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The Future of Procurement Is Digital.

The Time to Embrace It Is Now.

The Future of Digital Procurement

New technologies, such as Robotic Process Automation (RPA) and Artificial Intelligence (AI), can help procurement departments uncover information and data in ways that humans cannot.

There is no question that the digitization of procurement is following the same digital revolution that is affecting every line of business and business support function at all organizations. It is being driven by the convergence of these new technologies and a heightened level of customer expectations that demands speed, value, lower cost and customization.

Many procurement entities started down the digitization process as far back as 1996 with implementations of Procure to Pay (P2P) systems and PCards. In its infancy, P2P software allowed procurement professionals to create, place and pay for orders, identify potential suppliers through their supplier network, electronically manage sourcing events, and run flexible reports to look for efficiency and savings opportunities by analyzing how the company spends its money (spend analysis). Prior to this innovation, most, if not all, procurement processes were inefficient, paper-based and labor-intensive.

However, the next evolution of procurement lies in the implementation of RPA and AI. This is the Future of Digital Procurement.

The Future of Digital Procurement

Forward-thinking procurement leaders have consistently leveraged the latest technologies to support these traditional procurement functions:

  1. Relationship management
  2. Category management
  3. Sourcing
  4. Purchasing
  5. Contract management
  6. Third-party risk management

These functions have existed since the beginning of commerce. We don’t expect, nor do we see any reason for, these functions to go away. They will continue to evolve and mature as procurement evolves into an increasingly digital environment. But they will work differently and will require some additional new capabilities and organizational changes to maximize the value of procurement.

Think about procurement’s traditional purchasing function and then compare it to your own online shopping experience. You search for an item to purchase and buy that item online. Your purchase history creates and continually updates your profile; even your online browsing habits are captured and analyzed. They are constantly being used to generate targeted suggestions for future purchases and are presented to you while you are engaged online. These events are driven by robotic processing and artificial intelligence tools.

Now think about how you can apply this technology to your supply chain, supplier and vendor communications, business partner spend habits, spend predictions, legal contracts and risk management analysis. Think about how you might be able to accomplish high-volume processing that you cannot complete in full with your current head count. Think about which tasks you would like to complete but don’t have the resources to do so. These are areas that should be top of mind for applying robotics and AI.

Prepare for Digital Procurement

Every company, in every industry today, has been affected by the digitization of commerce and must find new ways to leverage technology to enhance supplier, customer and internal business partner demands.

While procurement continues to become increasingly more automated and efficient, it is built on strong interpersonal relationships and knowledge powered by man as well as machine. The real value of automation and data is not how fast the information is collected but how strategically it is curated, organized and implemented. There is no robot that can use data the way a human can to negotiate a contract, build a relationship or foster creativity.

Technologies affecting procurement today will require additional investment in technology and organizational change. Here are some of the initiatives that should be considered for the digitization of procurement:

  1. A Digital Procurement Strategy, which will outline the elements of the digital supply chain to drive transparency and enhance decision support. This strategy should also identify processing that can leverage robotic and AI technologies. It should include a social media strategy to manage activities and communication across a new digital ecosystem.
  2. A Redesigned Procurement Organization, which will transition from a fairly centralized, corporate function to a more blended function, incorporating skills that are currently siloed in other business support functions.
  3. New Spend Categories for the Future, which will respond to demand from all parts of the business for expertise in new areas of artificial intelligence, including predictive analytics, natural language processing, machine learning and intelligent sensors.
  4. Integration of a New Digital Workforce, which will perform routine, rules-based transactional work, previously targeted for offshoring or outsourcing to lower-cost providers. The digital workforce will be composed of Robotic Process Automation (RPA) software but must work seamlessly with the human workforce.
  5. Introduction of Predictive Analytics and Artificial Intelligence Technologies, which will enable procurement to tap into its rich databases and information from throughout the ecosystem to provide business-ready insights to both internal and external stakeholders.

The digitization of procurement presents a unique opportunity for man and machine to work in partnership in a way that impacts an entire organization. Procurement is, after all, one of the departments in an organization that can add strategic value to all lines of the business and operations.

Driven by Data. Focused on Strategy. Leading Organizational Change

In the Future of Procurement, tech tools will be leveraged to create an ecosystem of interconnected suppliers, offering transparency and enabling swift decision-making that is based on predictive analytics as well as trend analysis. These tools will allow procurement to redefine and fine-tune its most fundamental tasks and activities.

As procurement continues to become increasingly more automated and efficient, it will remain a corporate function built on strong relationships and knowledge, and powered by man as well as machine.

Our message to CPOs is simple: Let the robots assist with data analysis and process automation. Robotic processing is not coming. Robots are already here. But they don’t want your job. They’d be lost without you, and you will be left behind without them. So invest in software to automate the most rote functions in your organization. Free your best talent—and your best self—to create, innovate, problem-solve, and make your organization stronger, leaner and more competitive in the Age of Automation.

Allyson Campos Gilbert

Allyson Campos Gilbert, CEO and founder of Adaptation, is a thought leader in business transformation strategy and organizational change. Allyson is a frequent speaker on topics such as disruptive technologies and organizational change, business transformation and global best practices.

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