To Efficiency and Beyond: The Tech-driven Transformation of Procurement

There’s a new style of procurement finding its feet in the enterprise and it’s shifting procurement’s role from that of cost containment to one that is equally focused on value creation and sustainable growth – and it’s delivering seriously bankable dollars. 

For procurement departments, this means we are no longer passive players but active drivers of innovation and revenue generation. Key to this dynamic new role is the drive to inject efficiency into many aspects of the supply chain.

After all, efficiency is the defining quality that can significantly influence whether modern organisations can thrive in the face of disruption and maintain their competitive edge. Efficiency is finding its value beyond supply chain operations, it involves the technologies and tools you adopt, the processes you implement, and the way you collaborate with other business departments. 

But first, what are the major impediments to efficiency? Inefficient and labour-heavy processes are often plagued by manual data entry and inaccuracies – particularly when data is managed in spreadsheets. The absence of standardised procedures further compounds these challenges, making it difficult to achieve consistency. Complex supplier onboarding processes and ongoing supplier management issues are also contributing to the problems.  

So, how are procurement leaders addressing these obstacles strategically for improved efficiency? 

In fact, it is the emphasis on digitisation that has propelled supply chains into the technology-enabled future. Strategic sourcing can be predictive, transactional procurement can be automated, and supplier management can be far more proactive. But with a vast array of tools and systems at your disposal, where should your efforts be focused? 

Automation is pivotal to efficiency with a reach extending from the initial stages of sourcing and requisitioning through to payment processing. By delegating repetitive tasks to technology, automation frees up valuable human resources in ways never before possible. It also promotes the standardisation of processes, eliminating variations and bottlenecks common to manual workflows, and another huge blocker of efficiency.  

The below automation examples are not mutually exclusive, they work together to create a more comprehensive and efficient automated supply chain ecosystem, but they do provide a window into the far-reaching range of automation opportunities available. 

• Robotic Process Automation (RPA) uses software robots to automate repetitive tasks such as data entry, order processing, and inventory management. 
• Automated guided vehicles (AGVs), conveyor systems, and robotics all handle once-human tasks like picking, packing, and sorting and come under the umbrella of warehouse automation. 
• Inventory management systems can automatically track inventory levels in real-time, reorder products when stock is low, and optimise stock locations for efficient retrieval. 
• Demand forecasting and planning solutions leverage predictive analytics and machine learning to automate demand forecasting, ensuring inventory levels meet expected demand. 
• Automated supplier management systems can be used to monitor supplier performance, send automated requests for quotes (RFQs), and efficiently manage supplier relationships. 
• Transportation Management Systems (TMS) automate the planning and optimisation of transportation routes, reducing transportation costs and improving delivery times.  
• Employing blockchain technology via Smart Contracts can automate contract execution and enforcement in the supply chain, to ensure transparency and trust among parties. 
• Finally, AI-driven chatbots can manage customer inquiries, order tracking, and support, improving customer service and reducing the workload on human operators. 

There are also a number of procurement suites that integrate automation and other capabilities to further drive efficiency. Of course, there are the core technologies that are the mainstay of any procurement function including, Supplier Networks, Supplier Risk Management, Spend Analytics, eSourcing, Electronic Catalogues, Contract Management, Supplier Information Management, eProcurement and eInvoicing.

Most organisations are currently using at least some of these platforms. But there are also emerging – often SaaS – solutions that are far quicker to deploy and faster to attract ROI too. Let’s look at some of the most promising new tech for procurement. 

• Cognitive computing and AI solutions employ pattern recognition software and iterative machine learning algorithms to rapidly categorise unstructured data – spend, cost, contract, and supplier information. They can also automate responses to supplier queries to drastically reduce administrative burden. 
• Intelligent content extraction uses a combination of Optical Character Recognition (OCR) and learning algorithms to extract critical data from unstructured documents – pricing tables, payment terms, and clauses – which once took take days or weeks to do. 
• Predictive and advanced analytics is experiencing rapid uptake tanks to its ability to leverage machine learning and AI to predict scenarios such as cost fluctuations, demand, and supplier risks – something previously out of reach to mere humans. 
• Collaborative network platforms are offering unprecedented visibility into value chains for both buyers and suppliers, supporting performance measurement, joint process improvement, and risk identification. 
• 3D Printing is worthy of a mention for its ability to quickly create physical objects from digital models for rapid prototyping and has the potential to eliminate some stocking activities.   

Of course, technology isn’t an efficiency solve-all, in order to effectively harness its capabilities technology adoption should be paired with new operating models, skills and practices. But it does serve as a powerful enabler, amplifying the impact of well-planned strategies and supporting organisations to innovate, streamline processes, and create new efficiencies across the procurement function.