The IT sector has a soft spot for abbreviations and acronyms. You’d think it’s just important to have three letters. They only provide clarity for insiders, though. Outsiders remain confused after looking at them and sit with question marks in their eyes. This is also the case when words and terms with different origins are transferred into the digital sphere. And it’s the case for procurement, which has its origins in the field of business administration. Time for a summary.

Procurement: out of the sea of names

Let’s start with the word procurement itself. If you root around online, it will immediately become apparent that this word is or should be a generic term.

Definition: Procurement

Definition: Beschaffung

The word procurement describes all external input factors required to preserve and maintain the company’s operational processes. In other words: In business administration, procurement is among the functions of a company whose aim is primarily to purchase services and materials for the purposes of production and resale.

One of the main objectives of procurement is therefore to maintain the supply of a company at the lowest possible cost. Particularly in times of globalized and often volatile markets, special opportunities and challenges arise here. Well thought-out and efficient procurement supports companies in taking advantage of these opportunities.

Terminology: Procurement management

Definition: Beschaffungsmanagement

The phrase procurement management describes how decisions on supplying internal consumers are made, and in which processes. In other words: Procurement management is the answer to the question of who, when, where and what is provided by which external suppliers, at what cost and at what level of quality to maintain operational processes. The primary aim of procurement is to guarantee the security of supply. Naturally, the procured items are varied and include production materials and workers, technologies and rights, material assets and services, etc.

The terms procurement and procurement management describe functions, i.e. they describe their purpose and aims. The following terms, on the other hand, emphasize the procedural aspects.

Explanation: S2P – source to pay

Source-to-Pay: Definition

The abbreviation S2P stands for source to pay and refers to the specific process of procurement. S2P represents the procurement process, starting with the search for a supplier of goods. Subsequently, S2P describes negotiations with goods suppliers, the commissioning of the same, and finishes with paying for the goods supplied.

Source to pay originally comes from the digital sphere, which means the entire procurement process is mapped with the help of software. The aim of S2P software is to increase the efficiency of procurement. The procurement process is no longer thought of as just a series of various tasks. Rather, source to pay software summarizes the procurement process into units. The aim is to increase the value of the business by improving expenditure analysis.

Concretization: P2P – purchase to pay

Definition: Purchase-to-Pay – Illustration

The acronym P2P stands for either procure to pay or purchase to pay and should not be confused with P2P in the sense of peer-to-peer networks. Procure/purchase to pay are variations on the same term and originate from the digital domain. What is meant, of course, is the procurement process. Purchase to pay comprises the acts of making purchase requisitions, ordering, buying, receiving, paying for and invoicing goods and services.

Both acronyms are mentioned frequently in the field of procurement processes, which are enabled and supported by software solutions. The aim is to provide a plus in transparency and efficiency in the purchase to pay process.

Description: RTC – requisition to check

This abbreviation also represents the procurement process. Requisition to check means the procurement process and starts with making a (purchase) requisition and ordering goods and services, flows into the receipt of goods and invoices and ends with payment and booking. Like P2P, RTC is among the words frequently used interchangeably.

Definition: E-procurement

E-Procurement definiert. Illustration

E-procurement stands for “electronic procurement”. This compound is a mixture of the generic term “procurement” and the electronic or digital resources and methods in the process level. In other words: E-procurement uses a unifying digital system to provide the processes for purchasing materials and services with the aid of network-based communication technologies. Just as important as the connection of back end systems like ERP systems is the provision of user-friendly and role-based UIs for making purchase requisitions, placing orders, and receiving goods and invoices. The main aim of the e-procurement systems is to provide more efficient and transparent procurement processes across the company.

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Thorsten Schmidt

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