What if businesses could fully automate their most time-consuming procurement activities, freeing up employees to redirect their energies to serving customers, pursuing innovation and driving growth?
How much strategic value, previously tied up in tactical tasks, could organisations unleash? With the rise of cloud-based, intelligent applications, businesses are beginning to find out — and, in the process, gaining meaningful insights into their customers, their trading partners, and their own operations.
These technologies are dramatically simplifying some of the most labour-intensive business processes, from sourcing and purchasing to contracting and payments. Through digital transformation, many businesses have streamlined procurement and spurred collaboration among trading partners, increasing resiliency in the face of supply chains disruption.
Take TAFE NSW, for example, which recently transformed its procurement function from an ad hoc system of disconnected systems to a consolidated platform that handles the end-to-end source-to-pay processes across the organisation. As the second-largest vocational education provider in the world, serving over 400,000 students across more than 130 campuses and online, TAFE NSW sought out intelligent spend management solutions to simplify its extremely diverse supply chain, which in turn allowed the business to drive efficiency, significant cost savings and compliance.
TAFE NSW is just one of many businesses that are taking the digital transformation leap, because they’re seeing an increasingly clear connection between embracing intelligent spend management — an approach that draws upon vast reservoirs of operational data to mitigate risk, yield contextual insights, fund innovation through savings, and extend competitive advantage.
Where is intelligent spend management headed in years to come? Toward systems that can carry out end-to-end procurement processes within parameters strategically set and overseen by humans. These cloud-based solutions are bringing us closer to an era of autonomous functionality, where AI-enabled applications reveal detailed insights, provide prescriptive recommendations, and unshackle talented procurement professionals from the tedium of low-value administrativia.
What is autonomous functionality?
To understand what autonomous functionality is, it may help to point out a few things it is not: It is not a replacement for humans. Nor for a growth strategy, a well-managed supply chain, or the carefully considered judgment calls that procurement professionals must make every day. It is, however, an important complement to all of the above.
Autonomous functionality represents a profound shift for procurement in much the same sense that autonomous vehicles do for transportation. With a self-driving car, one’s morning commute doesn’t go away, but it does become easier. The autonomous vehicle is a self-contained system within which humans set a destination, navigational features, and “rules of the road.”
The same idea holds true for procurement. Both types of systems collect and analyse massive amounts of real-time data about their users’ needs and the external environment. In addition, both must cater to a range of users or “personas,” whether weekend vacationers, taxi drivers or long-haul truckers (for vehicles) or category buyers, casual users or trading partners (for procurement). Moreover, the self-driving vehicle’s route is akin to autonomous procurement’s purchasing channel, both requiring stops along the way where decisions need to be made and actions taken.
Keeping control in an automated future
Fundamentally, moving toward autonomous procurement processes represents a journey that different industries and personas will embark on in different directions and at varying speeds, tailoring intelligent technologies to reduce human activity in some business processes while augmenting it in others.
For example, automated procurement systems may anticipate the need to replenish inventory levels based on the velocity with which they diminish, create sourcing events by inferring information drawn from activities taking place elsewhere in the value chain, or leverage operational analytics to initiate timely communication with suppliers with the aim of improving key performance indicators — all without manual intervention. An autonomous system can even notify suppliers when catalogue searches turn up empty, suggesting that new goods be made available.
Yet even as humans let go of certain mundane tasks, they remain very much in command of the strategic ones — such as overseeing the growing trend toward procurement with purpose, by using spend to drive favourable social outcomes. Determining an organisation’s procurement needs is likely to remain in human hands for the foreseeable future, while deciding how to meet those needs — and proceeding to meet them — is left to the new technologies.
For example, a user may initiate a process, only later to be informed of subsequent actions taken by the system, requiring human approval for only certain types of decisions. Or a user may employ a set of fully trusted, self-learning analytical applications, which humans merely tweak as needed. Procurement professionals remain in control, adjusting their level of intervention per the needs of the business.
For many businesses, procurement has held fast to the technologies of yesteryear for far too long, leaving value untapped — and miring employees in drudgery rather than strategy. As autonomous functionality takes shape, procurement teams can harness a powerful new tool to fuel growth and operational agility at a time of disruption.
Chad Crook is senior vice president and global head of customer engagement and adoption at SAP Procurement Solutions.