Why RPA is not a breakthrough advancement in procurement

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Procurement teams globally are facing the same common challenges. We hear it over and over: CPOs are constantly being tasked with cutting costs and doing more with less … yesterday. But how are they doing in actually overcoming these challenges? Let’s take a look.

Today, many procurement organizations are attempting to solve these challenges by turning to robotic process automation (RPA) as a solution. Emerging data from these RPA implementations augur real benefits, particularly in automating predictable and stable workflows. Consistency in process execution is an added follow-on benefit that organizations are starting to experience in this arena. These outcomes of consistency and efficiency of process execution are especially resonant in a regime where best practice adoption is the primary mechanism of procurement value creation.

What constitutes a breakthrough technology?

For a new/emerging technology to be justifiably billed as “breakthrough,” it has to un-constrain prevailing bottlenecks to value creation within the domain of application. For example, when material resource planning (MRP) technology came along, it directly impacted the prevailing constraint: material requirements calculations. Pre-MRP, it took an army of analysts several weeks to get through one pass of these calculations across different lines. Given its complexity, this onerous task was performed once a month. MRP automated these calculations to occur within a few hours. These calculations could now be run several times a week — lifting the efficiency of the manufacturing operation by orders of magnitude.

Today’s constraints on procurement performance

Procurement technology has evolved in waves over the last several decades, with each wave addressing the resident constraints in procurement at that time.

The first wave was to electronically enable paper-based procurement processes. The next one was about harmonizing these electronic processes around best practices and ensuring enterprise-wide adoption. These two waves have largely played themselves out and have become table stakes within procurement departments today. Procurement has advanced to a point where best practice adoption (while being critically important) is no longer the constraint in their ability to create value.

In the current scenario, there are at least two new key constraints that set the ceiling on overall performance: quality of spend data and level of domain know-how resident in procurement.

  1. Spend data quality: There are various reasons why many procurement organizations put up with bad spend data. Bad data means it’s unstructured, incomplete, inaccurate, fragmented or otherwise imperfect. It might be scattered across various systems that don’t communicate with each other, widespread across locations that operate independently, missing necessary attribution details or simply because people don’t follow the processes set in place. When you have imperfect data, it’s impossible to accurately understand what’s going on, establish compliance and control, manage spend appropriately or find ways to save.
  2. Domain intelligence complexity and evolution: It is not reasonable to expect procurement team members to be experts in every category (of which there are many in indirect procurement). Moreover, the supply markets are constantly evolving to avoid commoditization. It is impossible for procurement specialists to keep up with this constant and accelerating evolution.

So, ultimately, two procurement departments with the same level of best practice adoption in procurement will release differing levels of value back to their businesses based on the quality of their spend data and domain know-how that is available to them.

Your procurement deserves more than RPA

RPA, while serving as an important automation tool, operates in a regime that accepts current constraints as a given and works within them. It represents an incremental advance in the evolving technology frontier by addressing a subset of procurement domain competently, but it cannot be justifiably elevated to the status of a breakthrough technology.

In order to accelerate the advancement of procurement, you need to have better quality spend data and up-to-date domain know-how that can make sense of the data working in tandem.

Xeeva’s patented specialized procurement AI demolishes the resident constraints in procurement by transforming spend data and digitizing domain expertise. Our next-generation AI moves with the market and is self-learning, helping procurement teams release significantly higher value back to their business.

If you want to experience much more than what RPA can provide, move beyond RPA. Get insights, drive savings and see real results that impact your organization’s bottom line — don’t settle. Get the value your procurement deserves and move beyond procurement’s constraints.

Contact us today to see the difference that specialized AI can have on your procurement organization.

Koushik Kumaraswamy is Xeeva’s vice president of artificial intelligence.

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