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Four Ways to Start the Digital Procurement Journey

March 17, 2020
New Kearney report paints a picture of a procurement department that fully leverages the value of artificial intelligence, robotic process automation and other advanced technologies.

Digital transformation is no longer just about using technologies to capture value; it’s a powerful tool that helps organizations drive top-line growth, bottom-line efficiency, and radical business transformation. “Spurred by both established and emerging technologies, digital-enabled businesses are becoming smarter, faster and more scalable,” global consultancy Kearney states in “Procurement: Making digital transformation work for you.”

Enabling Good Collaboration

Kearney says procurement organizations should focus on using digital tools that enable effective collaboration across a network of external partners. Doing so helps procurement create new, innovative business models. “As digital trends disrupt the supply chain, business leaders are being forced to rethink their traditional operating models,” the company states.

“In the digital age, expectations for procurement are no longer confined to the contribution to the bottom line,” Kearney continues. “Backed by real-time access to market data and trends, procurement can offer valuable information for top-line strategic decisions.”

Highlighting procurement’s increasing sophistication—and how its role has been elevated from transactional management to strategic sourcing over time—Kearney sees automation, advanced analytics and artificial intelligence (AI) all playing an important role in its future. These technologies not only help unlock new areas of value, but they also keep downstream transactional activities “seamless and efficient.”

Robotic Process Automation

The term used for software tools that partially or fully automate human activities that are manual, rule-based and repetitive, robotic process automation (RPA) works by replicating the actions of an actual human interacting with one or more software applications to perform tasks such as data entry, processing standard transactions or responding to simple customer service queries. According to AIIM, RPA tools are not replacements for the underlying business applications; rather, they simply automate the already manual tasks of human workers. 

As more technology makes its way into the digital procurement environment, Kearney expects RPA to have a real impact on the procurement function. “It differs from traditional software by working at the user interface level, replicating the exact actions of a human user—effectively a virtual method of business process outsourcing,” Kearney points out. “RPA augments human resources with virtual ‘bots’ to improve productivity and allow people to focus on activities that add value.”

This, in turn, helps to enable operational excellence (i.e., speed, accuracy and quality); enhances stakeholder engagement; and most importantly, contributes to the bottom line. “There is a wealth of RPA opportunities across the procurement value chain, particularly within the downstream operational procure-to-pay process where adoption is the most straightforward and brings the most value,” Kearney states, adding that numerous procurement organizations are already using RPA to grow automation and compliance across transactional activities.

Four Success Tips

To procurement organizations that are just beginning to dip their toes in the RPA pool, Kearney offers these four tips for project success:

  • Optimize your processes. Improve your processes before attempting to automate them. RPA often fails because the focus was on automating process issues, which only buries the problems within the automation codes. Instead, RPA must be treated as an opportunity to revamp process—using automation to run the process in the best way possible.
  • Engage your stakeholders. Assess the appetite for change and engage business stakeholders early. Business stakeholders must be open to the change and ready to take on new tasks of managing the automation. Communicate with stakeholder groups early as hype about robots can create false perceptions that cause people to resist the change.
  • Create a proof of concept. Prioritize a proof of concept to deliver rapid benefits with minimal investment in order to build confidence in the solution. A typical RPA can be automated in six weeks and deliver an in-year return on investment of more than 300 percent.
  • Focus on design. Consider the entire operating model as the organization structure may need to be reshaped and roles reengineered. Focus on teams within the organization rather than on discrete processes.

“Digital disruption has been keeping business leaders awake at night, many of whom fear their businesses will get left behind. In reality the digital wave is already rising,” Kearney concludes. “To stay relevant, procurement will need to not only embrace digital but also rethink their strategies and create a new organizational structure.”

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About the Author

Bridget McCrea | Contributing Writer | Supply Chain Connect

Bridget McCrea is a freelance writer who covers business and technology for various publications.