What is Source to Contract (S2C)?

Source to Contract (S2C) is the process that covers strategic procurement from the identification of a need to the conclusion of a contract. This process includes several steps such as market research, selection of suppliers, tendering and finally negotiation and signing of contracts and is often integrated in software.

How does the Source to Contract process work?

The source to contract process typically begins with the needs analysis, where a company identifies its needs for products or services. After determining the need, market research follows, in which possible suppliers and products are evaluated. This phase often involves a preliminary evaluation of suppliers based on their ability to meet the company's specific needs.

After the market research, the request for proposal (RFP) takes place, in which the identified potential suppliers are invited to submit their offers for the required products or services. The offers are then compared and evaluated to select the best option. This step can also include negotiations to optimize the conditions.

Once a supplier is selected, the contracting process is initiated. This is where the terms of the contract are negotiated and finally the contract is signed. This ensures that the company is supplied with the required products or services under the agreed conditions.

What are the advantages of Source to Contract?

The source to contract process offers companies several advantages. First, it enables a systematic and strategic approach to purchasing, which can lead to better contract terms and cost savings. The detailed evaluation of suppliers and products also ensures that the selected options meet the company's requirements.

In addition, the S2C process can help improve relationships with suppliers and promote long-term partnerships. This is particularly important in industries where the quality and reliability of suppliers plays a critical role.

The systematic approach to procurement also supports the company's compliance and risk management by ensuring that all purchasing activities are traceable and carried out in accordance with company policies.

What is the difference between Source to Contract and Source to Pay?

Source to Contract (S2C) and Source to Pay (S2P) are both procurement processes, but they cover different aspects. While S2C focuses on the process from needs assessment to contract conclusion, S2P covers the entire procurement cycle from needs assessment to supplier payment.

The main difference lies in the downstream processes after the contract has been concluded. S2C ends with the signing of the contract, while S2P continues and also includes ordering, goods receipt, invoicing and payment processing.

This means that S2P offers a more comprehensive view of procurement and includes all financial transactions that occur after the contract is closed.

In practice, the use of S2P can lead to better integration and automation of procurement processes, as it is not just about purchasing, but also about the subsequent management and optimization of supplier relationships and financial transactions. This can be beneficial for companies that want to make their procurement processes more efficient and gain better control over their spending.  

Source to contract: Conclusion:

Source to Contract (S2C) is a crucial part of procurement management that enables companies to design their purchasing processes strategically and efficiently. By systematically carrying out needs analysis, market research, supplier selection, tenders and contract negotiations, companies can not only save costs, but also ensure the quality of the products and services purchased. The S2C process also helps improve supplier relationships and supports risk and compliance management.