16th May 2018
Next-generation automation tools are freeing procurement from bureaucracy
As any procurement team knows, spending is always a lot more complicated and paper-heavy than it seems. Even once the best suppliers are found and assessed, there is a paper trail attributed to every selection choice and change. Suppliers need to be regularly monitored to ensure continued delivery and quality.
Advances in big data are already making this process much easier, although collecting and acting upon this data can still be headache. But developments in automation could make this process even smoother. As AI and automation tools grow more sophisticated, procurement teams are reaping the benefits of increased efficiency and time savings.
Through eSourcing programmes, procurement teams can drastically reduce the time taken to select suppliers. A variety of sensors and data-trackers are now available to measure many different metrics, both on premises and over the cloud. These programmes can gather insights from big data sources automatically to radically cut down the number of suppliers the team will even have to look at.
This shifts the working focus from the brunt work of collecting large amounts of data and sorting through large numbers of potential companies, to more subjective tasks, applying complex human judgement to strategic and informed decision making.
For instance, automation programmes can easily find the supplier that is best value for money, but human intervention is still needed to weigh financial considerations against other issues including corporate social responsibility, human resources, marketing and the supply chain, with a more holistic view to the company’s resources as a whole.
Once suppliers have been selected, the on-boarding and contracting process will be hugely simplified with automation tools. By setting up smart contracts, procurement teams can almost completely eliminate the administrative stages of verifying performance before confirming payment or other responses.
This can be made double secure if carried out on blockchain or distributed ledger technology, which records all transactions in a permanent format. The ledger can be added to as time goes on, but its records cannot be altered, so that it keeps a thorough, chronological record of every transaction.
Because it is distributed over a variety of servers it is also very safe from tampering. If certain deliveries are tied to the smart contract programme that triggers payment of a supplier, this means procurement teams can trust the technology to enact the next steps for them. Staff will no longer need to manually check supplier delivery, before confirming and having a programme office initiate payment.
This means the regularity and quality of delivery can be continually assessed and tied directly to spend on it. Alerts about any dip in this can be detected and automatically flagged up to human staff. This shifts the role rapidly from a focus on continual management of suppliers to simply managing exceptions and hiccups, saving time and labour.
And as the easiness of measuring delivery increases, so can the scope with which it is measured. More meaningful metrics around the quality of supply can be built into these measurement programmes, to give a deeper, more informed picture of what suppliers are doing and how they are performing. In effect, automating the quality of suppliers can improve the quality of procurement work itself.
This in turn means procurement automation can be applied to an increasingly complex areas that are harder to quantify in single metrics, such as management consulting services or legal, creative and marketing agencies.
As AI and automation technology continues to develop, teams will be saved from large amounts of administrative work, freeing up their time for the more strategic areas so they focus on pivoting procurement strategy according to data insights. Companies will be able to take a more holistic overview of company resources, to make the best and most strategic decisions to drive the business forward.