Procurement is increasingly being asked to exist at the intersection of multiple contradictory trends.
At a time when procurement leaders are searching for ways to deliver strategic wins and new forms of innovation for the business, the traditional yardsticks for success—reliability and cost containment—have never been more important. Procurement teams are consistently being asked to do more (and more complex) work. Simultaneously, procurement headcounts aren’t rising in step with workloads.
CPOs are increasingly turning to automation as a way to support existing staff while increasing efficiency, streamlining processes, and managing internal spend. For procurement leaders exploring the potential for automation to alleviate pain points and unlock new strategic wins, we’ve put together the top X use cases for automation in procurement.
1. Payments
Manual payment processing, including invoice management, is a common cause of bottlenecks, delays, and data entry errors. The risk of human error and lack of visibility also raise the risk of vendor fraud.
Robotic process automation can automate payments based on specific triggers. These RPA bots can improve supplier relationship management and maintain a positive business reputation by reducing processing time and errors. By automating the payment process, accounts payable can efficiently and accurately handle payments, record transactions, and store data for subsequent reporting activities such as month-end close and financial reporting.
2. Contract management
Contract management is another time consuming element of procurement. The ability for RPA tools to automate some of the more time consuming elements of the contract management process can be a huge source of efficiency for procurement teams.
Contract management automation tools can draft new contracts by automatically extracting vendor information from other sources. They can flag imminent or incipient compliance breaches or contracts that are about to expire. Automating the contract management process can even improve customer satisfaction, as the number of errors and time to delivery go down.
3. Pricing negotiation
A large part of the procurement process is cost negotiation between procurement representatives. While the process seems, on the face of it, to be very human-centric, pricing negotiations are actually a prime candidate for automation. Once a procurement department receives a vendor quote, they can use an RPA bot to automatically negotiate prices based on a rules-based framework. Certain pre-programmed criteria determine whether the bot approves, rejects, or negotiates a quote.
4. Repeat orders
Traditionally, procurement teams would be required to either manually monitor inventory levels across the organisation or wait to be told to reorder stock by other stakeholders. With RPA tools, bots can automatically monitor inventory levels and create purchase orders for the products that are about to be depleted.
5. Inventory management
Much like repeat ordering, inventory management automation takes a highly manual and error-prone process and streamlines it.
Combining RPA tools with IoT devices makes it possible to monitor inventory levels in real time. This then enables automated reporting and inventory audits. For businesses like grocery stores that rely on fresh inventory and need to avoid overloading on perishable produce, having an up-to-date inventory report is crucial. Automated inventory management identifies products lingering in the warehouse, reducing the chances of overstocking perishable items.
6. Supplier onboarding
Supplier onboarding is a long and necessary process that can consume a lot of valuable time for procurement teams. By using RPA tools, CPOs can automate multiple aspects of the onboarding process. Bots can, for example, scrape supplier information from the web like references and prices, and compile it into a report.
RPA also has the capacity to conduct a basic evaluation of suppliers based on rule-based decisions. For instance, if a company needs a logistics company with experience moving fragile or unstable materials, and can’t find relevant case studies on the vendor’s website or profile, the vendor may be ranked lower. When done manually, these initial assessments can be time-intensive. By delegating these tasks to RPA bots, procurement teams can focus on more valuable work.
7. Sourcing
Sourcing is the process of identifying and selecting suppliers to meet the organisation’s needs. Traditionally, sourcing is a highly manual, time-consuming process prone to delays and communication errors.
A procurement automation platform streamlines this process by providing a centralised portal for supplier communication, bid comparison, and document storage. It also offers insights on price and delivery to ensure procurement teams are able to select the best supplier based on criteria including, but not limited to, price, reliability, sustainability credentials, and more. Increasingly, automation is allowing AI-enabled solutions to buy and sell products with minimal human intervention and oversight.
