Insights / Supply Chain / Article

Get Started On RPA In Procurement

April 26, 2019

Contributor: Jackie Wiles

Procurement leaders will see the biggest return on robotic process automation (RPA) investment from repetitive, time-consuming, lower-value processes.

Sarah, head of procurement at a global oil company, has the proof she needs that RPA can pay dividends in sourcing/contracting, buying and payables. Her team identified 24 potential use cases with low, medium and high levels of opportunity, and areas of high opportunity offer 30% to 60% automation potential. For those in procurement who have yet to prove the concept, the first step is to figure out where to start — and where to go from there.

“ RPA applications free up procurement to partner with the business”

One major financial services company is creating a searchable and easy-to-audit contract repository. The initiative will pair optical character recognition (OCR) technology with RPA — initially to digitize 8,000 contracts and add them to the contract life cycle management system. Procurement then plans a proof of concept for RPA technology to expedite auditing and contract review.

“RPA applications can save time and money,” says Gerald Stevens, Vice President, Gartner. “Additionally, they can free up procurement to partner with the business, collaborate and innovate with suppliers, surface emerging risks or provide other value-added activities.”

Despite the benefits of digitization seen across the organization, only 6% of business leaders recognize the potential for digitization initiatives in procurement.

Read more: 2 Ways for Procurement to Uncover What's Driving Costs Up

RPA lessons learned from shared services

Right now, procurement departments are at a very early stage in understanding how robotics solutions can help automate internal processes. In fact, just 8% of procurement teams are using RPA — and 73% still have no plans to adopt RPA at all.

In other words, procurement leaders are interested in the idea, but generally lack the expertise and proof of concept required to implement.

In January 2019, Gartner research found that 65% of shared services centers, 49% of accounting departments and 34% of tax departments are in the early stages of RPA implementation.

Procurement leaders can — and should — draw lessons from other functions’ experience to help pursue robotic software use.

Learn more: Procurement in 2020 and Beyond

Where to begin with RPA in procurement

In theory, robotics can be used for any process or activity that is well-defined by rules. Most procurement executives who have tested RPA start with redundant manual tasks across multiple systems — typically tasks that have involved human interaction with an IT system. General recommendations based on early RPA pilots include:

  • Begin with time-consuming, repetitive, lower-value processes.
  • Consider how new processes fit into larger procurement workflows.
  • Determine the type of data that will be necessary to train the robot.
  • Use a proof of concept to build support for adopting robotics.
  • Design a short-term experimentation plan with clear upfront goals that demonstrate the impact for procurement and how the impact supports business’s priorities.
  • Fail quickly in the short term to prevent large financial and time investments on ineffective solutions.

At a high level, what separates robotics software from other forms of automation is that it is flexible (not designed solely for any one process or activity) and can be taught nearly any standard rule-based process or activity. Procurement just needs to pick human interactions with IT systems to mimic.

“There is a substantial amount of hype around RPA, prompting companies to make unrealistic assumptions on its potential use,” says Stevens. “Procurement should consider RPA alongside more practical, time-tested alternatives when evaluating activities and processes.”

Find a good candidate

To determine a good candidate for robotics in procurement, ask these questions:

  1. Can the activity be mapped as a repetitive process and therefore be programmed into a robot?
  2. If the activity requires human judgment, can the rules on how to judge be defined to cover all possibilities?
  3. Does the activity pull (and put) data from and into the same place every time (i.e., the same field name, same location of the field on a particular screen of an IT system)?

Projects that meet the above criteria are well-positioned to increase accuracy and efficiency. For example, one notable use of RPA in shared services is customer payment processing. At one company, the bot was able to mimic the manual process of one person copying and pasting data from one source to another. Implementation reduced processing time from 24 hours to 1 hour, and improved accuracy from 97% to 100%. Over 2,500 payments are now processed this way daily.

Alternatively, other functions also find value in leveraging robotics. For example, one firm gathered sales lead-generation data from numerous sources across varying formats to create a regular report for those who needed it. This was a labor-intensive process that required employees to access 50 different information sources. Automating the retrieval of 29 out of the 50 information sources through RPA reduced the required time by 300 hours per month, which resulted in nearly $150,000 in savings. Procurement needs to find its own version of such use cases.

This article has been updated from the original, published on May 10, 2018, to reflect new events, conditions or research.

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