Insights & Ideas

Why RPA is the first step in procurement digital transformation

Organizations that want to gain a competitive edge should consider automation, which can not only simplify and streamline operations, but will result in generating massive cost savings while also improving employee productivity.

Not surprisingly, the Robotic Process Automation (RPA) market will reach $2.9 billion by 2021, from $250 million in 2016, according to Forrester Research.  This massive adoption will be driven by companies adding artificial intelligence (AI) to RPA in order to automate more than just present day rote tasks. Robotics will also play a central role in digital transformation – well underway in some organizations.   

How big is the opportunity?  Genpact estimates 70% of a company’s manual processes can be automated, netting massive business gains by freeing employees from doing repetitive, low value tasks and moving on to more strategic, value-add projects.  It may sound alarming, but Forester expects that there will be more than four million robots running administrative related tasks in the next three years. 

So, how do you embrace automation?  Like any innovation program, it’s best to start small, and demonstrate a return on investment (ROI) by replacing a specific and highly visible manual process with robots.  Then, once you have received results and feedback from your initial scope, expand your automation capabilities (and the level of complexity in your RPA software) as part of a wider digital transformation program.  This may require bringing in expert resources (software vendors and professional services firms) to help guide you.  What is clear is that you should be already exploring some aspects of RPA to avoid being left behind by an increasingly innovative market. 

To help you, we have provided four examples of RPA use cases for your procurement organization that will effectively strengthen your supplier performance, compliance and risk mitigation capabilities at a fraction of the cost of manual processes.

We have chosen this important function because of the complexity procurement professionals have to deal with when on-boarding, managing and terminating or phasing out (hundreds, and sometimes thousands of) suppliers on a continuous basis.  Let’s now have a look at how automation could transform your supplier lifecycle:

  • Supplier selection
    • Instead of spending hours to monitor and determine the most profitable inventory mix, and the level of inventory, have a robot that intelligently conducts this analysis based on data from across your organization
    • Instead of manually sending RFIs/RFPs to potential suppliers, have a robot that generates communications, sends updates and follows-up with companies in a timely, consistent and standardized manner throughout the selection process
  • Supplier on-boarding
    • Instead of manually looking up a supplier’s credit rating, deploy your robot to periodically check the supplier’s name against a database such as from Dun & Bradstreet
    • Instead of manually informing colleagues in your organizations about new suppliers, have a robot that sends communications (i.e. emails, one-page supplier profiles) with supporting documentation such as agreements, certifications etc.
  • Supplier performance management
    • Instead of manually searching for data from different departments to determine on-time delivery of goods, have a centralized robot track and alert you when a supplier fails to hit a key performance indicator
    • Instead of manually scanning the internet for reference of your suppliers, have a robot that alerts you to potential supply chain risks such as product shortages
  • Supplier phasing out or renewal
    • Instead of manually scrolling through many contracts, have a robot that automatically alerts you to when a contract is coming up for renewal alongside actions that must be taken
    • Instead of spending hours gathering information about a supplier’s performance in order to decide whether or not to renew a contract, have a robot that pulls information from across the company including payment history, on-time delivery record and customer satisfaction levels

If you would like more ideas to transform your procurement organization and stay competitive, please watch our webinar, “How to apply intelligent automation to procurement digital transformation.”

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