Procurement has rapidly become a high-impact area for automation. Traditionally, it has been primarily a back-office function, focusing on handling and approving requests from business stakeholders for products and services, dealing with vendors, and ordering and obtaining the items or services. Now, organizations are looking at procurement as playing a bigger role as a strategic partner. They want procurement to help drive business outcomes, for greater efficiency, resiliency, and cost savings. And automation can be the catalyst to make that transformation possible.
Procurement leaders have faced several challenges in their traditional and expanded roles. Many of the procurement tasks are handled manually, with paper-based tools, including spreadsheets, and multiple human touchpoints. That manual effort can slow down the process—affecting efficiency and productivity—and opening the door to errors.
Robotic Process Automation (RPA), especially when combined with artificial intelligence (AI) to support intelligent automation, can enhance the efficiency and accuracy and reduce the related costs of procurement. According to the Everest Group, RPA and AI can also provide procurement leaders with strategic insights to be better business partners.
The diagram below summarizes the core procurement processes chain. The Everest Group image shows the Source-to-Pay (SPS) value chain split into two process groups: Source-to-Contact (S2C) and Procure-to-Pay (P2P). These are two key areas for intelligent automation.
The Everest Group evaluated all of these processes using a proprietary methodology to assess the suitability of processes for automation. Named the Enterprise Value Chain Approach (EVCA), this five-step methodology helps businesses identify business processes, analyze each process, spotlight high-value opportunities for automation, and define metrics to prioritize those opportunities.
Using EVCA scores, processes are divided into the following four quadrants based on cost savings potential and overall automation potential:
In this blog article, we will take a look at one promising process in the “pursue” automation category for procurement—requisition-to-PO—and show how intelligent automation can be applied.
For procurement specialists who are working with legacy solutions, including manual processing, the requisition-to-purchase order journey can be full of obstacles and worries. The specialists have to handle data from many sources such as purchase orders, receipts, agreements, RFPs, RFQ, and emails—unstructured and structured data. And that can take a lot of time for human workers to process, affecting productivity and cost-efficiency, with the possibility of some data falling between the cracks, so to speak, as the result of errors.
The typical requisition-to-PO involves a complex approval structure. A sudden influx of requests or a few mistakes along the way and you could face a process bottleneck, causing delays, long cycle times, and a bad procurement experience for stakeholder, vendor, customer, and the procurement specialist.
Legacy solutions can also affect visibility. Informational silos, inefficient data storage, and large volumes of paper often associated with those solutions can make it difficult to keep track of purchase orders, monitor spend, cyberattack, and fraudulent activity, as well as gain insights to predict future needs.
Intelligent automation combining RPA and artificial intelligence automates and streamlines procurement tasks—increasing efficiency, lowering related operating costs, reducing errors, and improving the experiences of everyone involved in the processes. In addition, procurement specialists can move into higher-value work such as category management and analysis.
Intelligent automation also offers benefits specifically for the requisition-to-PO process, including:
Intelligent automation can help transform your procurement into a strategic partner to drive business success.
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Catherine Calarco, senior director of industry strategy and marketing for life sciences, has more than 20 years of global leadership in life sciences, digital medicine, and technology. She's known for driving significant B2C/B2B revenue growth and developing innovative, award-winning digital health and technology products.