Tag Archives: automation

Navigate Global Trade in 2020 and Beyond

Digitisation, automation, and the shifting state of global trade are the three macro-trends predicted to affect Procurement and Finance the most over the next few years.

global trade

According to ourworldindata.org, global exports today are 40 times larger than 100 years ago. Much of this due to long-term relentless focus on developing free trade – across the world, but especially between the three powerful nations or nation groups: The European Union (EU), The United States of America, and China.

Albeit with the global commerce climate changing daily, there are growing concerns, as highlighted by a recent report from the Economist Intelligence Unit (EIU) that explores why geopolitical issues are dominating.

Free trade is the heart of modern business

The free market has thrived for decades. So much so that the young generation of business professionals haven’t experienced the closed alternative. But due to shifting trade dynamics, the free market we have grown accustomed to may be threatened, and not everyone is prepared.

According to the survey report from the EIU, only 35 per cent of respondents are confident in their organisation’s ability to adapt to global trade trends and have secured alternative market sources or suppliers.

Anyone in Procurement and Finance would agree that a free market and mutually advantageous regulations have made business easier. Cross-border shipping, VAT handling, cross-border invoicing—all of which are more straightforward when governments cooperate with one another. All that mundane work and those non-productive tasks required to move money, people, and goods between countries is decreasing.

As a result, businesses can:

  • source materials where they are the most accessible,
  • produce goods and services where it’s most economical,
  • and sell final products in the markets where the profit can be maximised.

An European Strategy and Policy Analysis System (ESPAS) report has estimated that by 2030, the amount of trade between USA and China will grow by 80 per cent, and over 85 per cent between EU and China.

Given these numbers, free trade must surely be part of the recipe for growth. Or will it?

EIU highlights global trade concerns

In the recent EIU report sponsored by Basware, we interviewed over 400 supply chain and finance professionals to find out how they’re preparing for the future.

Almost one in four of the respondents believe that the post-Brexit climate of trade will have the greatest effect on global commerce. 21 per cent believe that the impending US-China trade war will pack the biggest punch to global trade dynamics.

Overall, survey respondents revealed that they’re generally quite concerned. The most common impacts expected from these changes are:

  • An increase in procurement costs (35 per cent);
  • Greater supply-chain complexity (29 per cent); and
  • A decrease in business opportunities (22 per cent).
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And these professionals are justified in their worries.

Questions regarding international trade post-Brexit and the customs introduced between the USA and its trading counterparts make even the most experienced supply chain experts raise questions.

Discussions of the current and future geopolitical landscape have become a permanent agenda point in board meetings. The competitive nature of businesses is no longer merely determined by the typical factors of economies of scale, product differentiation, switching costs, or access to distribution channels. Instead, it’s also determined by businesses’ abilities to manage ever-increasingly fragmented supply chain for goods and services and respond to changes outside of their control.

According to Ernst & Young Global Limited (EY), one in five executives say that there is “too much uncertainty” to predict the full effects of the trade actions instated this year by the US government.

As products and services become more and more dependent on tangled interdependencies of businesses and therefore subject to trade restrictions, the chances of non-compliance increase. As the probability that these sanctions hit your supply chain increase, so does your business risk.

Steps to prep for the future of trade

How can procurement and finance professionals embrace change to make sure that they are a part of the solution and not the problem?

Participants in the EIU report state that reviewing internal controls and procedures, forecasting costs through simulations, and developing end-to-end supply chain visibility measures are all ways they are prepping.

Here are three steps you can follow, to future-proof your organisation’s global trade strategy:

1. Move to digital flow of information

Move away from paper and email-based orders and invoices and adopt electronic commerce to take advantage of digital financial supply chain and its economies.

2. Consolidate financial and supply chain information to identify risks

Combine information regarding your supply chain from different sources to learn more about your supply chain. Develop alternative sourcing options to diversify supply chain risk.

3. Automate where possible

Automation is required in order to move people around from transactional duties into business advisory and forecasting. Develop and train staff to adapt to change.

It may seem like a lot of work. But, it’s worth it. In fact, many companies may not be able to face the consequences of not doing it. In 2014, The US Department of Justice fined more than $1.5 billion in violations of US rules and regulations collectively.

But in 2019, just a single sanction for a non-compliant company exceeded $1.1 billion. Businesses must apply increased internal controls and procedures to continuously monitor their compliance and the compliance of their supply chains.

Make a plan for your team

Following the three steps (digitising, consolidating, and automating) are three overarching concepts that will future-proof your organisation amidst global change. But there’s more to it and it’s covered in depth in the EIU report, ‘What’s now and next for finance and procurement‘.

Learn more about automation, digitisation and the future of the global trade, and download the EIU report, sponsored by Basware, now. Learn how finance and procurement executives are preparing their organisations – and get additional tips on how you can do the same.

Questions? Contact Basware – we’re here to help you simplify your operations and spend smarter.

Traditional vs Automated Procurement Process

Got major procurement issues in your organisation? You may well be able to use technology and automated procurement to solve them.

Photo by rawpixel.com from Pexels

The procurement process is much more complex than it looks. The more complex it is, the higher the number of issues. An automated procurement process can help you prevent and resolve these issues. However, many companies still rely on a manual process. 

Let’s understand the challenges of the traditional procurement process and the ways automation can help.

Challenges of Traditional Procurement Process

A company practicing traditional procurement process faces a lot of challenges. Here are some of the major challenges of a traditional approach:

1. It’s Time Consuming

A traditional procurement process consumes a lot of time of both vendors and companies. As a result, it slows down the entire process and affects productivity. In addition to this, it can take days to communicate a single message and get the job done.

2. Chances of Duplication and Fraud

In a traditional procurement process, everything happens on paper so it becomes difficult for your team to keep track of everything. That’s why there’s little to no transparency in the dealings. This can lead to malpractice such as duplication of contracts or fraud. A single incident of fraud can affect your company’s reputation. 

3. Inefficient Data Management

An offline procurement process involves a lot of paperwork, so data management becomes challenging. In addition to that, it also increases the risk of errors. In spite of this, 54% of companies are still using a paper-based invoice process. 

Paper-based records are always vulnerable to tampering or loss of information and data. This can put your company in a troublesome position.

Benefits of Using Automated Procurement Process

Here are some important benefits of using an automated procurement process: 

1. Improves Efficiency and Speed of Procurement Process

By automating your procurement process, you can not only speed up the process but also increase efficiency. This helps your procurement team by saving a lot of their time for other important tasks.  

With an automated process, you can automate all the repetitive tasks. This helps you cut down on the amount of manual work for your team. It allows them to handle much more important and complex tasks. 

2. Creates a Centralised System

As mentioned above, a traditional procurement process can lead to duplication and fraud in contracts. For any company, there’s nothing scarier than this.

However, automation can help you minimize instances of duplication and fraud. It helps you create a centralized system for all of your data and documents. This allows your procurement team to easily track down the required documents.

3. Reduce Manual Errors

Unlike a traditional approach, automation eliminates paper-based documentation and decreases the risk of errors. When you follow a traditional approach, it not only consumes a lot of time but also invites risk.

So, it’s best to automate your procurement process and encourage a paperless process to reduce manual errors. It also allows you to store information and data easily and safely.

Do you want to learn more about issues in the procurement process and how automation can help you fix them? If so, check out this infographic from PurchaseControl.

Major Procurement Issues & How to Fix Them with Technology

Image courtesy: PurchaseControl

Are you Effectively Mitigating your Automation Risk?

Procurement’s new direction comes complete with a number of new risks to consider. And automation accounts for a few of them.

Photo by Alex Knight on Unsplash

For several years now we’ve heard the same message – procurement is going to become more strategically focused in organisations. One of the key enablers cited in this change is technology and the increasing automation of transactional tasks to help free up time and resources.

But technology and automation bring their own challenges, not least the impact of dealing with the ever-increasing issue of cybercrime and third-party risk. And, as I’ve said before, despite knowing about it, few CPOs if any have a full grasp of the risk present throughout their supply chain.

It’s not just technological advancements that represent a key risk, but also the role of technology in the changing nature of work. Being educated and aware of these risk factors will help put mitigation strategies in place. But it will come down to how well risks are managed when it comes to understanding the impact of any future major risk events.

I’ve selected three areas linked to technology and automation that procurement must be mindful of as they take their new strategic direction.

Third Party Risk Management & Personnel

Technology has helped to drive and support the rise of the gig economy. A 2018 report estimated that over one-third of US workers (36 per cent; 57 million people) were part of it. It may have started smaller, but the gig economy has grown beyond the names traditionally associated with it, the like of Uber, Lyft, Deliveroo and Freelancer.com.

The attractiveness of the gig economy lies in greater flexibility on where, when and how people work. For organisations it means they don’t have pay all the costs associated with a full-time worker – potentially saving 50 per cent on rates by using a gig worker. This would even hold true in spite of recent legislation passed in the EU and in California regarding workers’ basic rights.

However, organisations may not realise that they are exponentially increasing their third-party, technology-associated risk. An estimated 90 per cent of hacks targeting organisations take place through an individual employee’s computer.

How can they be sure that the laptop or internet-capable device the worker is using is compliant with network security? Or free from viruses or malware? It’s not only the gig workers, but the employees too, with 87 per cent admitting that they use their own devices for work purposes.

How will organisations support the gig economy workers to carry out their tasks while managing their risk levels? It’s a question no-one has really answered yet.

Changing Skill Sets for Sourcing Professionals

An increasing level of automation in procurement will naturally change the skill set that sourcing professionals require to do their job. This will be seen in a move away from data and analytical skills, and an increasing focus on Emotional Intelligence (EQ) and soft skills like change management, negotiation, selling, presenting.

The question is what are organisations going to do with displaced employees? Do they have an ethical responsibility to retrain them, retain them or up-skill them to allow them to move on? Yes, EQ and soft skills can be trained and will come more naturally to some people. However, there will still be a number who have difficulty in moving into this new way of working.

In my opinion the key skill, even accounting for EQ, will be adaptability. With the speed of technological advancement we are now seeing, people have to be far more adaptable than they ever used to be.

It’s impossible to fight change – some people embrace change, others fight it, others are paralysed by it. People will struggle if they don’t have that adaptability as a natural barometer. It’s a much tougher skill set to train, but as technology continues to advance, it’s a risk that organisations need to be aware of.

Responsible Automation

Linked to this is the final risk factor I’ve chosen to highlight here – responsible automation.

Most automation is pretty obvious, for example, installing an ordering kiosk instead of a human for ordering fast food, or having self-service checkouts at the grocery store. What people don’t see is the impact on the low to mid-level managers, who lose much of their transactional and managerial work as a result.

They are at risk as much as the frontline employees, but this isn’t always considered. Organisations have the social responsibility to have intelligent automation, to consider this through the risk management lens and assess how their technology fits with the social agenda.

Being more socially responsible with automation will represent a dramatic change from the current situation. Organisations need to stop automating for the sake of it, only eliminating the transactional elements because there is good reason to do so.

By being too keen to automate, organisations lose site of the need to have humans in the process, which may in turn increase risk. Until such times as bots and AI have the EQ we discussed before, they will miss out on the human aspect of detecting fraud or seeing the human thought process behind decision-making.

This is a more responsible approach, but also, from a risk point of view, protecting organisations against the loss of the crucial human element in some tasks.

About the Author

Dawn Tiura is the CEO and President of SIG, SIG University and Future of Sourcing and has over 26 years’ leadership experience, with the past 22 years focused on the sourcing and outsourcing industry.

In 2007, Dawn joined SIG as CEO, but has been active in SIG as a speaker and trusted advisor since 1999, bringing the latest developments in sourcing and outsourcing to SIG members. Prior to joining SIG, Dawn held leadership positions as CEO of Denali Group and before that as a partner in a CPA firm. Dawn is actively involved on a number of boards promoting civic, health and children’s issues in the Jacksonville, Florida area. 

She is a licensed CPA and has a BA from the University of Michigan and an MS in taxation from Golden Gate University. Dawn brings to SIG a culture of brainstorming and internal innovation.

Dawn provided some great insight and thought-provoking ideas at the Big Ideas Summit Chicago 2019 this week. If you weren’t able to be there on the day and couldn’t get there as a Digital Delegate, don’t worry. You can still sign up to access all the great content by clicking here.

Procurement 2030: Would You Report To A Robot?

Can leadership be automated? Will AI soon take over procurement negotiations, communications and problem-solving? Once thing is for certain – no skill-set will remain uniquely human forever.

Click image to get your copy of Procurement 2030: Level 3.

What is your human advantage?

With 42% of the average workload in procurement expected to be automated by 2030, now is the time to take stock of our skill-sets and focus on what makes us uniquely human.

Today, the automation of core procurement skills such as data analysis and market research is well underway. Lines are being drawn between those skills that AI has already mastered, those that will be automated in the future, and – critically – the areas where humans still have the advantage over machines … and that’s where soft skills come in.

However, categorising procurement skill-sets into 1) core skills for AI and, 2) soft skills for humans oversimplifies the issue. It ignores the fact that the creeping wave of automation increasingly includes soft skills such as communication and problem-solving. 

Robotic leadership?

Avoid the trap of thinking there are particular skills that AI will never be able to replicate. Surprising results in this research, for example, reveal that very “human” skills such as negotiation and even leadership are seen as likely to be automated. Robots are currently being trained to read and respond to the subtlest of human facial expressions.

With this in mind, our research identifies core procurement and soft skills where – for the foreseeable future – humans hold a unique advantage. The ability to influence others, build relationships and think creatively have emerged as stand-out skills that will enable us to future-proof our careers on the cusp of the robotic age.

Let’s recap.

Level One of this four-part series by Procurious and Michael Page UK examined the forecast for procurement and the threats and opportunities facing the profession. Level Two shifted the focus to the practicalities of procurement and supply chain management’s evolution against the backdrop of a technological revolution.

This report, Level Three, dives into the core procurement and soft skill-sets to understand exactly which parts of our roles are expected to be automated, and offers advice on the skills that top CPOs will be hiring for by the year 2030. 

AI and Core Procurement Skills

Determining customer needs, developing supply strategy and delivering stakeholder value are not only considered to be the most important core procurement skills, but also the least likely to be automated.

Procurement professionals who wish to develop their skills in determining customer needs (both internal and external) should work to improve their ability to build relationships, listen carefully, challenge assumptions, and always look for opportunities to connect the dots, help others and add value.

AI and Soft Skills in Procurement

Among the top four soft skills nominated as most likely to be effectively automated, problem-solving, leadership and negotiation have emerged as unexpected results. Robotic problem-solving is an entirely different concept to human creativity and innovation. AI has the superior ability to search and analyse data – for example, the answer to an engineering challenge may already exist in your files, but has been forgotten by human staff. Given the right search parameters,AI can identify the solution.

Would you feel comfortable reporting to a machine? Robotic leadership is a fascinating concept. Robots may very well have the ability to check your work and track your KPIs, but are not yet capable of motivating or inspiring others, or picking up on the human nuances that are a part of powerful decision making.

Negotiating robots already exist, and may soon be considered very useful for conducting low-level, emotionless negotiations that involve no ambiguity or complexity. For strategically important negotiations, however, human skills such as awareness, empathy and flexibility will always have the advantage.


Interested In Learning More?

This content-packed report also contains links to relevant thought-leadership from Procurious and Michael Page UK, including videos, blog articles, podcasts and webinars.

And don’t forget … part 4 of the Procurement 2030 report will be released before the end of the year!

CLICK HERE TO DOWNLOAD PROCUREMENT 2030: LEVELS 1 to 3.

4 Reasons Why Your Organisation Isn’t Embracing Cognitive

In the battle for capital, how does procurement ensure its cognitive projects come out on top?

At last month’s London CPO roundtable; Amit Sharma, Global Procurement Practice Leader for Cognitive Process Services (CPS) –IBM led our attendees in a discussion on how procurement leaders can ensure their cognitive projects come out on top.

There is so much potential in cognitive technology to transform the role of procurement. It will allow professionals to do dynamic forecasting, telling you when to raise acquisition and awards contracts to a particular supplier based on a triage.

“For procurement, maintaining our relevance to the organisation beyond cost savings is imperative” said Amit.  “[Procurement pros] need to embed the latest in technology as best practise into the business as it will free up our time and help us to move from transactional to strategic management.”

“The logic is unquestionable.  We know the sophistication of AI is going to come. It’s a question of when, not if.”

But when it comes to making the leap to cognitive, which can do a world of good for analytical and predictive analysis, organisations are still hesitant.

Procurement needs to make the business case for how cognitive can add long-term value and, as Amit reminded us, “If you’re not convinced, you can’t convince someone else”

Throughout our discussion, four key reasons for an organisation’s reluctance to embrace cognitive tech became apparent.

1. Remaining skepticism at the value of cognitive

As Amit explained, cognitive technology like Watson can help procurement professionals to analyse reams of data. It would, for example, allow users to plot the price at which they are being charged for something by suppliers and analyse how the index has moved in past [x] years. Five years ago this process would have been extremely time consuming but with the index data, the system can quickly tell you exactly where you’ve been overcharged.

So it all sounds great. But in reality, business leaders are often skeptical about the actual cost savings brought about by this kind of analysis.

Do you genuinely make better decisions in the long term by having so much data at your fingertips? Or can you have just as much success through effective negotiations with your suppliers?

Amit’s response to this “If you’re not doing spend compliance – you don’t know if you’re compliant. If you’re not analysing this data, you don’t know the potential cost savings.”

“I spoke to a CPO who thought their processes were good. [But it was discovered that] there was a 40 per cent unit price difference across the company in the same category, simply because the left hand doesn’t know what the right hand is doing!”

2.  Spend within organisations is fragmented

One key problem for procurement, when it comes to implementing cognitive technology, is that the CPO doesn’t always have the authority to drive transformation. Perhaps they are reporting to a CFO who doesn’t see value in cognitive tech or the spend might simply be too fragmented across the business. When it depends on lots of other people, procurement are unable to drive change effectively.

As one of our roundtable attendees pointed out “there are organisations I know who can’t justify the need to implement Ariba to their CFO- let alone cognitive technology!”

3. Trouble looking at the bigger picture

Several of our roundtable attendees cited short-termism as a key reason for their organisation’s lack of cognitive adoption. “The mistake we make is that we look at opps in a tactical way and not at the bigger picture,” said one CPO.

“For example, we know that there will be headcount reduction in the coming years and we will benefit hugely from cognitive tech, but articulating that at a hollistic level to the CFO and explaining it as a 5-year journey is the challenge”

4. Confusion about AI

Remarkably, one of the biggest challenges remaining around  the uptake of cognitive technology is a universal lack of understanding of what it actually is and the distinctions between different terms.

“You can start talking to a group about AI and within a few minutes people are talking about blockchain, as if the two are interchangeable,” said one of our attendees. “People need to have a clearer understanding of the buzzwords ; AI, blockchain cognitive etc.”

Of course, there are people who know a little and people who know a lot. And that’s a challenge in itself.

Read more here on the insightful discussions had at our London CPO roundtable. 

One Step Closer To Invoice Automation…

How can smart coding functionality take invoice automation one step further…?

Depending on your organisation, the maturity of your invoice processing is likely varied even across your own internal workflows for different invoice types.

And like many others in your shoes, your goal is to get those things as automated as possible – regardless of invoice type – and shoot for 100 per cent invoice automation. The good news is full invoice automation is an attainable goal with innovation available in e-invoicing solutions today like smart coding.

What is smart coding?

Smart coding helps customers further automate their invoice processing of non-PO invoices, going a step further towards touchless invoice handling. With smart coding, invoices that are not automated by purchase order matching, payment plans (schedule, budget or self-billing), or automatic coding templates can now be automatically coded with minimal human interaction.

Why should you care about smart coding?

Smart coding speeds up invoice processing and improves productivity.

Traditionally, non-PO invoices are automated with business rules that are very laborious to manage. Finding a correct cost allocation is typically a challenging task for employees who are not familiar with bookkeeping rules, especially when there is no purchase order to copy information from. It requires the AP clerk to spend a lot of focus on this type of invoices – researching the origination of the invoice, reaching out to others in the business to ask questions and making an educated guess as to the best place to code the invoice. All of this takes time and often delays payment of non-PO invoices.

Smart coding automates those manual steps, so employees can easily code an invoice with a click of a button to automate more of the process. The solution leverages big data to analyse historical transactions, ultimately providing a highly reliable recommendation to the user that can also be complemented with business rules. Not only does this simplify the process for the user and save time in processing the invoice, it also reduces the need for the AP department to rectify erroneous coding lines at month-end.

How does full invoice automation prepare me for the future?

Everyone is talking about machine learning and AI – and invoice automation and e-procurement are certainly areas of application for these emerging technologies. But there a couple of things you must do today to ensure you’re ready when those technologies become the new norm. Use smart coding to help you:

  1. Automate as much as possible: Machine learning and AI are layered over systems, so you want to be as streamlined as possible in preparation for those applications. To do this, set your goals on a high level of automation. And this doesn’t just mean adding technology over clunky processes. As you mature your systems and strategy, make sure you’re re-engineering processes where necessary so workflows are optimized too.
  2. Get financial data: One major benefit of full automation is the central collection of all your financial data in one solution. Data is what feeds technologies of the future. Machine learning and AI are not effective in purchase to pay without a complete, ever increasing source of financial data. If you want to embrace machine learning applications, capture every possible piece of financial data in your purchase-to-pay system today.

Basware has the most advanced invoice automation solution in the world and we’re constantly improving it. Based on 30+ years in the industry, we’re rolling out features and functionality that continue to deliver the ultimate efficiency benefit to customers. With the largest open network, we have the unique ability to capture the most data across customers and combine that with third party data to deliver what customers need now and in the future.

10 Questions to Ask in a Purchase-to-Pay Demo

$1 million is wasted every 20 seconds collectively by organisations around the globe. So, here are some areas to dig into and questions to ask during a purchase-to-pay demo. 

$1 million is wasted every 20 seconds collectively by organisations around the globe.

Yes; you read that correctly – organisations are losing money to the tune of $1 million every 20 seconds due to poor project management practices, according to a recent survey from Project Management Institute (PMI).

This same survey also reported that 52 per cent of projects in the last year experienced scope creep, with one of the main reasons being erroneous requirements gathering.

Seeing these stats and given my profession, I immediately thought of purchase-to-pay projects and how procurement and finance professionals can ensure they have what they need when evaluating purchase-to-pay solutions against their requirements document.

With over 7 years in the business, I’ve seen prospective customers led astray by solution providers making them unsure of exactly what they’re looking for in terms of functionality, and more importantly what they need to solve their business challenges.

Sometimes cleverly crafted demos can gloss over important nuances or mask inadequacies, which can cause major problems later during implementation – and the dreaded scope creep. So, here are some areas that I recommend digging into and questions to ask during a purchase-to-pay demo.

10 questions to ask in a purchase-to-pay demo:

  1. Does the e-procurement solution do line item requisition approval workflow? 

That’s a mouthful, so let’s break it down. Imagine you have a user that wants to buy three items requiring three separate approvers in the e-procurement solution. This person fills the virtual shopping cart with these items, just like on Amazon.

But unlike Amazon, these items need to be approved and POs issued before ordering happens. And because you want your users to get the items they need quickly, you want to make sure the e-procurement solution automatically issues POs and places orders as each individual request is approved without waiting for the other approvals – this is line item requisition approval workflow. The alternative is a linear approval workflow where each step is dependent on the previous step, meaning all the POs are held up until that approval workflow is complete.

This means all POs are reliant on the final approval in the linear chain and the entire process slows way down. Ultimately what happens in the latter scenario is your users get fed up with the slowness of the system and start purchasing outside the system – often referred to as maverick spending – so they can get what they need faster and more easily.

  1. Will I be able to create complex workflows? 

Related to the first question is the ability to create complex approval workflows. While the goal should always be to streamline approval processes, certain business scenarios and regulations call for more complexity, and you should not forgo that requirement because the system isn’t sophisticated enough to accommodate. Don’t let the solution provider try to oversimplify matters or sway you with a sharp user interface – what you need is flexibility. The tool should give you the flexibility to create comprehensive workflows that address all your needs – not create multiple work-arounds that you must maintain. You also should be able to configure the workflow once and leave it mostly intact – which is better from a compliance standpoint – instead of having to constantly adjust to meet business needs.

  1. Will I get budget visibility during the requisition or approval process? 

This is a biggie. Perhaps the greatest advantage of automating your procurement and accounts payable (AP) processes is the visibility you get across the entire buying process. But here’s the key – you need that visibility proactively, not reactively with month-end reports. A proactive approach gives managers the visibility to see how purchase requests impact budgets as the requests are being made in real-time, so they can make informed decisions as to whether to approve or deny the requests based on their budget amounts. If managers can only see how purchases impacted budgets at month-end after the money has been spent and budgets used up, that’s a reactive approach and it’s not good enough.

  1. Is the sourcing tool easy to use?

Most purchase-to-pay solutions now offer sourcing as part of the full suite. In terms of value, this helps streamline more of Procurement’s job so they can focus on suppliers and other strategic procurement initiatives. If you’re adding on this functionality to make someone’s day-to-day tasks easier, it should be user-friendly and not more cumbersome than manual sourcing activities.

  1. Can the system perform partial returns?

Say you get a shipment of 10 laptops and one is broken. You want to be able to acknowledge receipt of ten laptops in the system and note the return of the one broken computer. And, you want to be able to track that broken item through the return process. Returns and tracking returns should not be an all-or-nothing process.

  1. Can the invoice automation solution truly process ALL invoice formats?

Remember those cleverly crafted demoes and nuances I was talking about earlier – invoice automation is a landmine for hidden inadequacies. I often hear of solution providers try to mask solution shortcomings by harping on getting more PO-backed invoices, when in reality driving a higher PO percentage is not going to solve your problems. So, let’s be clear about a few things here: you will always have a certain percentage of non-PO invoices and paper/email invoices are not going away just yet, but there’s no reason you can’t automate the processing of those invoice types anyway.

Therefore, you should choose a solution that can truly ingest and process any invoice type automatically (paper, electronic, EDI/XML, PDF, etc. – covering direct, indirect, PO, Non-PO spending) and convert these documents into true e-invoices (i.e. – invoices with structured data formatting for machine reading without human intervention). Your suppliers don’t need to change how they operate today – if they send paper invoices, they can continue doing that – but you can still get an electronic invoice. Automation of this process is key. Leveraging automation should eliminate the need for your AP staff to key invoices into the solution. It should also automate approvals, handle exceptions like extra costs, create all book-keeping information automatically and map the spend accurately to correct categories, regardless of invoice quality and with zero change management for suppliers. This means there is no disruption in the supply chain and you can get 100 per cent of your supplier on-board.

This was a lengthy section of highlighting nuances, but it’s key to understand why this is so important. The point of achieving this level of automation and sophistication in your accounts payable department is to capture 100% of your enterprise spending data by automating all invoices – not just some – so ultimately you get 100% spend visibility.

  1. Can the invoice automation solution do split coding on invoices at the line and header level?

Let’s say you have a trade show coming up. The event is an investment for three departments: marketing, sales and pre-sales. When you’re coding invoices for the event, you want to have the capability to take the sum amount and split it between the three departments. If you can only split at the line level, you will have to split-code each line three ways and that gets to be time-consuming and inefficient.

  1. Does the analytics solution offer out-of-the-box reporting and customisable reports?

You don’t want to reach out to a customer service representative every time you want to see your own financial data in a certain way – that’s time-consuming, annoying and can be costly depending on your service agreement. Make sure the analytics tool offers configurable dashboards and reports that have standard views to provide a starting point for your analysis, allowing you to drill into the details when necessary, and also gives you the ability to easily create, configure and export your data in the format you need.

Analytics should make your life easier – not more complex.

  1. How are upgrades handled?

The advantages of using Software-as-a-Service (SaaS) technology are plenty, but to reap those benefits you have to be receiving upgrades regularly. Ideally, you want to be on a multi-tenant SaaS environment (if you want the real techy stuff, ask the head of your IT department – this person will know exactly what that means). But in short, this enables every customer in the environment to upgrade at the same time to the newest version.

Other environments stagger upgrades for customers, meaning that not everyone has access to the latest functionality and bug fixes (including features that ensure compliance) and worse, they fall behind on their upgrades. This begins to pose real problems due to fragmented support across various versions, some customers opting to skip upgrades and falling further behind and challenges maintaining the solution.

  1. What happens to custom fields during upgrades?

The custom fields you create and the data associated with those fields should remain intact when upgrades occur. You spend a lot of time and energy defining custom fields during implementation; there is no reason your solution administrator should have to go back in and do re-work every time an upgrade happens. This is a waste of time and you risk loss of data capture if those fields are not re-activated in a timely manner.

Procurement Process vs. Chat-Bots

What are chat-bots? What can they do? Are they soon to replace all procurement functions?!

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Software Robots (called Bots/Bot) are dramatically disrupting procurement processes involving human interface. They will have a high appeal on the transactional and digital side of procurement processes and will gain growth in the coming years with cognitive and machine learning tools.

The strategic interfaces in procurement planning, strategy, performance management and relationship building will continue to be human-centric (people oriented) but will increasingly rely on the Bots to support them with structured knowledge readily available.

What are “Chat-Bots” and how do they differ from RPA Bots?

A Bot is a software program designed to perform a task which would be done by a human being.

Like any software, these Bots can be programmed to perform almost anything where the workflow can be programmed and information digitalized with the added advantage of the advents in Artificial Intelligence which improves the human-machine interface.

The key difference between a Bot and any standard software is that the Bot generally has the capability of working across a couple of system environments.

With recent advancements in human language translation capabilities (like IBM Watson, Microsoft’s LUIS and equivalent) a lot of software are now capable of interacting with human beings in a seamless “human-like” manner and these Bots are referred to as “chat-bots” (chatting bots).

They usually handle the human front-end interfaces and then interact with the back-end systems to accomplish the task. They are distinctly different from the RPA Bots which are primarily back-end (non-human facing) software that will perform the task based on the system-generated routine as opposed to the chat-bots which are triggered by human interaction.

The chat-bots can then be further classified into

  1. Information chat-bots Provision of information based on the human input. “Speak or Enter flight number” and the chat-bot will provide the flight information. (However, it won’t be able to book the ticket for you!)
  2. Interactive/Smart Chat-bots Ability to perform certain tasks based on customer input. These type of chat-bots can book tickets for you or even resolve defined issues based on rules “explain your problem in a few words and I will try to help you”
  3. Machine Learning chat-bots Self-learning chat-bots which learn from previous interactions and adjust their interactions as time goes on. These chat-bots are still evolving and are going to disrupt the legacy notion of “dumb bots”

Which areas of Procurement are more “Bot-able”?

In a typical Source-to-Pay process the following areas of Source-to-Pay processes are more likely to be linked to Bots with a clear carve-out of the processes which will continue to be human-centric.

What are the Benefits of Bots in Procurement?

The Procurement Bots add a significant value to the business on the following fronts:

  1. Improved Reliability Bots help improve the reliability of the process by taking away the human fallibility and the results are far more reliable.
  2. Reduced Cost-to-Serve Taking away the human tasks also helps reduce of the cost of the transactions especially if done on a large scale for highly repetitive tasks.
  3. Reduction in Cognitive Bias Humans handling any repetitive tasks are always prone to cognitive bias and resulting errors. Bots eliminate the cognitive bias from the workflow (Although they limited by the cognitive bias built into the program itself).
  4. Reduction in cycle time Since Bots work 24×7 and in real time bots have demonstrated a 20%-95% reduction in cycle time associated with tasks/processes.
  5. Resource allocation Resources can be diverted to more strategic aspects of procurement. When the Bots can take away the repetitive tasks away and help assist the procurement professionals they are now more devoted to handling the more strategic/value adding aspects of procurement.

What are the risks of Bots in Procurement?

While the Bots bring about a great deal of value to the organisations they have risks that need to be considered during evaluation and implementation:

  1. Snow-balling of errors created due to Bots The chances of errors created by Bots is heavily reliant on the business rules captured in the software. If not watched closely these un-intended errors can balloon very easily since there is no human being watching these errors.
  2. Loss of Organisation Capability on process knowledge As organizations implement Bots the organizational knowledge on how these processes work erodes and when escalations happen there are very few people who have an end-to-end view of these processes.
  3. Local customisations may not be picked up in Bots While Bots also help standardise the processes by removing the human bias element they also run a double-edged sword of missing out on certain local requirements that might not have been built into the program thus resulting in manual interventions or an inefficient process.
  4. Lack of Human Interface impacts perception/relationships While the Bots are becoming smarter in terms of aping the human interface they are not perfect and they often run into situations where the user gets frustrated at not being able to get across.

How will Bots Transform Procurement function?

Bots will revolutionise how the procurement function is perceived currently through its ability to work/analyse across systems at the speed of thought.

What are the other factors to be considered in the Procurement Bot transformation journey?

Besides the obvious elements of the business case the following considerations need to be factored in during Bot Implementations:

  1. Long term alignment with System architecture design

Even though the Bot implementations are extremely light implementations lasting a few days to a few months – it is imperative that the long-term alignment with system strategy be considered before embarking upon these initiatives

2. Human Org Capability considerations

Consider both existing and future org capability to implement and maintain the Bots. They will require different skill sets and both are equally important to the success of the value from the Bot.

3. Characteristics of the process and the Bot-ability

Strong considerations should be given to the alternatives available. Bot is not a panacea for any process issue and should be treated accordingly.

The Logic of This “New Reality” is that people collaborating with ‘bots’, within a current Procurement Department that possesses effective work-flow processes can be integrated with ‘bot’ utilization.

The myth that Bots will replace Procurement function is a little overstated.  Procurement function will continue to be a human-centric (people oriented) organisation

Sourcing, But Not As We Know It!

How many procurement pros do you need to manage $1 billion of spend? We examine the stats revealing the state of today’s sourcing landscape…

How many staff does it take to make a success of strategic sourcing?

We might not have a definitive answer to that question, but we do have access to some figures that tell us a lot about the state of the sourcing landscape today.

For instance, we know that companies dedicate 16 full-time employees (FTEs) to the sourcing process for every $1 billion in spend. It’s one of those stats that makes you think. At first glance this might sound ok, right? 16 full-time staff can achieve a lot. But $1 billion represents an incredible amount of procurement.

The fact is, most organisations aren’t maximising the value of their purchasing. Efficiency is being compromised, and in this there are a number of factors at play.

Periodic category reviews, while being the best way to ensure effective sourcing, are just not possible for most organisations with the resources available to them. This means companies aren’t adjusting their sourcing to account for changing market conditions.

Compounding the problem, the bulk of sourcing teams’ time – 50 per cent – is swallowed up by the supplier evaluation and negotiation stages, which in some cases can involve highly complex financial and regulatory work. With so much time spent on this phase, more strategic and potentially value-adding phases such as planning – which are still mostly conducted by category managers – don’t get the attention they deserve.

Looking at the landscape as a whole it’s no surprise that most sourcing projects are long and costly, and ultimately don’t deliver the results that stakeholders expect.

Strategic sourcing, it’s a-changing

And automation is the key…

More and more firms are convinced that digital transformation is the answer to increased efficiency in strategic sourcing, and they’re not afraid to invest in software that gives them a procurement advantage. In fact, they spend more than a quarter of a million dollars a year on these solutions. What’s more, they’ve found that this investment is paying off. According to these companies, supplier discovery, e-sourcing and contract lifecycle management software is helping them streamline the entire sourcing process – from discovery to contract signing. As a result, their total sourcing times are being reduced by 30 per cent as are their costs.

This is just the beginning of a trend that holds significant opportunities for organisations. But firms need to be bold in their thinking to achieve these results. Increasing FTEs isn’t the route to increased efficiency. Companies need to look to technology to help them transform their procurement processes and deliver faster, more cost-effective sourcing than ever before.

To discover how your organisation can embrace digital transformation and reduce costs and cycle times by 30 per cent, read The Hackett Group report now.

Automation: Who Says You Can’t Manage What You Can’t See?

If your business is engaged in international commerce, you’re probably struggling to toe the line with supplier risk management. Automation, alerts, and third-party data are your best defence.

Managing supply chain risk is no walk in the park. Exogenous events like the recent terrorist attacks in Barcelona have drawn attention to the EU’s rules to combat terrorism financing through stricter anti-money laundering (AML) regulations. These rules impact many companies that are increasingly added to the law’s scope: possibly yours.

Meanwhile, modern slavery violations can surprise even the most astute contract or supply chain managers who may have unknowingly relied on invalid or falsified information. In the U.K., The Modern Slavery Act 2015 includes a Transparency in Supply Chains clause, which requires companies operating in the U.K. to address modern slavery in their supply chains. If you’re at a big company, you’re probably on the hook to comply.

Once you add in the more common types of risk, such as the financial or credit health of your suppliers, changing markets, and natural disasters, the sense of how challenging it is to manage them all—in the age of digital disruption with fast-paced change and volatility—can quickly become overwhelming.

Fortunately, there is technology and automation to help you maintain control, gain visibility into your supply chain, and mitigate much of these risks. The right technology can help you proactively steer your organization clear of minefields that can damage everything from reputation to sales. And it’s only getting better.

 Start with real-time monitoring and alerts

The first step is to identify the most likely disruptions to the supply chain, like a natural disaster or a work stoppage at a supplier’s supplier. One way to deal with this type of risk is with real-time monitoring. Real-time monitoring of your suppliers means that you can receive an alert whenever there is a potential for disruption. Such alerts can help you find an alternative source of supply, maintain production, and avoid missed deliveries or even a plant shutdown.

Real-time alerts should be an extension of an overall solution consisting of a platform and business network. This is the ideal foundation to set up, monitor, and manage a portfolio of suppliers to ensure that all essential documentation about labor practices, certifications, certificates of insurance, and so on, is in place before you start doing business.

Integrate third-party data sources

Documentation and data about your suppliers can come from many sources, not just what you gather during an onboarding, contracting, or surveying exercise. There are plenty of third-party sources that have standalone solutions and open APIs or integrations into supplier management platforms that let you address various dimensions of supplier risk and to set up corresponding alerts.

If your company is engaged in trade and has a 10,000-euro or more money transfer in any way, it will need to comply with the EU 4th AML Directive. In addition to digitally onboarding your supplier base, you may want to automate KYC / KYB (know-your-customer, /-business), AML (anti-money-laundering), and EDD (enhanced due diligence) requirements. These steps will help you comply with the directive

One provider that is using cutting edge technology like distributed ledgers is Austria-based Kompany. Their counterparty verification data allows users to streamline the supplier verification process at the point of onboarding (and continually) with up-to-the-minute alerts on any material changes to supplier vitals. Their information comes directly from the commercial registers. Kompany even includes PEP (politically exposed person) screening and sanction lists.

Who says you can’t manage what you can’t see?

Other popular sources of company and industry data include Moody’s (credit ratings), EcoVadis (sustainability scorecards and ratings), riskmethods (transparency into risk exposures in 1-n tier supply chains), and Made in a Free World (visibility into modern slavery), to name a few. These data sources can help you continuously monitor for risks and evaluate your risk portfolio during the sourcing process.

Through technology and regulatory technology systems like those described above, you can design an automated, customized, and intelligent risk management strategy. In turn, this can boost trust between you and your suppliers and you can plan more confidently in an environment full of uncertainty.