Procurement automation is about automating procurement processes, with benefits being experienced from optimising procurement spend to streamlining the onboarding of suppliers.
The technology is known to speed up aspects of the procurement, relieving employees from repetitive tasks which take time and resources. But how does it work?
Some companies report procurement automation software is helping teams focus on business essential processes, while it also makes the procure-to-pay process more efficient.
In this first feature from a three-part series on Exploring Procurement Automation, PASA spoke with Gavin O’Kane, Chief Information Officer for Efficiency Leaders, a procure-to-pay automation provider.
Gavin says there’s a lot to get excited about with what may be perceived as a buzz word “autonomous” with real impact to be felt as the technology gains momentum.
“The word “autonomous” evokes a range of emotions, from excitement for a future world full of labour-free activities, to dreaded fear of out-of-control robots annihilating human existence. The reality is a lot less dramatic, where 99% of intelligent automation will be accepted without much fuss,” Gavin suggests.
“Think Netflix movie recommendations based on your watching history, or your phone telling you it’s time to pick up the kids from school (even though you didn’t set a reminder).”
Gavin says in terms of business processes, “autonomous” has a range of interpretations from classic workflow type processing to AI-based learning algorithms. “ Across procure-to-pay, automation solutions digitalise and connect the purchasing and accounts payable functions so data can flow between systems.”
Freeing up time
“The use of AI and a business rules engine within the solution enable the automation of repetitive, time-consuming, and error-prone processes, leading to greater operational efficiency and freeing up time for staff to take on higher value work.”
A study by PWC found 52% percent of companies accelerated their AI adoption plans due to the Covid crisis, (Harvard Business review).
A further 86% of those companies surveyed said AI is becoming a “mainstream technology” at their company in 2021.
“AI’s potential in procure-to-pay is tremendous: the system can learn from human input, analysing patterns and applying this knowledge to making decisions, even in edge cases, where traditionally the knowledge worker has been required,” Gavin said.
Gavin said the technology is advantageous with analysing masses of data, spotting patterns that might escape even the most experienced knowledge worker.
AI for risk assessments
“Examples might include risk assessment for the onboarding of proposed new suppliers, or trends in the supply chain that may have a knock-on effect for the business and ultimately a negative experience for the customer,” he said.
AI has evolved at an accelerating pace since its foundation in 1956 through major milestones, such as IBM Deep Blue beating chess champion Garry Kasparov in 1997, to more recently the Eugene Goostman chatbot seemingly conquering the “Turing Test”, pioneered by the late British cryptographer Alan Turin.
“Today it is commonplace to see AI – and more specifically Machine Learning (ML) – listed as features in standard off-the-shelf software packages or SaaS platforms, Gavin says.
“The extent to which ML is implemented is maybe a bone of contention, however with it available as a service from various cloud vendors we will gradually see this creep into standard software solutions, as the technology moves to the “slope of enlightenment” phase of the hype cycle.”
Early adopters can become ‘champions’
In an ideal setting, Gavin says an autonomous procurement system is part of an overall corporate-wide digital transformation strategy, where stakeholders understand the benefits – and risks involved
“Rollout of any new software platform comes with risk – and this is especially the case with the adoption of any emerging technology,” he said. “However, with risk comes reward, and early adopters can become real champions for their business as well as for the industry as a whole.”
Gavin says there’s a shift for the “knowledge worker”.
“The mature era of workflow automation took away the more routine grunt work leaving exceptions to be handled by experienced staff, the role of the knowledge worker will become more of an augmentation to the autonomous system, in a semi-supervised learning capacity,” he said.
He said this frees up these valuable resources to improve the function of their respective departments.
“In procurement, this may involve more strategic work managing suppliers and negotiating more competitive rates and terms, while in accounts payable this may mean advising on where money is being spent, where it can be saved, and timing payments to optimise working capital,” he said.
On the final word for autonomous procurement Gavin says it’s not a “blockbuster movie” just yet, but it can make life easier.
“Autonomous procurement will not make headlines and certainly won’t be recommended as the next best movie to watch, but it might just improve efficiency, unlock business value, and highlight that supply risk that you didn’t know you had.”
Gavin O’Kane is Chief Information Officer at Efficiency Leaders, a procure-to-pay automation software provider.
In next week’s edition of Exploring Automation, hear from Sanjay Kadkol, Technical Account Director at JAGGAER on discovering ‘Is your organisation ready for autonomous procurement?’