Is procurement “bot-able” or not?

By:

Karthik Rama

Procurement Doctor

Published:

March 26, 2020

We have come a long way from being a transactional procurement organization to a somewhat strategic partner over the years, but there is still a lot that could be done to better ourselves. Adapting to change, or at least being receptive to change, is one of the key aspects for bettering ourselves as procurement professionals.

So how do we change? We start by looking at the different areas in procurement that could be “bot-able” or not. By “bot-able” I don’t mean, have a fancy talking and walking robot moving around your office that can occupy your desk space. These are virtual bots in most cases, who can do the mundane, redundant tasks that you as a human shouldn’t be wasting your time with.

Start of procurement bots

Procurement bots have a great place in the source-to-pay process for improving reliability, reducing the cost to serve, and improving the efficiency of the procurement processes. They will transform the future procurement org structure and will help organizations focus more on the strategic aspects of procurement with a lot of support.
Below is a breakup of the different sub-process areas within sourcing and procurement that could be “bot-able” or not.

Strategy planning: Process of defining the strategy

Bot-able areas:

Market intelligence data triggers from data sourcing from websites and reports
Trigger alerts and trends via social media crawler bots

Not bot-able areas:

Discussions with business on the strategy planning
Firming up the long terms business goals into category plans

Category management: Approach to organizing procurement to focus on specific areas of spend

Bot-able areas:

Spend and category analysis from multiple operational systems or ERPs
Key indices information from external sources such as CPI or PPI. This kind of market intelligence triggers will help have a stronger category management plan and keep procurement up to date with the latest information

Not bot-able areas:

Build the category plan alignment with the business strategy
Scenario planning, total cost of ownership modeling, and apply other models as deemed necessary
Business based discussions other than the above points

Sourcing: Obtain from a specific source

Bot-able areas:

Approved vendor list retrieved via simple chat with the chatbot
RFx event created by the bot, via simple logic provided to the bot
Managing, administering, and providing the score to the responses given by supplier on RFx
Risk profiling and performance alerts based on the supplier
On low-risk bids, you could try automated awarding of contracts or PO’s

Not bot-able areas:

Ad-hoc information creation or maintenance during the sourcing process
On high value/risk bids the recommendations on award

Contract: Enter into a formal and legally binding agreement

Bot-able areas:

Template and clauses could be recommended by the bot
Receive compliance and due diligence alerts on suppliers via data from websites and social media
Financial risk modeling based on suppliers
Contract information to be converted in a digitized manner in multiple systems
Creation of standard scope of work documentation on low-risk contracts
Contract catalogs creation and rate table maintenance via rules-based off pricing index mechanisms

Not bot-able areas:

Creation of non-standard scope of work documentation
Negotiation with supplier on the commercial terms
Negotiation with supplier on the legal terms
Discussions with other users, such as businesses or any other teams to finalize the contract

Ordering: Request (something) to be made, supplied, or served

Bot-able areas:

Assistance provided on ordering and selection via a chatbot
Auto-approval of orders based off rules and risk-based logic built into the bots
Escalations and expediting logics or algorithms build into the bot to ensure no delays occur on specific order types
Volume allocation across suppliers done in a biased free manner since it is done without human intervention

Not bot-able areas:

Managing the relationship with the sales team
Managing transition issues during the onboarding or off-boarding of suppliers

Logistics: Commercial activity of transporting goods to customers

Bot-able areas:

Live monitoring of goods in transit
Auto good receipting
Exception alert and advance shipping notification generation
Creation and presentation of the customs and shipment documentation
Carrier selection and daily delivery routing decisions would be fed as logic into the bot

Not bot-able areas:

Inspection of the goods at the factory or site
Planning for long term logistic network
Managing the escalations on the shipments

Warehousing: Process of storing goods in a warehouse

Bot-able areas:

Build in a dynamic logic to automate the ordering and replenishment process
Provide recommendations based on inventory analysis
Trigger disaster recovery process, based on the BCP rules built into the bot
Robot assist with picking/packing/shipping of high-volume material (these are the real physical bots)

Not bot-able areas:

Quality audit or checks on the inbound materials
Conducting the positive material identification test on materials procured

Supplier management: Process that ensures that value is received for the money that an organization spends with its suppliers

Bot-able areas:

Due diligence and registration on multiple systems done during the registration and onboarding process
Chat-bots to manage the supplier queries
Generation of supplier scorecard via multiple sourcing information
Monitoring and escalations on the KPIs

Not bot-able areas:

Supplier selection and finalization
Maintain the executive management relationship with the key/critical suppliers
Supplier meetings, performance, and relationship management
New product development workshops and supplier innovations

Invoice and payment process: Optimal way the supplier payments are managed

Bot-able areas:

Scanning and optical character recognized hard copy invoices
Invoice verification and approval routing based off the algorithm feeds to the bot
Payment issues resolution and queries being managed via chatbots
Compliance and tax code verification done via the logic built into the bots
Advance analytics to provide hot spots based on the payment information

Not bot-able areas:

All other aspects that don’t fall under the standard process
Escalation management on the invoice issues

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Don’t be a procurement dinosaur!

Can the activity you perform be mapped as repetitive?
Does the activity require human judgment? Can the rules on how to judge be defined to cover all possibilities?\
Does the activity make you pull (and put) data from and into the same place every time (i.e., the same field name, the same location of the field on a screen of an IT system)?
If your answer is yes to any of the above, it can potentially be performed by a procurement bot. It is better to start involving yourself in more strategic work.