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Procurement functions are historically paperbound processes saddled with sizable administrative costs, risks and inefficiencies. For this reason, process automation has been widely embraced; now, there is a shift toward intelligent automation well underway. Procurement departments will need to clear a few hurdles — namely, reducing their reliance on manual input and sourcing accurate, reliable data — to find success with intelligent automation, but emerging technologies are already helping to ease the transition. And as companies continue prioritizing investments in time-saving and risk-minimizing procurement technologies, particularly in the wake of the economic distress brought on by COVID-19, they will continue to evolve; here are some solutions to keep an eye on.

Granular supplier databases

Imperceptible supply chain risks are a top concern for procurement leaders, more so post-coronavirus. Fortunately, more comprehensive supplier databases  are helping companies improve visibility into their first, second and third-tier suppliers, fostering a more holistic understanding of supplier relationships and laying the foundation for further development of supplier risk profiles.

Dynamic supply chain simulations

Analytical supply chain simulations that describe operations in certain scenarios have been widely-adopted. Now, dynamic supply chain simulations are taking center stage for their ability to adapt operations to random real-world events, helping procurement teams uncover hidden vulnerabilities in the supply chain and predict risk events.

Supply chain collaboration tools

Supply chain management software is evolving to automate purchase order (PO) management through collaboration, in turn bridging the gaps in communication between procurement teams and supplier networks. Supply chain collaboration tools can communicate real-time order changes on buyers’ end directly to suppliers, eventually confirming that the supplier both knows and approves of any revisions, in turn streamlining PO change requests and making it easier to execute supply chain operations.

AI-based invoice automation

Among the most promising iterations of procurement software is AI-based invoice automation software. First up, chatbots that help buyers determine when and what products to order are expected to proliferate in the coming years. Then, predictive analytics and, later, artificial intelligence will inform buyers of and execute orders independently, based on learned information like consumption and weather patterns, thus alleviating some of the challenges associated with inventory management.

E-auctions

E-auctions, or reverse auctions, are an increasingly popular alternative to the conventional request for proposal (RFP) process. In e-auctions, buyers issue requests for quotation while suppliers bid electronically to win contracts based on pricing and performance features. Robotic process automation (RPA) can even be used to prompt suppliers’ participation independently of buyers’ input, facilitating a fully automated negotiation process that helps buyers and suppliers save time while arriving at a true market price.

Smart contracts

As environmental concerns continue translating into higher demand for digital (versus paper) contracts, the digital tools that enable users to more easily interact with such contracts will grow more capable. Contract management software increasingly contains machine learning tools that scrape contracts for content, mostly searching for specific clauses and conditions to include or improve, thereby automating contract proofing and interpretation.

Smart factories

Companies that invest in smart factories have been found to experience asset efficiency improvements upwards of 20% and product quality improvements upwards of 30%, according to Supply Chain Dive. As such, smart factories will be a key competitive differentiator among suppliers moving forward. Smart factories, which supplement human work through machine learning in industrial robots, also help reduce maintenance costs through the use of robotics sensors and asset tracking software that track wear and tear. As smart factory investments continue and suppliers become more agile, they will respond more effectively to shifting sourcing needs, in turn improving resilience across procurement functions.

 

By: Ayanna Leaphart

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