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Procurement teams spend a lot of time on tactical activities and end up with little time for more important tasks. This is where process automation can come in to its own: it can take on those activities, enabling procurement professionals to focus their time and efforts on value-adding strategic initiatives.
Robotic process automation (RPA) is an IT layer involving algorithms, natural language processing, and machine learning to enable rules-based processing of data and subsequent decision making, emulating how humans work with systems.
The implementation of RPA can work in both independent and assisted ways:
The benefits of using robots or machines to automate operations at warehouses or distribution centres is well-known and documented. Companies like Amazon and Walmart have been doing this successfully for the last few years. Yet, RPA goes beyond the use of traditional robots in manufacturing or distribution. It has a wide variety of applications in the service industry. Certain processes which are manual and repetitive in nature fall within the scope of automation.
Let’s take the example of the claims processing function of the insurance industry. The function requires a lot of manpower and investment of time and resources. RPA can completely change the way claims are processed leading to savings of time, money and effort. Here’s how:
The Procure-to-Pay (P2P) side of procurement can be completely revolutionised by RPA. At present, P2P involves processes which are heavy in volume, highly transactional in nature and again need investment of both time and resources. Once a business requirement comes in, a purchase requisition is made; the procurement department reaches out to vendors to get quotes and finalises a vendor (based on RFP or spot-buy) to procure the required items. A purchase order is eventually raised, followed by invoicing, goods receipt and payment.
RPA can automate most steps of this process by minimising human touchpoints, leading to enhanced order management and maintaining a strong audit trail for the future.
The first step in introducing RPA should be to identify the processes that could most benefit from it, and decide whether the independent or assisted model is more appropriate. After a cost-benefit analysis to build the business case, and investigation of possible RPA vendors and their successful case studies, you’ll be ready to design a pilot project, making sure to build in future-oriented scalability.
Implemented correctly, RPA can be used to automate multiple processes to bring about cost savings, and free up valuable time and resources for employees to focus on more strategic initiatives.
Deepesh Jethwani is a consultant at GEP
This contributed article has been written by a guest writer at the invitation of Procurement Leaders. Procurement Leaders received no payment directly connected with the publishing of this content.