Robotic Process Automation: Procurement’s Next Big Thing Or Next Big Hype?

Marcell Vollmer

There are two schools of thought when it comes to robots and automation in the workplace: Some people warn of soaring unemployment rates, and others foresee a future workforce of more productive, engaged, and motivated talent. While some people point to the decline of factory jobs as a reason to be concerned about this technology, there are also reports of shop-floor workers who are taking this new era as an opportunity to redefine their contribution to the bottom line.

There are at least 20 other occupations that are experiencing the same situation: customer service agents, retail sales associates, food delivery people, and even mixologists, to name a few. But when it comes to the procurement area, adoption is moving at a snail’s pace. The Hackett Group cites that 23% of purchase-to-pay organizations are either piloting or partially rolling out the technology, while the remaining 77% have no immediate plans for adoption. Surprisingly, the trend is emerging despite the fact that 45% of surveyed procurement executives indicate that RPA could significantly impact how work is done over the next decade.

Is it possible that the procurement function may miss an opportunity to liberate its ever-shrinking workforce from mundane, repetitive responsibilities so they can focus on delivering more strategic outcomes? Probably if the business area continues to ignore its close organizational cousin – finance.

RPA is prime for the transactional nature of procurement

Recent research conducted by HfS Research, with input from the Genpact Research Institute, revealed that approximately one-third (34%) of finance leaders claimed that RPA tools and applications are impacting their operations right now. And perhaps more encouraging, that figure is expected to take a massive leap up to 58% within the next two years. In fact, accounting organizations have long used the technology for transactions such as optical character recognition and reading of paper invoices.

But for procurement, which is transactional by nature, there is an opportunity to reap even further rewards. HfS Research predicts that RPA and of late, cognitive computing such as machine learning, can help procure-to-pay processes move away from an arbitrage-heavy model to improve overall delivery speed and quality.

For example, billing systems automated by cognitive RPA can accelerate the pace of invoice and contract generation and processing. As with any process that handles large volumes of paper or PDFs in a range of languages, reconciliation can be incredibly manual-intensive and error-prone. By applying natural language processing, procurement can quickly scan fee schedules and invoices, then translate process requirements into an automated workflow. More important, this approach is providing a level of insight that allows the business to pinpoint billing opportunities and risks.

According to a Deloitte white paper, this RPA approach can help uncover as much as 9%–10% in revenue leakage and recover approximately 3%–4% of it after initial deployment.

RPA gives procurement a new reason to gain greater security and optimization

When it comes to managing and expanding the supply chain network, the procurement area exposes the business to a variety of risks. The possibility of data breaches and fraud increase, especially when oversight of a new provider’s supplier network is limited. Compliance with internal controls frameworks is more likely to break down and run inefficiently. Working across time zones can result in lag time, limited coordination, and ramp-up errors that fall through the cracks.

RPA can help the procurement function reclaim control over these liabilities by keeping all management operations in-house and digitally interconnected with its suppliers’ systems–all running in real time and compliant with ever-changing regulations. And whenever customers are concerned, these three capabilities can translate into bottom-line improvements that stretch beyond the organization.

1. Ensure proper inventory levels consistently with little effort

Companies can RPA to order discrete materials without the need for electronic data interchange. Software bots can monitor inventory, notify the business when levels are low, and automatically trigger a purchase transaction for a quantity that will build supplies back up to a predefined level. Plus, RPA can be used to generate real-time reporting to help procurement professionals readjust inventory levels based on past needs and demand patterns.

2. Accelerate data-driven insights and action

Another benefit of RPA emerges with the integration of machine learning. Procurement managers can consume and understand information faster and turn it into a desired outcome. Whether dealing with a supplier, internal department, or customer, natural language processing can read the inquiry, detect the meaning of the request, and grab required information from the text to complete the task within parameters defined by the business. This approach not only makes addressing supply chain needs easier, error-free, and more compliant, but also increases customer satisfaction and reduces the time necessary to process e-mails and portal submissions daily.

3. Mitigate financial risk in the moment and with greater accuracy

RPA capabilities are particularly useful in the area of financial risk management. Bots can identify changes in risk exposure and determine the causes of such movement. Approvals and adjustments of credit limits can be automated, as well as the detection of breaches of such limits and recommendation of potential remedial actions. Bots can also sift through lengthy risk reports, legislation, and regulations to identify gaps in compliance and provide insight on how to close them.

RPA adoption: “If,” not “when”

While time will tell whether robots will run the procurement function, some exciting opportunities are beginning to open the door for more strategic and value-driven work. And if the digital disruptions and changes we’ve seen over the last three years are any indications, there will likely be a robot closing and processing invoices, generating and analyzing reports, and creating a unified, compliant supply chain network in a procurement office near you.

This article originally appeared on LinkedIn Pulse.

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Marcell Vollmer

About Marcell Vollmer

Marcell Vollmer is the Chief Digital Officer for SAP Ariba (SAP). He is responsible for helping customers digitalize their supply chain. Prior to this role, Marcell was the Chief Operating Officer for SAP Ariba, enabling the company to setup a startup within the larger SAP business. He was also the Chief Procurement Officer at SAP SE, where he transformed the global procurement organization towards a strategic, end-to-end driven organization, which runs SAP Ariba and SAP Fieldglass solutions, as well as Concur technologies in the cloud. Marcell has more than 20 years of experience in working in international companies, starting with DHL where he delivered multiple supply chain optimization projects.