May 22, 2023 | Procurement Software
Digitalizing key functions is top of the mind for business leaders today.
Given the rising economic uncertainty and supply disruptions, procurement is likely to feature among functions that must be digitalized without delay.
And there are a lot of reasons why procurement should feature at the top of this list.
When procurement turns autonomous, it can truly focus on core and strategic business priorities. In many enterprises, procurement is now expected to play a bigger role and contribute to several programs including ESG and sustainability, supplier diversity, emissions tracking, supplier risk management, supply chain resilience and business continuity. At the same time, it must also deliver on cost savings and efficiency.
CPOs and CIOs expect procurement to address all the above challenges, says Santosh Nair, vice president of technology at GEP in this webinar. They want to see progress on all these initiatives, that too with a smaller and leaner team.
While the expectations from procurement have changed significantly, this also means tremendous opportunities for the right functions and the right leaders to make an impact, adds Nair.
Procurement can fulfil all these responsibilities when it leverages technology and automates repetitive tasks, many of which are currently performed by humans.
Autonomous procurement is a data-driven approach to procurement that can work with historical data derived through past experiences as well as real-time data synchronized with market trends.
Procurement has evolved into data-driven decisioning, says Saratendu Sethi, vice president at GEP. Using past actions and experiences, artificial intelligence and machine learning algorithms can make recommendations on the next best course of action, he says.
Autonomous procurement provides the ability to recognize patterns coming not just from your own systems but from third-party systems as well. It provides the intelligence needed to proactively act and make recommendations based on these patterns. In this way, it simplifies decision-making for procurement.
For example, if product prices are expected to increase in direct procurement, it sends an alert to the user and recommends an appropriate action. Based on these market trends, it initiates procurement activities that can either be automated or reviewed by the user.
Autonomous procurement minimizes human intervention but does not eliminate the human worker. Instead, it allows human workers to focus on strategic tasks. In this way, human workers can fulfil their core responsibilities and add more value to the function. They can also strategize how to make better use of autonomous components in bigger, broader areas.
Also read: Procurement Is Turning Autonomous. Here’s How
Here are some of the ways autonomous procurement can add value to your business:
Selecting suppliers by checking and comparing bids can be a tedious task. Autonomous procurement simplifies this process. It looks at past performances and contract and payment terms to make recommendations. Further, it also simplifies the supplier onboarding process.
With autonomous procurement, users can compare products and make purchases via their mobile phones. They can use speech to text, chatbots and other advanced tools in this process.
Autonomous procurement makes it easy for businesses to adopt technology. It also brings consistency across a remote diverse workforce. Additionally, it helps the workforce make the best use of technology with minimal training.
No transition can happen overnight. Before procurement can become fully autonomous, it will go through an ‘augmented’ phase. In this phase, the procurement workforce will start using technology and gain better understanding of digital tools and algorithms. Systems will also learn from human interaction to provide better insights and recommendations over time.
For example, procurement teams in many businesses are now using digital solutions that offer features such as vendor-managed inventory. This functionality monitors inventory levels and automatically orders products when they hit a predefined level. It eliminates the need for procurement teams to place an order.
Autonomous procurement takes this functionality a step further. It looks at user preferences, past purchases as well as market trends to automatically make purchases. In this way, it allows a business to make the best use of available opportunities.
There is little doubt autonomous procurement can benefit a business in many ways. However, businesses that have long relied on manual procurement processes are reluctant to dive in straightaway. Some have also raised concerns about the accuracy of the technology.
As technology continues to evolve, these businesses are likely to carefully assess the benefits and potential use cases. And as they struggle amid an uncertain business landscape, they will look to adopt procurement technology and future-proof operations.