At the 2018 Big Ideas Summit in London, around fifteen procurement decision-makers were asked about the automation of their profession. Their thoughts, recorded on video, paint a picture of an exciting future with the automation of low added value tasks. In turn, this will allow procurement professionals to take on a more strategic role.
Automating procurement processes with low added value
The video opens with a question that is crucial to the future of procurement departments: "What would you say to someone who proposed to automate the entire procurement function?".
The professionals were almost unanimous in their answers — a significant amount of the processes can be automated, even though it is not feasible to automate the entire profession. Many of them listed purely operational tasks with low added value, such as transactional processes (placing and approving orders, order and invoice reconciliation etc.).
In terms of the technologies we can expect to see in this field, we have Artificial Intelligence and, more specifically, robotic process automation. Deloitte provides a clear explanation for the process commonly known as RPA (robotic process automation): "[These solutions] can process any input data by running a series of pre-programmed actions, like a macro, and following predefined business rules." This technology can really help with the repetitive and time-consuming tasks which still take up the working day for a large number of buyers.
Tarandeep Singh Ahuja, Partner at McKinsey & Company, confirms this trend based on the latest studies in this area: "We've actually done the analysis looking at what a procurement function currently does and we broke down the Source-to-Pay activities into about 220 different tasks and said, "what can be automated, what can't be automated?" More than half of the tasks can be automated with this technology. I think if you fast-forward ten years even more, it can be done, so probably 80 or 90% of it."
Automating procurement — a fantastic opportunity
The professionals interviewed see the automation of procurement as an exciting challenge. However, they are clear about one matter: Technology will not be able to automate human relationships. The tasks involved in procurement and the skills required will have to be redistributed between humans and machines.
Procurement will become more strategic, with a focus on thinking and managing processes. Meanwhile, technologies will carry out operational tasks in a more efficient and cost-effective manner. Peter Curcio, Chief Procurement Officer at ANZ Bank confirms this idea: "I think in the end, procurement, to be strategic, is about humans, it's about customer experience, human sense of design, understanding how we can make the journey that people take on a daily basis with procurement easier."
As a result, buyers will need to strengthen their emotional intelligence skills such as collaborating with various stakeholders, negotiation, teamwork and innovation etc.
What's your opinion? What would you say to someone who proposed to automate the entire procurement function?