Part one of PASA’s three-part series on Exploring Procurement Automation, explored procurement-to-pay-automation – today’s article explores themes of readying your organisation.
In part two, PASA spoke with Sanjay Kadkol, Technical Account Director at sourcing and procurement software company JAGGAER.
Innovation and advances in technology are unlocking new capabilities for organisations across almost every business function. The pandemic, ongoing global microchip shortages, and incidents like the blockage of the Suez Canal have highlighted the volatility of supply chains. Consequently, procurement is increasingly viewed as one of the most valuable and critical business functions, warranting greater investment in digital transformation—particularly for organisations still attempting to manage their procurement by spreadsheet alone.
The pandemic accelerated investment in digital transformation and widened the gap between the organisations already heavily funding technologies like artificial intelligence, automation and the cloud, and those that are racing to catch up. With 63% of global organisations having increased their digital transformation budget as a result of COVID-19, spending on transformation initiatives is expected to reach US$6.8 trillion by 2023.
When it comes to procurement, the most successful organisations are well-versed in these future-shaping technologies and on their way to achieving the pinnacle of digital transformation in the supply chain: autonomous procurement.
Sanjay takes a closer look at what autonomous procurement is, the benefits it will bring to the procurement function and how organisations can ready themselves to compete in the digital landscape with a more intelligent and autonomous future.
A natural evolution in digital procurement
The procurement function has come a long way. Digital procurement has evolved over the last few decades from automated procurement characterised by the automation of simple and repetitive tasks, to augmented procurement where systems learn from human feedback to provide insights on specific tasks, and finally intelligent procurement.
We define an autonomous procurement solution as one that will not only have cognitive capabilities embedded throughout the platform but will build on those capabilities to automate entire sourcing and procurement processes without the need for any human intervention.
Autonomous procurement is the next step in the digital procurement journey – it leverages a range of technologies including machine learning, natural language processing, augmented analytics, the internet of things (IoT) and of course, artificial intelligence. It delivers wide-ranging improvements and enables organisations to derive greater value from their procurement function.
The benefits of autonomous procurement
One of the greatest advantages of autonomous procurement is that it will free up time spent on repetitive tasks, allowing procurement teams to focus on value-adding activities like building stronger supplier relationships and developing and refining their procurement strategy.
For example in one case study, a leading construction company in Australia recently implemented a supplier management solution to digitise supplier onboarding and risk management processes. The highlight of the implementation was using automation to manage complex supplier risk assessments-based on information provided by suppliers during the registration process, cross-referencing that information with 3rd party data providers to determine actions.
This removed the need to hire staff to handle repetitive tasks all day, every day—allowing their procurement experts to focus on strategy rather than manual data processing.
Autonomous procurement will also increase the level of agility and responsiveness of procurement functions so organisations can more quickly adjust to changes in the market or disruptions in global supply chains. As unexpected events arise – the global pandemic being a perfect example – agility will become one of the most valuable attributes of a resilient procurement function. An attribute that could make or break an organisation in fast-changing times.
As an intelligent system, the tools of an autonomous procurement platform continue to evolve and expand over time. Because they build on data and learn as more tasks are executed, autonomous systems only get more useful over time.
The journey starts now
The level of change and transformation needed to realise the full benefits of autonomous procurement will not happen overnight but will require long-term commitment, strategic investment, and a holistic approach to avoid the pitfalls of failed digital transformation initiatives.
The journey towards autonomous procurement requires a shift in mindset that understands procurement as an extremely valuable business function, not just a cost-reducing exercise.
While we are still a long way from achieving fully autonomous procurement solutions, organisations are making headway and waking up to the critical importance of strengthening their procurement teams to weather future disruptions.
Missed Part one of Exploring Autonomous Procurement? Read about more of the benefits the technology is bringing to the procurement world.
In Part three next week, hear from Chironix CEO Daniel Milford.