Transforming the procurement process with robotics

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Humans have been fascinated by automation since the Dark Ages.

The first major step towards automation in human history was the invention of the wheel, which improved transportation in ways that were previously unimaginable. Fast forward to now, and the automation of operations, manufacturing, finance and marketing have resulted in significant improvements in productivity. So where does the technology go from here? Robotic Process Automation (RPA) has the answer.

In modern organizations, the supply chain consists of a portfolio of dedicated software applications that perform specialized functions. Ensuring smooth interaction between them is a common problem. RPA can help businesses establish contactless collaboration between key applications such as enterprise resource planning (ERP), transportation management, warehouse management, planning, sourcing, and product management .

Supply and procurement users interact with many of these systems, relying on external data points to make informed decisions about product quantity, price and location. The procurement team often invests a lot of time in collecting and analyzing data, which directly affects the length of the processing cycle. In a 2019 Gartner survey of sourcing, sourcing, and vendor management, critical issues in technology sourcing included direct (instant) cost savings, impact of business results, effective negotiation, ‘avoidance of costs and processing time. RPA can significantly help resolve supply issues in all of these areas.

A 2020 Gartner IT Cost Optimization Report found that introducing or increasing automation can help organizations achieve net savings of 10-15% on costs for ongoing IT service projects . Businesses can maintain their existing IT architecture while benefiting from increased productivity gains through RPA. Technology can maintain better ROI for existing digital products through optimized product strategies.

Reconciling inventory through RPA can help multinational companies reduce reconciliation cycle time by more than 70%. For example, a large global logistics company implemented RPA for Transformation of Operations to achieve supply chain excellence.

By enabling rapid digital transformation of supply chain functions, RPA is proving to be one of the most critical tools for improving productivity. The size of the global RPA market is expected to grow significantly, reaching $ 6.10 billion by 2027, according to Fortune Business Insights. In the supply chain of a modern organization, RPA can uncover hidden value through the transformation of most processes in the procurement function. Here are some of the key areas where organizations can gain immediate RPA benefits.

Autonomous expenditure analysis. Collecting expenses and analyzing categories is a key area where RPA can help, by automatically gathering data from a variety of sources. At the organizational level, RPA can help generate detailed reports from ERP applications as well as manual files, such as PDF files and Excel spreadsheets. RPA can also integrate existing locally developed tools that a company could use to perform procurement processes. By automatically collecting spend data, “bots” can also enable detailed automatic assessments of spending opportunities based on a defined policy.

Market analysis and optimization of spot purchases. A bot can easily collect information from multiple websites and documents, which is updated regularly on a monthly or weekly basis by third party data providers. A market analysis dashboard can use this collected information without needing to update or verify the source data. Purchasing managers can even place cash purchase orders using robots, which identify the best sellers and prices available in the market based on market research. RPA can dramatically reduce the effort spent on research on the Internet and other sources.

Automatic benchmarking and non-contact performance monitoring. RPA can enable automatic data collection to populate Key Performance Indicator (KPI) dashboards and enable companies to conduct benchmarking exercises without human intervention. It can also help to automatically collect data from multiple applications (including email). If a user wants to provide data with an email, RPA can help integrate the email entries into the KPI dashboard and improve the sourcing experience and stakeholder satisfaction.

Management of purchase requests (PR) and purchase orders (PO) and identification of suppliers. A bot can collect data from PRs and search the product catalog for available items. If an item is not available, the bot can search the internet for suppliers and provide suggestions for possible supplier matches. RPA can even help start conversations and ask multiple vendors about product availability with draft quotes, using email or text. A bot can handle the entire process of product identification, market research, and supplier relationship management, freeing up considerable time for purchasing managers. In addition to the regular notifications and reports sent by the ERP for launching PR and POs, RPA can help create custom reports at the category or product level.

Automatic supplier boarding and creation of supplier records. Onboarding and creating vendors is typically a tedious manual task in many organizations. With an RPA bot, the automatic provider creation process can be performed without human intervention. A bot can add master data to corporate applications at any time.

Tailor-made supplier audit. Bots can help create custom reports for a specific vendor by monitoring open contracts, tracking claims, and contract compliance. Based on a defined policy, bots can send periodic reminders automatically via email or SMS to specific providers. Bots with email capabilities can also provide automatic updates in the mailbox or by SMS directly for any criteria or exception defined.

Autonomous expenditure analysis

Optimized market analysis and cash purchases

Automatic benchmarking and non-contact performance monitoring

PR / PO management and supplier identification

Automatic supplier boarding and creation of supplier records

Custom supplier audit

What percentage of the process can be automated?

> 80%

> 70%

> 60%

> 80%

> 50%

> 60%

What cannot be automated?

  • Maverick spending without documents
  • Management advice
  • Human validation
  • Offline seller integration
  • Performance improvement plans
  • Identification of KPIs
  • Product quality controls
  • Lowest price guarantee
  • Supplier verification
  • Supplier authenticity
  • Quality controls in the field
  • Identification of the source of the dispute

KPIs directly affected

  • % of total expenses managed by the purchasing organization
  • ROI of purchases
  • Cost at source
  • Purchasing operating costs
  • Reduction of direct costs
  • Cost avoidance
  • Employee satisfaction
  • Contract value under active management
  • Order value deviation
  • Contractual risk
  • % of certified suppliers
  • PR to PO cycle time
  • Average cost of processing purchase orders
  • Stakeholder satisfaction
  • Master data management expenses as% of total expenses
  • Data logging error rate
  • Contract administration time
  • Compliance rate
  • Rejection rate
  • Trade-in and scrap value
  • Supplier quality assessment

* Data estimates for maturity level 3 and 4 organizations according to the TCS process excellence framework

RPA is becoming an integral part of the purchasing organization and will continue to evolve and mature. Once aligned with business strategy, RPA can deliver exceptional and lasting results in a short period of time.

Bakul Sharma and Mudit Bansal are Tata Consultancy Services’ Global Supply Chain Practice Consultants.


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