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The future of automation in procurement

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A common complaint from procurement chiefs is that their teams spend too much time on administrative tasks. They would much rather they spent more time on growth-enhancing activities.

 

Robotic Process Automation (RPA) promises to take over administrative duties and give buyers back that precious time.

The beauty of RPA is its ability to implement change gradually. If you look at a traditional application integration, it’s usually highly specialised and carried out as part of a major project. Because RPA can be introduced to automate small, individual tasks, it is much easier to integrate because the team can become familiar with the system before it’s rolled out on a larger scale.

 

For example, it can be used to have vendor email attachments downloaded into a folder, which while taking an hour or two to set up would help save a buyer ten minutes a day.

 

Outside of that, RPA can retrieve sale and inventory data and analyse it to help prepare a demand forecast. While this would take a few days to set up in the first instance, when it’s in place for one product, it can easily be adapted for other commodities and services.

 

What’s more, that demand forecast can be integrated with an online vendor qualification and reverse auction tool.

 

But RPA is not limited to simply covering the procurement cycle. Over time, it is also likely to cover bidding from the vendor’s side. In this scenario, robotics will be used on both sides of the negotiation. From the human seller’s point of view, they will need to get their cognitive input into the process early to influence the scope of services and specification required to address customer needs. If not, when it reaches the negotiation stage, there will be less of a chance to have a human impact because the robots will already be interacting.

 

Big gains

 

The use of ’Big Data’ is becoming increasingly essential in understanding underlying drivers of trends in pricing, and volumes of procured products and services. Very often, whole life cost is driven by complex systems, and to date, procurement has struggled to truly understand it.

 

Major price movements can be determined by factors such as technological change, macroeconomics and geopolitics. The more data there is, the better the function can predict price fluctuations. The prognosis for commodities could even point us towards new materials and a completely different approach.

 

Things will also change with the implementation of the Internet of Things, which will see sensors embedded across the supply chain.

 

These sensors will significantly improve operational capabilities and levels of customer service. Vendor negotiations will change considerably as a result.

 

Traditionally, procurement has had its basic set of vendor performance measures: whether they deliver on time and whether the product lasts longer than six months, for example. The embedding of sensors will mean that contracting will be based on more detailed data, which will be able to be fed into an RPA system.

 

A further development will involve new products and specifications. Although there is some ability to automate the communication of specifications into the procurement cycle, the actual development of new specifications is still an area that humans lead on. At a very basic level, you can automate it from web-based information, but I think in the future we will see artificial intelligence enabling vendor systems talking to buyer systems to develop specifications.

 

Richard Bell is the former procurement director at Averda and founder of Steps 4 Consulting. Read the full article here

 

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.

Richard Bell
Posted by Richard Bell

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