Why automation should have a place in modern procurement

If there’s one thing that could be usefully taken away from 2020 and all its troubles, it’s the idea that when worst-case scenarios occur, businesses who adopt a more proactive approach to shoring up their defences have a better chance of weathering the storm. But what role does automation play in strategy and are we just talking about AI?

Millions of us have been working from home, and with many also furloughed, companies have had to operate with fewer and stretched resources.  For those who have adopted it, automation has made these scenarios much easier to manage, with certain aspects of procurement benefiting from the upscale in productivity it provides.

It’s been touted as the next technology revolution for a long while but when people think of automation, they tend to think about AI.  The important issue is: that’s not the whole story.  There are other ways to automate processes at a simpler level - namely RPA and Machine Learning.  So let’s start at the top, and look at the opportunities of each type of automation in the procurement context.

The relationship between RPA, AI and Machine learning

Perhaps a good starting point is Robotic Process Automation, or RPA, which is designed to take care of common admin tasks.  On a basic level, RPA is an algorithm which is designed to mimic and replicate human actions to take on simple, repetitive tasks.  This is key for time-saving, allowing your team to work more productively in higher-value areas.  

Machine Learning is an entry-level stage of AI - its the input required for Artificial Intelligence to do its thing, but even used alone, just like RPA, it’s a quick, cost-effective win.  These algorithms detect patterns in your processes and use them for predictions or decision making.  It’s an excellent way to undertake spend classification - allowing the machine to analyse thousands of receipts to categorise spend in different areas.  Another opportunity for Machine Learning is in tasks such as vendor matching or for detecting anomalies in your procurement processes.

Artificial Intelligence, then, is on a higher level altogether.  It’s an umbrella term for solutions which can help teams make smarter or more efficient decisions.  By embedding AI software into applications from contract management, spend analysis or strategic sourcing, it will help you solve complex problems more effectively.  For example, AI can be put to use in areas such as risk management - in which it has the capability to screen millions of data points in order to raise alerts - or within purchasing software, to automatically review and approve purchase orders.  Having said that, AI is not a magic button - or a physical robot for that matter - and it will require expert oversight, but the depth of analysis it can provide is hard to achieve manually.  It’s expensive and complex but not a requirement to get started on the automation journey.

Is automation right for you?

So what business benefits can you expect to see from the use of automation?  In our last blog on Lean Thinking, we discussed how automation is a key part of the methodology, providing surety, efficiency and waste reduction.  

AI often suffers bad press due to a lurking fear that it will take jobs away from “real” people, but as we’ve explored above, it’s important to understand the reality of the situation and get away from the stigma of AI.  After all, to make an impact on procurement processes, simple automation tools are all you need - and there’s no suggestion your staff aren’t still valued.

In fact, in the context of procurement, these tools are becoming more and more relevant. I challenge you to think honestly about how judicial use of automation within your teams might conversely free up your existing staff to work more productively in other areas.  Automation provides freedom whilst adding value for clients and saving costs.  Surely a win-win?

Automation should be leveraged to cut wasted time from skilled individuals doing monotonous, time-consuming tasks.  RPA resolves simple admin processes immediately.  AI offers a deeper level of insight and analysis than could ever be achieved by humans in so little time.  Both cut waste and cost.

Automation: business benefits

The bottom line is: adoption of automation is vital to keep up with competitors and those ever-fluctuating market influences.  Once you adopt, you realise a host of benefits come alongside, including:

  • Reduced overheads;
  • Less internal process wastage;
  • Time-sensitive costs are kept down;
  • Valued staff are happy, focused and productive, being free to apply their skill to the aspects of their job they enjoy the most.

There’s no doubt that these compelling arguments are bringing more and more CPOs and CFOs to consider automation to assist and enable areas of business practice.  Right-back in 2018, KPMG wrote a White Paper on its research into the topic in which it concluded that one of the advantages of automation is it allows leadership to “fast track” the maturity of their organisations. Earlier this year, this article on LinkedIn discussed the practical ways four CPOs have been digitizing procurement processes for years.

In conclusion

As we’ve mentioned: automation is not a magic button.  But it does offer immense benefits.  The key is to understand the story the data is telling you - and how to apply that insight.  And in automating processes, it’s important to recognise the value of your people: automation is not replacing them - rather freeing up their skills and expertise for higher-level work which truly delivers added value.  Employees should feel empowered: by losing the shackles of repetitive tasks and gaining instant in-depth insight, each member of your team is placed at an advantage - and your business ahead of the curve.

To find out more about how Maistro is using is making procurement easier with automation, book a one to one demo with one of our experts.

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