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How automation is shaping procurement

Date: 14 June 2018

Almost two thirds (63%) of procurement leaders identify automation as a key priority, according to a recent poll by SAP Ariba.  Yet, while automation is an important part of digital transformation efforts, it’s not always clear what is meant by the term, or what it means for sourcing talent.

How can automation benefit procurement?
Automation is a general term for a range of technologies that have the potential to improve the speed, efficiency and flexibility of procurement systems. The use of artificial intelligence (AI) and machine learning are often involved in automation initiatives.

For example, a system using AI can analyse data to assist with contract management, calculating key metrics for renewals and performance. Machine learning can be implemented to learn about approvals granted within a system, helping to monitor and expedite approvals. This technology can also be used in master data management, providing automated updating of catalogue and contract data about products, materials, and suppliers. 

The distributed database technology, blockchain, is also being explored for ways to assist with procurement. Blockchain helps to improve trust and transparency in supply chains and can be used for portal and content management, contract management, goods receipt and confirmation, online auctions and payment processing.  

Making strategic decisions about automation
Companies will choose to explore different technologies according to their individual characteristics. According to the SAP Ariba survey, robotic process automation is the most popular form of automation among procurement leaders, with 20% intending to deploy this, followed by artificial intelligence (17%), machine learning (15%) and the internet of things (15%). 

In many organisations, procurement is already semi-automated. For example, an order might be generated by a computer, but then transmitted by fax, post or sent by PDF, or a payment is made by a posted cheque. Full automation of these procedures is about removing these inefficient, time-intensive procedures. This poses recruitment challenges for employers due to the need for two niche skill sets. Firstly, in order to not get left behind their competitors, organisations increasingly need talent that is tuned into AI and its future capabilities, in order to make strategic decisions. The adoption of AI enables companies to increase time required to make strategic decisions, as AI takes on more and more of the day-to-day/operational activities.

Secondly, companies now need people who are able to work with disruptive companies and start-ups, where typically they are used to dealing with the likes of Microsoft, SAP etc. This is a vastly different skill set within procurement and supply chain and a highly competitive skill area for employers.

The need for investment to see results
In order to reap the benefits of automation, investment in innovation is required. A limited view of automation sees only the potential to reduce costs, rather than a fuller picture of improved transparency and efficiency. According to Supply Chain Dive, 95% of chief procurement officers see digital solutions as a way to transform procurement, but three in four see cost reduction as a key focus. 

Procurement budgets will need to be sustained or increased in order to fund initiatives exploring emerging technologies such as blockchain and machine learning. Some industries have made much more progress in this sphere, for example, automotive companies using just-in-time manufacturing techniques. 

How does automation impact recruitment?
Qualified candidates are in high demand for key roles in digital transformation within procurement. Almost three quarters (74%) of companies rank ‘access to critical talent’ as a key risk.  

Employers want to see candidates with experience of digital transformation, particularly within artificial intelligence projects. Companies are looking for analytical skills, an understanding of the underlying procurement landscape and strategic oversight. 

Some sectors have much more mature supply chains with greater use of automated technology than others. Industries such as automotive and consumer goods look to hire from within their sectors, whereas less developed sectors, such as Life Sciences are willing to recruit from a wider pool to propel their supply chains forward.

The key change from a recruitment perspective has been that employers are looking for talent that is able to utilise this type of technology fully, either for greater automation, or increased use of data in negotiations

If you’re searching for procurement professionals who can help to drive your business forward through digital transformation, get in touch with the DSJ Global team today.

 
Tagged In: DSJ Global
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