Robots in Procurement:
How Are They Being Used Today?
By Hugo Britt | October 14, 2021
Many procurement professionals today are working with robotic partners, but unfortunately they don’t look anywhere near as cool as Will Robinson’s robot from Lost in Space. Instead, procurement robots take the form of invisible Artificial Intelligence (AI) algorithms that improve over time through the power of Machine Learning (ML).
The transformative potential of Artificial Intelligence in procurement is enormous. According to McKinsey, AI tools can cut the time required to find new suppliers by over 90%.
Below, we examine four uses of robots in procurement.
Robots in Procurement
1. Task Automation
Task automation in procurement helps drive down the costs involved in sourcing, significantly reduces time-to-source, and eliminates the ever-present problem of human error. Importantly, process automation frees up time for your procurement team, meaning they’ll be able to concentrate on big-picture thinking and strategic projects instead of tactical tasks.
What tasks should be automated, exactly? Start by asking your team to nominate the most repetitive, manual, and tactical things they do every day. Not only will your team be eager to offload these jobs, but repetitive tasks also happen to be the simplest for AI to learn.
Procurement tasks that are ripe for automation include:
- Supplier risk monitoring
- Supplier information management
- Purchase order review and approval
- Payments and invoicing automation
- Spend analytics, including automatic spend classification
- Contract management.
Keep in mind that automation doesn’t just mean flicking a switch and it’s done. Machine learning models require training, with a human supervisor checking the conclusions it is making. For example, a ML model engaged in automatic spend classification may make mistakes by putting spend events in the wrong category. Having a human to correct this enables the model to learn and avoid making the same mistakes in future.
2. Capturing more data
Big data is so-named because it’s simply too much of it for a human data analyst to manage. For AI, however, the sky is the limit. AI can capture vast amounts of data not only from your internal processes, but also new sources of external data.
These may include monitoring supplier announcements, market indices, stock prices, company credit ratings, and even social media where relevant. Doing so can greatly improve your organization’s ability to benchmark its performance and support decision-making with real-time data.
3. Decision support
Cognitive procurement and predictive analytics leverage the power of big data to flag new opportunities and recommended activities for procurement. For example, procurement AI may note an emerging weather event such as a hurricane that could potentially impact a supplier’s factory and make a recommendation to find an alternative source of supply. Another example could be a “buy now” signal if the price of raw materials unexpectedly drops.
Decision support can also provide several possible simulations for different scenarios. The result is trusted, actionable, real-time recommendations that help procurement professionals make better decisions.
4. Customer service
How much of your procurement team’s time is taken up answering the same old questions from suppliers and internal stakeholders?
Procurement chatbots leverage AI and ML to answer questions and save the procurement team hours of phone and email time every week. Again, any Machine Learning model will need to be supervised so it can improve over time.
Procurement chatbots are highly valuable in a decentralized environment where buyers within the business are constantly asking “How do I…” questions. With the rise of voice-activated assistants, stakeholders will one day be able to summon a procurement chatbot in just the same way they currently summon help from Siri, Alexa, or Google.
Need even more help when it comes down to finding and vetting suppliers, cutting costs, and hedging against risks? In addition to robots in procurement, adding a group purchasing organization to the mix can help save money, time, and effort. Contact Una to learn more.