The age of digital transformation has, in recent years, led to a growing interest in streamlining and optimizing workflows across all areas of business—including procurement. Traditional procurement processes are paper-based and built on time-consuming, inefficient manual processes plagued by bottlenecks and inaccuracies. Electronic procurement (eProcurement) technologies such as artificial intelligence (AI) and process automation are ideally suited to the task of modernizing procurement, particularly robotic process automation, or RPA.
Robotic Process Automation is Key
Procurement professionals work in a world full of high-volume, repetitive tasks and iterative, data-dependent processes. When performed by humans, these tasks and processes are low-value, prone to inaccuracies, and costly in terms of both wasted time and missed opportunities.
It’s time to send in the robots.
Don’t run for the bunker just yet—nary a Terminator nor Transformer will darken your procurement team’s door. The “robot” in question here is a software robot—a specialized application that records and repeats a series of steps to accomplish a given task. These software robots can open and scan emails for specific content and generate automatic replies, fill out and submit forms, or capture and then perform a specific series of tasks to streamline procurement activities (e.g., auto-populating a purchase order with information from the procurement system).
RPA comes in two varieties:
- Independent RPA, which fully automates a given process (or set of processes) with minimal or no human intervention. This type can be leveraged to fully automate low-value and repetitive tasks for absolute accuracy and greater speed.
- Assisted RPA, which performs assigned tasks but allows the task owner(s) to make decisions on how best to proceed. This type is best for more complex tasks which still require human intelligence and action.
Robotic process automation minimizes the need for human intervention, letting your team focus on higher-value tasks while bringing greater efficiency, accuracy, and cost savings across the entire procurement cycle. To do so with the greatest efficacy, however, requires combining RPA with artificial intelligence.
AI gives the hard-working software robots the synthetic intelligence necessary to adapt, revise, and optimize workflows based on changing circumstances and contingencies.
When AI Meets RPA
Robots, unlike many humans, excel at following orders to the letter. However, even the most efficient ‘bot in a given RPA system is helpless in the face of unforeseen circumstances without help from a more advanced technology: artificial intelligence.
AI gives the hard-working software robots the synthetic intelligence necessary to adapt, revise, and optimize workflows based on changing circumstances and contingencies. Machine learning, a more specialized form of AI, allows software to apply the insights gleaned from data analysis to “learn” how to perform tasks more efficiently, make predictions based on historical patterns, and provide an intuitive, user-friendly environment for anyone working within the procurement system.
Beyond improved business process efficiencies and lower cycle times, artificial intelligence makes it possible to integrate technology such as natural language processing (NLP) into your procurement automation workflows. By analyzing spoken and written input, the system can learn human language patterns and apply that knowledge to:
- Address user search queries.
- Monitor and adjust inventory levels of production-critical supplies and services automatically through automatic generation of a purchase order for review and approval or automatic purchase based on user-defined budget thresholds.
- Perform repetitive tasks such as generating a purchase order, confirming three-way matching on an invoice, or routing and tracking requests through the approval process.
- Analyze market trends, supplier performance, and internal process efficiencies to reveal actionable insights for improved competitive advantage, contract negotiation, and workflow optimization.
- Flag areas of increased risk for further review and suggest both causes and solutions.
- Parse contracts, financial reports, regulatory requirements, and other documents to confirm compliance and reveal opportunities for improvement and growth.
Procurement Automation Benefits Your Entire Business
While they provide immediate gains to efficiency and productivity on their own, when leveraged as part of a cloud-based, comprehensive procurement solution, RPA and AI can enhance your entire procurement function in a variety of ways, including:
- Streamlined workflows. Procurement automation takes human labor, and errors, out of your most common procurement processes. Automated approval workflows with built-in contingencies and reminders eliminate bottlenecks and expensive delays. Forms are populated automatically, eliminating the need for time-consuming data entry.
Procurement workflows can be connected to your existing enterprise resource planning system (ERP system), legal team, and accounting software to integrate and centralize data and provide greater transparency and process improvements across all business units.
- Total spend visibility. Automated procurement processes track every transaction, removing maverick spend and reducing risk from fraud and theft while ensuring accurate cash flow calculations. Stakeholders can access information in real-time, from both desktop and mobile devices, and use advanced dashboards to transform raw data into actionable insights on demand for better financial reporting and planning.
- More strategic sourcing. A 2018 report from Levvel found that 33% of companies struggle to obtain adequate visibility within their supply chain, while 23% struggle to find high-quality suppliers and 30% suffered from poor supplier performance, compliance, and consistency. eSourcing reduces waste and leverages data analysis to ensure optimal ROI for every purchase through optimal terms, conditions, pricing, and compliance.
Vendor portals bring your suppliers into your system and connect suppliers with your workflows to provide end-to-end transparency for tracking your preferred key performance indicators (KPIs) and additional performance and savings-oriented insights.
- Lower costs and greater savings. Simply by eliminating paper, manual processes, workflow redundancies, and the need for most or all human intervention, procurement automation generates substantial savings on day one. AI-assisted approval workflows add further savings by removing the need for human touch on spend within established parameters, and centralized data management shaves hours off of cycle times for invoices, purchase orders, contract management, and audits.
Freed from low-value drudgery, your team can focus on more strategic and innovative responsibilities. Eliminating the need for seasonal or temporary help to process high-volume tasks like invoices reduces overhead, and data analysis can reveal hidden opportunities for market expansion, negotiation of better contract terms and pricing, and shared strategic initiatives with your most trusted suppliers.
Upgrade to Better Procurement with Automation
Making the switch to an automated procurement system brings substantial benefits, from improved contract management to more strategic sourcing to greater spend visibility and improved decision making. Understanding how these technologies work, and the ways in which they help procurement organizations overcome the inefficiencies of the past, is the first step to transforming automated procurement processes into greater productivity and a healthier bottom line.