An Affirmative Defense of Procurement Automation
“We will work together... unwillingly at first, on your part, but that will pass.”
- ‘Colossus,’ the AI at the heart of the movie The Forbin Project
With every day that passes, it becomes increasingly clear that automation will soon touch all areas of our lives. Just as ‘technology’ is assumed to offer an improvement on everything, the rapid advance of automation is quickly becoming perceived as a foregone conclusion, and procurement is no exception.
Although it is easy to let popular trends ‘just happen,’ procurement professionals owe it to themselves and their organization to take a more proactive approach to automating our processes. In response to the question, ‘Why automation?’ procurement should not shrug and say, ‘Why not?’ Instead, we should be prepared with an affirmative defense, one that asserts the reasons that procurement automation should be strategically and enthusiastically pursued.
What does process automation mean?
Procurement already has quite a bit of automation at our disposal. We send RFPs to suppliers all over the world with the click of a button and optimize the bids we receive in a similar fashion. Invoices are transmitted electronically by suppliers and electronic payments are issued in return. And yet, despite the automation brought to the function by procurement software to date, there is still a lot of human intervention: clicking, transmitting, receiving, and approving.
The incremental improvements associated with procurement automation will be gained through our processes: the parts of procurement still primarily handled by human beings. While some roles will always belong to the human domain, there is significant low value-added, transactional work still being done by overworked procurement teams that could be investing their time elsewhere. All tasks that can be governed by protocols, patterns, and logic are key targets for the benefits of automation, as are many less obvious ones. Through ‘fuzzy’ logic and heuristics, software can ‘learn’ to resolve many questions that require subjective thought today.
Will procurement be automated?
There is no question that some parts of procurement will be automated. In fact, automation is aligned with the fundamental objective of procurement, and that is to remove unnecessary (or non-value adding) waste and effort from organizational systems and processes. Leveraging automation is a natural part of procurement’s evolution.
In addition to the natural synergy that already exists, procurement should want to mirror the modern consumer experience with regard to automation since this sets the expectations for internal and external stakeholders alike. Most procurement software, leading though it may have been at its inception, has fallen so far behind the B2C user experience that it may actually hinder procurement more than it helps us. We can not allow the same to be true of automation. Having made the mistake once of discounting the importance of B2C advancement, there are no excuses for procurement failing to keep pace with consumer automation from the earliest days of its commercial availability.
Advantages aside, not all automation is good automation. As with anything else process-oriented, there will be a right way to implement automated processes. Automation should lead to the elimination or improvement – rather than the duplication - of manual efforts. Each current structure and process should be evaluated objectively to see it if continues to add value or if it has become an artificial construct. For instance, as accustomed as we are to catalogs in procurement, the searchability of data is doing away the need for them. If software knows (or can know) who each person is and what their purchasing authorizations are, catalogs only continue to exist for the convenience or familiarity of those who use and administer them.
Automation is not an all-or-nothing proposition. Procurement shouldn’t ask should we automate as much as what should we automate? Where are machines (whether software or hardware based) better positioned than people to create value and achieve success? If we divide the end to end procurement process into its major components, there are sub-components of each that are prime targets for automation.
How can we build a bridge from today’s technology platforms to tomorrow’s automation?
If procurement takes an active role in determining the opportunity for automation, one of the first steps will be to lay out a path from the current state to a future desired one. This critical process, and all of the necessary inputs to it, can not be worked in isolation. Like any other change, automation will have varying impacts on a range of stakeholders. Procurement must be prepared to bring them along, articulating the value of automation and listening to concerns as they arise.
Automation is not without a downside. By systematizing a process, we assume that all value has been drained out of it, and that there is no further opportunity for innovation. If we are wrong, and changes taking place around the automated process create the opportunity for improvement or evolution, humans must still be prepared to intercede as a system will not have the same capacity to respond. And if there is the need to improve a process, work on it in parallel with the automation effort. While it would be considered an error to automate a broken process, there is no need to delay the benefits of process improvement until the software is in place.
Procurement must also make sure that upstream functions and processes are ready to feed the automated process(es) at a rate that optimizes their return and that downstream ones are ready to handle the increased throughput made possible by automation.
Change is both inevitable and accelerating, but there is no reason to fear procurement automation or accept it passively. People have a way of inventing innovative new things to do, meaning that humans will never be completely ‘automated out’ of corporate processes.
- Stress flexibility in the selection of all systems, even ones that are not responsible for process automation.
- Be prepared with newly identified strategic priorities of the people and resources freed up by process automation.
- Remain focused on the needs and opportunities of the business; never automate for the sake of doing so.
For more information on this topic: Watch the on-demand webinar: Procurement Automation: Are Your Really Ready for All Your Processes to Run Faster? from SMART by GEP and Sourcing Industry Group
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