Procurement teams have a crucial yet often thankless job in enterprises – sourcing and purchasing the goods and services that keep businesses running. Yet antiquated processes and time-consuming manual tasks limit their impact. Studies show 66% of procurement leaders believe supply chain volatility will continue in 2024. How can procurement prepare?
Enter robotic process automation (RPA) – software bots that can automate repetitive, rules-based digital tasks. RPA is transforming functions across enterprises and holds great promise for supercharging procurement.
In this comprehensive guide, we‘ll cover:
- Common procurement pain points suited for RPA
- 12 use cases showing where RPA can optimize workflows
- Implementation challenges and how to address them
- Case studies of RPA procurement success
- The future outlook for RPA in procurement
If you lead or make technology decisions for procurement, this detailed analysis will demonstrate why RPA merits your attention and investment. Let‘s dive in!
Why Procurement Needs RPA
Procurement teams handle an array of vital responsibilities including:
- Supplier selection and management
- Purchase requisition intake and processing
- Purchase order generation
- Securing the best prices and contract terms
- Receiving and processing deliveries
- Invoice verification and payment
- Inventory management and logistics
- Budget tracking and reporting
- Regulatory compliance
Unfortunately, the lion‘s share of a buyer‘s time gets consumed by manual administrative tasks across these workflows – preventing higher value-add activity.
Some examples include:
Data rekeying across multiple systems – Entering the same supplier names, part numbers, and order details into forms, spreadsheets, ERPs, and other downstream systems. This duplication of effort is enormously wasteful.
Filling forms and paperwork – Whether processing a new purchase requisition or paying a supplier invoice, procurement team members spend countless hours manually completing digital and paper forms requiring extensive repetitive data entry.
Cross-checking orders, invoices and deliveries – Confirming that items ordered, received, and billed match across multiple documents requires tedious human comparisons and lookups anytime there are discrepancies.
Seeking purchase order approvals – Getting sign-off from managers via email trails and meetings introduces delays across the requisition-to-order workflow.
Staying compliant – From executing contracts to documenting every transaction for audits, procurers dedicate lots of time to governance, risk management, and regulatory paperwork.
By freeing staff from these mundane chores, RPA enables procurement teams to instead focus on high-value tasks that better support business objectives – category management, supplier negotiations, risk analysis, working capital optimization, and COGS reduction opportunities.
The benefits of an RPA procurement transformation extend organization-wide too in the form of bottom line savings, improved compliance, and more resilient supply chains. But how exactly is this achieved?
Digging Into Procurement Process Automation Potential
To assess where automation can boost procurement efficiency and value, it helps to segment the function into discrete sub-processes that make up the end-to-end procure-to-pay cycle.
Here are the typical steps with automation opportunities:
| Procurement Process | Automation Potential with RPA |
|---|---|
| Purchase Requisition | – Auto-populate order forms from past purchases/product lists – Route for digital approval based on rules |
| Purchase Order Creation | – Generate PO records in ERP based on requisition data |
| Supplier Quote & Selection | – Send RFx to qualified suppliers automatically – Analyze quotes, select optimal bid via algorithms |
| Contracts & Ordering | – Auto-complete contract templates – Digitize inked contracts via OCR – Send PO info to suppliers |
| Invoice Processing | – Extract invoice data & match to POs – Automate GL coding – Route exceptions for review |
| Supplier Payment | – Trigger digital payments – Reconcile invoices & confirm accuracy |
| Inventory Management | – Automated reporting on stock levels – Identify fast/slow-moving items |
| Procure-to-Pay Analytics | – Real-time dashboard tracking KPIs – Custom reporting for stakeholders |
RPA and AI can handle many of the repetitive administrative steps associated with these workflows to free up manpower for higher-level procurement activities. And optimizing P2P with automation also confers broader benefits:
Efficiency
- Data shows RPA can deliver 50-70% faster process turnaround times in procurement along with ~40% cost savings on buyer headcount and operations
- For example, automation enables 80-90% reduction in invoice processing costs
Working Capital
- Faster approval and turnaround of purchase requisitions and orders means the business can secure better prices and ensure consistently scheduled deliveries
Compliance
- Automated controls confirmation Conducting three-way matches on 100% of orders ensures accuracy and prevents issues before payment
Supply Security
- Bots continuously monitoring safety stock levels across items proactively trigger re-ordering rather than reacting after shortages occur
RPA unlocks immense potential across the procurement value chain. Now let‘s explore real-world examples…
12 Procurement Use Cases for RPA Bots
RPA offers many applications for optimizing workflows that span the procure-to-pay process. Here are 12 high-impact procurement use cases every organization should consider when assessing their RPA opportunity:
1. Input Identification
The Process: Compiling list of raw material inputs with associated vendors for manufactured items based on bills of materials and specs
The RPA Solution:
- Automatically retrieves product input components from PLM/ERP bills of materials
- Structures data into master spreadsheet stored on shared drive
- Sends real-time input change alerts to keep buyers in sync
The Benefits:
- Eliminates duplicative manual efforts to collate input data
- Provides buyers instant visibility to inform decisions
- Enables supply risk detection for critical components
2. Contract Management
The Process: Drafting, securing approvals, enacting and monitoring a high volume of supplier agreements
The RPA Solution:
- Auto-populates contract templates pulling data from procurement systems
- Digitizes completed paper contracts via OCR for e-storage
- Monitors expiration dates and renewal options
- Uses AI to assess contracts against policies and spot non-compliant terms
The Benefits:
- Accelerates contract finalization by >50%
- Reduces off-contract spend through better control
- Lowers risks related to manual errors and non-standard agreements
3. Purchase Requests and Orders
The Process: Transitioning purchase requisitions into executed orders with suppliers
The RPA Solution:
- Triggers purchase orders in ERP based on digital req forms
- Structures req/order data per system conventions
- Sends orders to supplier networks and confirms acknowledgment
The Benefits:
- Removes manual efforts rekeying data between forms/systems
- Accelerates order generation by 3-5 days on average
- Audit trails capture req-to-order process flows
4. Category Management
The Process: Classifying expenses across hundreds of cost centers and general ledger codes
The RPA Solution:
- Ingests invoice and purchasing data
- Assigns general ledger codes based on rules engine
- Enforces policies governing spending limits, approval workflow
- Alerts managers on non-compliant requests
The Benefits:
- Enables granular visibility into spend by category
- Tightens policy compliance across business units
- Saves hours spent fixing miscoded transactions
5. Purchase Order Approval
The Process: Securing authorizer sign-off for large or non-standard purchase orders
The RPA Solution:
- Auto-approves orders meeting pre-configured policy rules
- Flags orders for manager approval based on risk factors
- Accelerates turnaround time from days to hours
The Benefits:
- Removes approval bottlenecks impacting requisition-to-order cycle
- Allows managers to focus reviews on risky/complex purchases
- Maintains compliance without limiting procurement productivity
6. Automated Reordering
The Process: Monitoring stock levels across items to trigger reorder purchases
The RPA Solution:
- Retrieves inventory data in real-time from WMS and ERPs
- Calculates par stock targets based on demand algorithms
- Submits automated purchase orders to suppliers when thresholds breached
The Benefits:
- Proactively prevents stock-outs that impact revenue
- Eliminates manual purchase requests for repeat orders
- Optimizes reordering to align with actual demand
7. Inventory Management
The Process: Tracking current and historical item stock across multiple warehouse locations
The RPA Solution:
- Aggregates near real-time inventory data from IoT sensors
- Generates user-friendly inventory reports and dashboards
- Flags fast/slow-moving items and those nearing expiration
The Benefits:
- Provides holistic visibility to inform optimal procurement and logistics
- Automates inventory counting and reconciliation
- Tailors reordering rules based on item demand profiles
8. Three-Way Invoice Matching
The Process: Confirming ordered items, deliveries, and supplier invoices match
The RPA Solution:
- Extracts purchase data from digital POs, receipts, and invoices
- Validates if product SKUs, prices, and quantities match
- Flags exceptions for staff review – mismatches, overcharges, etc.
The Benefits:
- Eliminates manual document comparisons
- Prevents overpayments to suppliers through closer scrutiny
- Maintains clean audit trail across procure-to-pay steps
9. Automated Payments
The Process: Settling supplier invoices by scheduled due dates
The RPA Solution:
- Initiates digital payments to suppliers when workflow trigger occurs
- Draws pre-configured data for supplier details and payment amt
- Logs remittance confirmation against original invoice
The Benefits:
- Ensures accurate, on-time payments to maintain supplier relations
- Reduces potential penalties from overdue invoices
- Closes visibility gap between invoicing and payment activity
10. Supplier Onboarding
The Process: Registering and vetting new vendors in procurement systems
The RPA Solution:
- Extracts supplier data from questionnaires for assessment
- Assesses prospects against databases using predefined criteria
- Guides supplier reps through documentation submission
The Benefits:
- Accelerates vetting and onboarding to activate new suppliers
- Reduces risks associated with manual verification processes
- Enables procurement to absorb larger vendor pools
11. Price Negotiation
The Process: Establishing procurement arrangements with optimal pricing
The RPA Solution:
- Benchmarks supplier quotes against market data and previous contracts
- References guardrails on price targets, rate cards, discounts
- Submits personalized counteroffers aligned to guardrails
The Benefits:
- Expedites quote analysis and negotiation cycles
- Maintains optimal terms across vendors using data-driven guidance
- Continuously improves negotiation outcomes over time via AI
12. Record Digitization
The Process: Managing catalogs of paper and digital purchasing transaction records
The RPA Solution:
- Digitizes paper invoices, contracts, etc. using OCR technology
- Structures extracted text and data into searchable format
- Files digitized docs into procurement data lake or repositories
The Benefits:
- Automates aggregation of procurement data from all sources
- Enables enterprise-wide visibility for category analytics
- Supports compliance with faster document retrieval
These 12 use cases demonstrate the immense potential for RPA to give procurement teams superpowers – transforming productivity, control, visibility, and business partnership. But don‘t just take our word for it…
Quantifying the Benefits – Client Examples
Major global enterprises have already realized tremendous value streamlining procurement with intelligent automation:
Leading Fast Food Company
| Key Stats | |
|---|---|
| Procurement processes automated | 15 |
| Transactions handled by bots daily | ~5,000 |
| Productivity improvement | 65% |
| Cost reduction | 40% |
Detail
RPA was deployed across the source-to-pay process including automating supplier onboarding, invoice processing, inventory reordering, and payment execution. Bots are integrated with multiple backend systems and schedule processes to run autonomously while alerting staff to exceptions.
Global Consumer Goods Company
| Key Stats | |
|---|---|
| Annual savings delivered | $14M+ |
| Procurement productivity improvement | 55% |
| Number of FTE hours saved per year | >220,000 |
| Automations deployed | >70 |
| Months to implement | <12 |
Detail
Leveraging an RPA Center of Excellence, over 70 automations were deployed handling critical purchasing workflows from spend requests and vendor registration through budgeting, contract management, ordering, invoicing, payments, and reporting.
What‘s Next for Procurement Process Automation?
While RPA adoption is still early days, continued innovation looks to make procurement one of the more digitally transformed business functions over the next decade. Here are some developments to keep on the radar:
End-to-end connected platforms – Automation capabilities will expand as integrated process orchestration platforms emerge covering sourcing, ordering, invoicing, payments, inventory, and analysis seamlessly connected across procurement tech stacks.
Hybrid cloud architecture – Cloud-based bot deployment will become more mainstream as organizations manage scaling complexity. This enables centralized governance and promotes integration.
Embedded intelligence – RPA will increasingly incorporate AI for enhanced real-time decision support – NLP chatbots negotiating with suppliers, ML algorithms predicting price fluctuations, etc.
Blockchain integration – Smart contracts on blockchain networks will automate enforcement of procurement agreements and trades between parties based on real-world signals.
Enriched analytics – Bots will enable fusion of multiple data sources like contracts on the blockchain, IoT sensor data from delivery vehicles, and supplier quality metrics for holistic insights.
As innovations make procurement automation more configurable, scalable, intelligent, and interconnected, best practices will emerge around change management, security, controls, and more that all enterprises can leverage.
Gearing Up for Automated Procurement Excellence
Intelligent process automation presents a clear pathway for procurement teams to offload repetitive tasks while capturing and connecting data across vital workflows. This empowers buyers to make better decisions faster while strengthening compliance, working capital, and the bottom line.
However, as our earlier challenges discussion covered, RPA success requires thoughtful planning and governance. Avoid leaving outcomes purely to chance. Instead, conduct due diligence by:
- Documenting current procurement workflows with process maps and pain point assessments
- Classifying each process step by automation feasibility and potential value
- Building water-tight governance rules before development kicks off
- Securing IT and business stakeholders as active automation champions
By approaching automation deliberately instead of jumping in haphazardly, procurement can realistically achieve 50%+ RPA adoption across core workflows in under two years. The snowball effect of productivity unlocked across sourcing, ordering, payments, analysis and beyond will drive tremendous value for your organization in both hard and soft benefits.
Are you ready to spearhead a procurement automation revolution? Reach out to explore your use cases and future roadmap. Or get a free guided assessment on selecting the best-fit intelligent automation platform vendor for your tech environment. The future of connected, insight-driven procurement starts today.