Automation is one of the hotter topics in the procurement sector this year. Chief procurement officers are increasingly fixated on the potential for digital transformation to eliminate manual, routine tasks and processes.
Automation has generated significant productivity gains throughout the rest of the supply chain. Robotic process automation is cutting down on human error and lead times in the ordering process.
“Digital procurement is enabling a progressive digitisation of labour through automation of existing mundane processes and opening the door to new levels of performance at every stage of the procurement process,” notes a KPMG report.
In warehouse management, organisations are increasingly using robots and co-bots to automate and streamline the picking and shipping process. Logistics is even exploring self-driving vehicles to handle last-mile delivery. It’s unlikely, however, that self-driving long haul trucks will see mass adoption any time soon, given the disastrous collapse of the robo-taxi industry across several US cities.
However, in the procurement space, adoption of automation is lagging severely behind. According to a new white paper from SAP, procurement functions depend much more heavily on manual processes. Reportedly, these processes represent “a significant barrier to visibility, effective management, operational efficiency and organisational agility.”
The manual process problem
According to SAP “organisations that automate processes” are more agile than those reliant on manual processes. Essentially, they are significantly more capable of pivoting when needed and withstanding disruption. However, 37% of executives responding to their survey said that “most, if not all,” of their organisation’s procurement processes are carried out manually. That’s a shockingly large number of organisations working with legacy systems. Worryingly, these companies are failing to unlock the benefits of automated digital procurement. Not only that, but they are also exposing themselves to unneccessary risk.
As a result, 47% of executives said they find it difficult to gain real time visibility into spend. Additionally, 42% experienced reconciliation issues and exceptions.
The issue is that, when procurement is managed manually, human error becomes a troublingly constant factor. There are an allarming number of problems that manually conducting procurement administration can create. Communication breakdowns and mystery invoices drive inefficiencies. They also create grey areas where fraud can take place. Dark purchasing (unaccounted for spend from outside the procurement function) also flourishes in organisations where spend and sourcing are handled manually. Most importantly, manually managing procurement processes is time consuming. “This extra time costs money in terms of labour costs and affects your invoice processing costs. Over the course of a year in an organisation with high purchase volumes, this can make a tremendous impact on your bottom line,” notes Keith Murphy, head of content for Planergy.
- Collaboration & Optimization
- Sourcing & Procurement
