Transforming Procurement Through Process Automation
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Process automation has evolved into a strategic solution and is being leveraged across functions to generate efficiencies and build unique capabilities. Supply chain processes present ample opportunities to leverage this strategic tool and procurement-related processes are among the top ones in terms of focus area. SAPinsider will be publishing a research report, Process Automation in Supply Chain, in September 2022. This topic stems from our earlier research report findings that indicate that supply chain-related processes are increasingly becoming a focus area for SAPinsider, as evident in our most recent Process Automation and SAP S/4HANA research report.
There are many sub-areas in procurement where process automation can help transform the area. Some examples have been discussed below.
Procurement Data Management Process Automation
Like every other supply chain sub-function, data-related challenges plague procurement as well. Whether it is data quality or data fragmentation, data-related challenges are abundant when it comes to procurement data. Consider vendor master data management as an example. This critical data element is used for strategic sourcing analytics extensively. Inconsistent data can throw off your strategic analytics initiatives like spend analytics. The hard reality of business is that every organization has a plethora of business rules and logic to update the data, leading to duplications and bad data. Data management automation can help automate the underlying processes and improve overall data governance. Solution extensions from SAP, like SAP Data Quality Management as well as software from partners like Prospecta and Winshuttle (now Precisely) are examples of automation solutions focused in this area.
Accounts payable is an area where opportunities to leverage process automation, process intelligence, and intelligent automation galore. And as evident from the quote from the study, the opportunity to find efficiencies is plenty. At an elementary level, a process automation solution in this area can perform functions like digitizing paper invoices, processing the data captured to identify and record key fields, finding any missing required information etc. Then there is the opportunity to leverage intelligent automation, where the solution can also help perform invoice audits. Let us use the example of invoices from parcel carriers. An intelligent automation solution can reconcile the rate charged based on origin and destination address zip code, parcel metrics (weight, volume), and carrier rate card. Many options are available from SAP partners like xSuite, OpenText, and Conexiom, and if you have the internal skill set available, you can even custom build your customized solutions, or enhance existing third-party solutions.
As the pandemic has highlighted, supplier management is a very critical component of the supply chain in globalized supply chains. Processes in the areas of supplier onboarding and enablement have become extremely critical due to risks of various nature, like regulatory, compliance, and disruption as well as due to the increased focus on ESG. These processes are manual, repetitive, and in many instances prone to errors. Process automation solutions can automate many of these process elements like supplier background checks, supplier document reviews etc. These solutions can perform almost all steps for supplier onboarding, thereby increasing process quality and efficiency. SAP Ariba is one of the leading solutions in this area and then there are advanced solutions available from partners like ApexAnalytics.
A key aspect of a robust supplier management process is contract management. For a large organization that may have thousands of contracts, manual review of contracts is not only increasingly becoming unrealistic, it makes the review prone to errors and inefficiencies. This is where solutions like Contract Lifecycle Management(CLM) and its evolved avatar, Contract Intelligence Management (CIM), come into play. John Karagozan from icertis used this example to illustrate the magnitude of efficiency that automation can generate in this area: ” So in a 10,000 contract environment with about a billion dollars worth of revenue associated with those contracts, a contract management solution can cut 3% off the benefit value of contracts, meaning about a $30 million savings in just 12 months.”
Contract lifecycle management (CLM) solutions have been around for a while now. These solutions leverage technology to help manage, automate, and organize the contract process through all stages of the contract lifecycle, like contract initiation, development, negotiation, compliance, and contract renewal. Contract intelligence solutions are the modern-day evolution of CLM systems, that leverage advanced technologies, like AI, to take CLM platforms to the next stage, a cutting-edge level of value. Not only do these tools increase the efficiency of CLM platforms by enhancing features like automated data extraction, dashboarding, and reporting, but also help procurement professionals leverage the power of contract analysis, and focus on strategic sourcing, by using insights that only an AI solution can generate at scale.