Robotic Process Automation (RPA) — What’s in store for Procurement?

Imagine an efficient procurement system where the data accuracy is perfect, cost is lowest, efficiency is highest and yet it needs no IT investments. Well, with Robotic Process Automation (RPA) in picture, the day is not far-fetched.

Traditionally, procurement function has always involved processes which are concerned with manual data entries, multiple updates to the general ledger, invoice processing, payment scheduling etc.

All these not only consume a larger time of workforce but are also prone to human error.

Recent developments in process automation technology has created systems which can automate certain simple to minimal complex tasks through deploying a smart software or through a physical robot (bot) accessing the system.

The significant part lies in the fact that such automated software can replicate the processes which don’t require interpretation of data or any human intervention for comprehension.

In a nutshell, any process which is repetitive, rule based and doesn’t require frequent updates can be automated.

As per a report from Hackett Group, in purchase-to-pay, 23% of companies are at the earliest stages of adoption, i.e., either in pilots or partially rolled out. The remaining 77% have no immediate plans for RPA adoption.

Despite RPA’s low adoption level today, 45% of purchase-to-pay organizations believe it will be one of the areas with the greatest impact on the way its work gets done in the next decade.

Following are the few reasons depicting how RPA technology has the potential to disrupt the way procurement functions and can provide unprecedented cost savings.

1] Improved Operational Efficiency

• Through RPA technology, automated systems or robots will take over the manual task of transactional data entry which requires minimal human intervention.
• Furthermore, all tasks executed by robots would be recorded and error free which further can be represented through auto generated dynamic dashboards.

2] Optimization of Processes

• As robots will be handling the first level processes; human workforce can focus on more significant strategic initiatives vital for business such as working with stakeholders.
• Moreover, the expedited processes executed through automation will result in increased throughput and boost productivity beyond regular business hours.

3] Improvement in Compliance

• In case of a mismatch during invoice processing, a bot can refer to the preset set of rules and regulations mentioned in the contract and place a flag wherever the information is incomplete and missing.
• This will result in expedited resolution of all these cases as it is easier for an automated system to scan and review the contracts in place and compare them against standard templates and point out non-standard terms and conditions.

4] Better Risk Management

• A human carries out a contract renewal process typically once in a year whereas a robot can execute it in short span of time (may be a month or a week).
• This provides an opportunity to both vendor and organizations to have multiple contracts in place specifically for the resources whose price are liable to fluctuate with time.
• Both parties bounded through a contract can mitigate their risks as through automated system it becomes easier to juggle between many contracts each having multiple terms and conditions.

5] Cost Reduction

• An automated system can work more than a human, that too faster and more efficiently.
• This could lead to cost savings as implementing an automated system is one time investment which costs less the employing a full time functional resource.
• The same pool of resources could be trained to work for more advanced processes which require some sort of interpretation of data and decision making.
• Additionally, these L1 level processes which are typically outsourced to a 3rd party vendor, can be executed in-house, using automation, thus resulting in more productivity and faster execution along with cost savings.

Key Takeaway:

1. All these changes are likely to get unfolded in the next 4–5 years when more and more organizations would start implementing automation at their end.
2. As the first level data entry jobs would be taken care by automation, we need to carve out niche and more strategic role for human workforce to undertake.
3. Thus, the organizations will have to develop a long term vision that will address the need for automation and work on a strategy that would invest in training individuals for bigger and better roles.
4. The future of procurement looks like a healthy amalgamation of automation and human workforce whose synergy will take the procurement function to the next level.