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What Does Source-to-Contract Mean?

Source-to-contract refers to the collective set of procurement processes adopted when sourcing products or services. The process begins with analyzing the product or service requirement and developing a sourcing strategy. It advances to the request for quotation and contract negotiation phase before finally awarding the contract to a suitable supplier.

S2C has several elements that strategically contribute to the procurement process.

Sourcing is the first yet most crucial step for shortlisting suppliers through automated specialized software. Top-notch quality, along with the best pricing, are essential parameters.

The next step is a reverse auction , where vendors bid from the lowest prices up to the point where the contract is allotted to the winner. Now, the winner moves for final approval and then accepts payment.

With all the core procurement activities covered — from opportunity assessment, through strategy planning, sourcing and negotiations, and contract origination — source-to-contract or S2C is all about setting up the possibility of savings, efficiencies and additional value. It’s more than just a process with a beginning and an end at contract signature.

The activities within S2C for contract management and supplier relationship management are all core activities for procurement, making S2C both a process of execution of a project as well as its long-term management.

Source-to-contract delivers breakthrough improvements in year-on-year savings and enables enterprises to free up time and resources, and the same time significantly improve return on operating costs.

The ultimate goal of S2C is to drive value from contracts — that is, ensuring that all contracts find maximum utilization and drive maximum value with complete visibility all across.

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