In today’s rapidly evolving business landscape, organizations are under increasing pressure to drive efficiency, cost savings, compliance, and agility in their procurement operations. One of the most effective ways to achieve this is by implementing a streamlined Source-to-Pay (S2P) process.

The Source-to-Pay (S2P) is an integrated process that connects sourcing, procurement, and payment activities into a single, streamlined workflow. It enables organizations to manage the full lifecycle of supplier interactions, from strategic sourcing to contract management, purchasing, invoicing, and payment.

Let’s walk through the key stages of the Source-to-Pay process using four core pillars: Source, Purchase, Fulfill, and Pay.

🔍 Source: RFQ → Quotation → Compare

The Source-to-Pay journey begins with sourcing. Organizations initiate a Request for Quotation (RFQ) to invite suppliers to submit pricing and delivery terms. Suppliers respond with quotations, which are then compared against each other based on cost, quality, delivery time, and compliance criteria. This competitive process enables buyers to make data-driven decisions and select the most strategic suppliers, often leading to cost savings and stronger supplier partnerships.

🛒 Purchase: Purchase Requisition → Purchase Order → Approval Workflow

Once a supplier is selected, the next step is initiating the purchase process. Requesters raise a Purchase Requisition (PR) for goods or services needed. These Purchase Requisitions are routed through an approval workflow to ensure compliance with budgets and procurement policies. After approval, the Purchase Requisition is converted into a Purchase Order (PO), which is sent to the supplier. The Purchase Order formalizes the transaction and confirms pricing, quantities, and delivery expectations.

📦 Fulfill: Goods Receipt → Inventory

The fulfillment stage begins with the supplier shipping the ordered items or providing the services. Upon delivery of the ordered items or services, the receiving team performs a Goods Receipt (GR) to confirm that the items delivered match tahe PO in terms of quantity and quality. For materials, the goods are added to the organization’s inventory system, and the status is updated for downstream financial and audit tracking. Timely and accurate goods receipt is crucial for smooth invoice processing.

💰 Pay: Invoice → 3-Way Match → Payment

The final phase is payment. Suppliers submit an invoice based on the delivered goods or services. The system performs a 3-way match — comparing the invoice with the PO and the goods receipt — to ensure everything aligns. Once validated, the invoice goes through any necessary approvals before payment is processed, either through scheduled terms or early payment programs that offer discounts.

A well-structured Source-to-Pay process brings clarity, control, and consistency to procurement. It reduces manual errors, ensures compliance, accelerates procurement cycle times, and unlocks strategic value from supplier relationships. With modern platforms like SAP Ariba and SAP S/4HANA, these processes are automated and integrated, making procurement a powerful driver of business performance.