Automation: The bots are coming to help you

January 22, 2020

The robots are coming” sounds like the promotional tagline from a cheesy, late-1950s sci-fi movie, only in this case, the invasion is happening in real life, and the robots aren’t coming to enslave us. Rather, they’re here to alleviate us from having to perform any tasks whatsoever, and this scenario is equally unacceptable to many workers who believe their jobs to be in permanent jeopardy in the face of automation.

Sadly, it seems as if nothing can be said or done to allay the fears of these workers, partially due to the perception that any statements that classify the fears people have about automation’s progression as “overblown” are deceitful attempts to temporarily pacify the workers before the axes fall on their collective careers.

While it is true that automation is here to stay, and that it is certainly making inroads into the realm of procurement, the panic surrounding it has been blown well out of proportion. Yes, there are some positions in the general workforce that are in the process of being progressively wiped out, but the majority of these jobs involve the performance of low-skill tasks that most people consider to be painfully boring, and the same is true about the procurement jobs that are most at risk of being lost. In fact, the boredom induced by these jobs is one of the very reasons they are far more effectively performed by computer programs in the first place.

Not only are human beings incapable of performing mundane tasks like data entry at the accelerated rate of software systems, but they also lack the ability to maintain their precision after hours of performing these tasks. Conversely, the duration over which a routine is performed does not affect the ability of a computer to perform it. Therefore, automation is a logical step in the progression of the completion of office work, because there are certain tasks computer programs are better suited to reliably complete.

To the extent that automation is supposed to help procurement teams allocate their time to more substantive tasks, the data clearly indicates that the programs are performing as desired. In our latest eBook The State of Procurement 2020: Present and Future, Chad McDonald, Director of Procurement and Treasury at The Andersons Inc., a diversified agribusiness says: “Automation [is] helping our organizations focus on things that are more strategic, rather than tactical. For example, we have eliminated approximately 80 percent of manual invoice processing for indirect payables because of these tools.”

Of course, alarmists hear stories like this and automatically assume that employees are being placed on the chopping block as a result. The presumption is that organizations are systematically eliminating employees alongside the minor tasks that are being automated out of existence, but this is not in sync with reality. The truth is, because certain tasks are being extracted from human hands and handed off to machines, workers who once performed these duties are being freed to contribute to their offices in ways that actually require the high-level thought processes of the human mind, and which computer software is incapable of performing altogether.

In addition to being out of sync with reality, the idea that businesses are automating the process with the specific intent of reducing their internal headcounts is wrong for another reason. Generally speaking, downsizing is lousy for corporate morale, and reducing headcount is seldom a top objective of any optimization measures.

“We’ve been able to do more work with the same or fewer people,” explained Frank Cuomo, Vice President of Sourcing and Procurement for Univision.  “My goal is not to reduce headcount. That creates a false illusion of reducing costs. Reducing headcount gives you a one-time cost savings opportunity. That’s it, but if you keep that headcount and you have [the team] perform value-added activity, you can drive additional savings while leveraging automation to do the repetitive, non-value transactional activity. I want to extend the team and turn them all from tactical, transaction-performing employees to value-driven employees.”

For David Latten, Head of Indirect Procurement at Logitech, advancements in procurement automation have given his team more time to focus on driving value to the organization. Not too long ago, the technology did not exist to automate transactional procurement. And without that tech, there simply wasn’t time to dive into the analytics.

“Historically, way too much time has been spent with transactional procurement,” explained Latten. “We’ve started to automate a lot of those processes, giving my team the headspace for value-add procurement. This is part of the wider transition that we’re looking to do.”

In fact, not only is it a falsehood to claim that automation is integrated into business practices for the sake of reducing the number of employees in the workplace, one of the underlying goals of automating practices is often to retain money for the sake of hiring more employees to fill critical roles and perform crucial tasks. When it comes to procurement, automation permits an expansion of the supplier pool, along with simplified management of the bidding process. The net effect of the automation of just these two tasks results in greater savings with minimal effort.

For example, Chad McDonald says one of the benefits of implementing procurement automation has been the streamlining of the buying process. After negotiating an agreement with the same four suppliers for several months without a resolution, Chad realized there had to be a more efficient way to manage the process.

“Instead of buying any one of these commodities from those three or four suppliers, we’re now able to bid and buy the commodity from twenty to thirty different suppliers,” said McDonald. “Imagine trying to manage a bid process with twenty to thirty suppliers to buy one item through a spreadsheet in email. It just doesn’t work.”

With automation handling the responsibilities that felt valuable because of identifiable results they produced, like a filled-out spreadsheet, procurement teams can devote more time to roles that maximize their human attributes, like building relationships with suppliers, talking through limitations, performing on-site assessments and negotiating solutions. Bots can provide supporting data to assist with tasks like these, but they lack any of the necessary faculties to perform the tasks that create the utmost value in the procurement realm.

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