated at Buyer End.
2. Requirement For Quotation (RFQ) is sent by the
Buyer.
3. The Request is posted in the Company Database
4. Relevant Sellers are Identified (System / Internet)
5. The RFQ is Floated to the Sellers
6. Quotations from at least 3 Sellers to be taken
7. Compare the received Quotes to find the best with
competitive pricing and the least lead time.
8. Send the Quote to the Buyer with all requiredInfo&
Company margins.
9. Receive and acknowledge the Purchase Order (PO)
from Buyer
10. Punch the PO in the Company Software
11. Create a Seller Purchase Order & send to Seller
12. Follow Up with the Seller regarding the material
status
13. Inward the Material at the warehouse
14. Create a Goods Received Note (GRN)
15. Process the Seller Payments according to the terms
16. Generate an Invoice for the material
17. Create an E-Way bill if required
18. Dispatch the material to the Buyer
Improvements And Suggestions
For numouros line item Orders the system wasimplimented
with a downloadable Excel sheet where the operations
manager would simply enter the enquiries and upload the
sheet on.

Optimization of logistics is a step which includesprocedures
which satisfy customers by decreasing the Turnaroundtime
(TAT) which is the priority for many industries as to
increase and maintain their customer base is already a
monumental task. Also at the same time, freight cost is a
factor that has to be considered. A low cost and effective
logistics setting is the goal for any industry. The storage of
materials also is another factor that was considered here.
Overburdening any sector of a particular supply chain leads
to that sector becoming a bottleneck for the industry.
Key Performance IndicatorsintheProcure-to-PayCycle:
Although every business is different, the core KPIs used to
review the procure-to-pay process largely remain the same:
• Purchase order cycle time
• Average cost to process a purchase order
• Lead time
• Electronic PO processing rate
• Invoice processing time
• Average cost to process an invoice
• Invoice exception rate
• First-time match rate
• Average invoice approval time
• Days payable outstanding
• Spend under management
• Realised savings
• Discounts captured
Conclusion
Procurement does set a benchmark in addressing
adversities and transforming business models to face
disruptions as seriously as seen throughout 2020-2021.
Procurement has been a pioneer in helping businesses
understand crisis management and maintainingoperational
continuity.
Procmart has realized the potential of data-drivenstrategies
and insights that can revolutionize business operations and
decision-making processes. It hasseveral businessesdigitize
their procurement processes with their competitive
solutions.
In summary, procurement has been proven to be an
important function, responsible for increased
competitiveness even within an unstable or volatile
environment.
Beyond building reliance and robust systems, companies
should also focus on developing different new and
alternative systems rather than channelling the entire
resource means into developing a single-method plan; this
allows the system to have more options and reduces the
chances for reliability on a single factor. One suchexampleis
to develop virtual warehouses on specifically developed
platforms which will allow the companies to share data on
their inventories and stock. Though it might be complicated
to set up it can be achieved through a useful approach
towards technical support.
Acknowlegement
I would like to express my special thanks and gratitude
towards ProcMart PVT. LTD. who gave me the golden
opportunity to pursue this immensely insightful project on
the topic “Operations in S2P Cycle” which helped me in
learning a lot of new concepts and also got the exposure for
working at a world-class Industry. I’m really thankful to
them.
References
[1] https://www.procmart.com/blog/who-should-
consider-procurement-outsourcing
[2] https://www.procmart.com/blog/design-thinking-in-
supply-chain-optimisation
[3] https://www.procmart.com/blog/procurement-vs-
purchasing

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