Procurement Automation: Where to Start and What to Scale
The role of procurement has changed from a back-office affair to an indicator of resilience and efficiency.
Now, procurement leaders are brought into the strategy meetings of some of the leading teams, discussing how to build operational resilience through a blend of cost savings, strategic sourcing and traditional procurement functions.
To help procurement leaders meet demand while also undergoing the pressure to do more with less, they are turning more and more to automation and AI to manage the heavy workload and sort through the repetitive tasks.
Barriers to success
The transition from manual procurement processes to digital autonomy is a core function of business resilience. Consistent volatility is putting pressure on leaders, with a need for procurement teams to unlock strategic value by removing risk from transactional tasks.
Many organisations are failing to align goals with execution. Over-ambitious projects are stalling before they can deliver measurable ROI due to overwhelmed systems and badly applied technology.
EFESO's annual CPO Pulse Report explored how large-scale generative AI is lagging behind intention, with only 5% of procurement functions having successfully industrialised the technology. Though this technology is seen as a driver of success, incorrect application is actually reducing efficiency, productivity and cost savings.
When applied correctly, however, automation and AI can make procurement 25-40% more efficient, according to McKinsey.
To ensure they are operating accurately, teams need to identify low-risk entry points and find where value can be unlocked through automation, before applying it to that specific area.
Low-risk entry points
Procurement leaders should prioritise high-volume, repetitive tasks with their AI application. These take human workers away from more meaningful tasks, but are also more likely to be disrupted by human error.
Tasks such as catalogues, approval workflows and supplier onboarding are the low-risk entry points for digital transformation, meaning they are the best places to initially apply automation.
Leaders cannot be sacrificing speed or security in today’s world. Automation in onboarding allows for instant verification and fraud prevention, helping ensure that a supplier’s financial data is secure. Implementing automation in this helps cut down onboarding time and can spot risk points that the human eye or manual data checking might miss.
With e-catalogues, organisations can be certain they have compliance from the beginning, with pre-negotiated rates that do not require direct oversight. The automation of an approval chain ensures acceleration across this cycle, with bottlenecks of manual email chains removed. Digital portals during onboarding allow vendors to upload their own compliance documentation and bank details, reducing time-consuming administrative burdens for procurement, without sacrificing data integrity.
Prioritising indirect spend
Indirect spend categories are more impactful and safer to apply automation to. Indirect procurement often covers high volumes of small transactions across fragmented suppliers – this includes purchases such as office supplies and IT services.
As these purchases do not impact the flow of a company, the risk is low if a glitch occurs, but it also means that quick wins can be achieved by reducing the amount that a human workforce has to spend on these tasks. The efficiency gains from automation in this area are significant, with better transparency through a less fragmented type of purchasing.
Scaling automation
Global procurement teams need to ensure, once ready to apply automation to scale, that it remains flexible enough to adapt to local regulations and regional supplier nuances. As well as investing in the technology itself, teams need to invest in change management in order to scale automation effectively.
As automation takes over the manual, repetitive tasks, procurement leaders can focus on risk mitigation and relationship management. They need to be aware of where the technology can actively help versus hinder operations, applying it where it is needed most, rather than applying it meaninglessly.
When scaled effectively, automation becomes a strategic driver of cost savings, predictive sourcing and business transformation.
This article is brought to you in association with Amazon Business.
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