5 Best Practices for Future Procurement Automation

When I first began my career in procurement, the extent of automation we employed was nil. It was still a dark age of paper-based requisitions with ink signatures and rubber stamps… that makes me quite old, I know…

Since then, the march toward increasingly integrated automation tools within the procurement ecosystem has been a steady one. From e-catalogues to e-RFX and procurement e-cards to spend cubes and end-to-end electronic P2P systems, most organizations today rely on some amount of automation to boost productivity and efficiency.

Measuring the ROI of automating the more routine, day-to-day transactional procurement activities is fairly straightforward making it an easier sell. As the focus moves toward automating more strategic and complex activities, measuring the ROI becomes more of a challenge. As Andrea Sordi, professor of supply chain management at the University of Tennessee says in a recent Procurement Leaders’ report on procurement automation, “When you’re automating procurement activities so as to free procurement professionals to work on more strategic activities, or to innovate, then most of the ROI might be the ROI of that strategic activity, or of that innovation activity.”

So, what does the future look like for best-in-class procurement organizations? I propose they are businesses where the vast majority of procurement transactions are automated. Supplier onboarding will also be automated / self-serve. Much of the procurement function’s analytics, including spend data and key performance indicators, will be automated. The organization will receive automated risk monitoring and alerts, sourcing and contracting processes will benefit from automation, and budgeting / forecasting will no longer be manual.

Let’s not forget that no two procurement organizations are identical, and each will have its own set of automation priorities. In attempting to identify what to tackle next, I recommend the following five best practices in effective automation.

1. Automate Intelligently. Always start with a clear plan and vision for what you want to achieve. Know what and why you are trying to automate and, through Design Thinking, strive to transform processes to enhance efficiency, simplicity, and end user experience.
2. Automate Incrementally. Thoughtfully plan out your automation roadmap. Don’t attempt to do it all at once, or you risk organizational exhaustion. Start with a pilot project where you can glean key learnings to improve the stakeholder experience, learn and adapt. Seek out low-hanging fruit where it is easier to demonstrate success and value to help gain momentum.
3. Embrace a Can-Do Mindset. Being rigorous in implementing your automation strategy is smart, but don’t be so cautious that you miss out on making timely and impactful change. Be open to taking risks and shaking up the status quo if you determine that potential benefits can be achieved.
4. Deploy a High-Caliber Change Management Program. Invest in a strong change management process that keeps the range of end users in mind – those who easily adapt and those who take a bit longer to edit the way they operate. Employ Design Thinking principles, to unleash the power of empathy and inclusion, for optimum stakeholder engagement and adoption of new automation features.
5. Take the Organization with You. Share your vision of how automation will contribute to the entire organization through greater efficiency, speed, improved analytical insights, as well as productivity. Ensure your stakeholders fully understand how they and the business will benefit from automation.

As you look to augment your digital transformation in 2022, I encourage you to download Procurement Leaders’ Procurement Automation: Advancing to the Future report for more insights from industry leaders.