Look for Procurement to Move Toward Autonomous Functionality

As autonomous functionality takes shape, procurement teams can harness a powerful new tool to fuel growth and operational agility at a time of disruption.

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What if businesses could fully automate their most time-consuming procurement activities, freeing up employees to redirect their energies to serving customers, pursuing innovation and driving growth? How much strategic value, previously tied up in tactical tasks, could organizations unleash? With the rise of cloud-based, intelligent applications, they’re beginning to find out, and in the process, gaining meaningful insights into their customers, trading partners and operations.

These technologies are dramatically simplifying some of the most labor-intensive business processes, from sourcing and purchasing to contracting and payments. Through digital transformation, many businesses have streamlined procurement and spurred collaboration among trading partners. Still others have yet to do so. But, the holdouts are dwindling. That’s because they’re seeing an increasingly clear connection between embracing intelligent spend management, an approach that draws upon vast reservoirs of operational data to mitigate risk, yield contextual insights, fund innovation through savings and extend competitive advantage.

Where is intelligent spend management headed in years to come? Toward systems that can carry out end-to-end procurement processes within parameters strategically set and overseen by humans. These cloud-based solutions are bringing us closer to an era of autonomous functionality, where artificial intelligence (AI)-enabled applications reveal detailed insights, provide prescriptive recommendations and unshackle talented procurement professionals from the tedium of low-value administrivia.

To understand what autonomous functionality is, it may help to point out a few things it is not. For example, it is not a replacement for humans, nor for a growth strategy, a well-managed supply chain or the carefully considered judgment calls that procurement professionals must make every day. It is, however, an important complement to all of the above.

Autonomous functionality represents a profound shift for procurement in much the same sense that autonomous vehicles do for transportation. With a self-driving car, one’s morning commute doesn’t go away, but it does become easier. The autonomous vehicle is a self-contained system within which humans set a destination, navigational features and “rules of the road.” The same idea holds true for procurement. Both types of systems collect and analyze massive amounts of real-time data about their users’ needs and the external environment. In addition, both must cater to a range of users or “personas,” whether weekend vacationers, taxi drivers or long-haul truckers (for vehicles) or category buyers, casual users or trading partners (for procurement). Moreover, the self-driving vehicle’s route is akin to autonomous procurement’s purchasing channel, both requiring stops along the way where decisions need to be made and actions taken.

Fundamentally, moving toward autonomous procurement processes represents a journey that different industries and personas will embark on in different directions and at varying speeds, tailoring intelligent technologies to obviate human activity in some business processes while augmenting it in others. For example, the system may anticipate the need to replenish inventory levels based on the velocity with which they diminish, create sourcing events by inferring information drawn from activities taking place elsewhere in the value chain or leverage operational analytics to initiate timely communication with suppliers with the aim of improving key performance indicators, all without manual intervention. An autonomous system can even notify suppliers when catalog searches turn up empty, suggesting that new goods be made available.

Yet even as humans let go of certain mundane tasks, they remain very much in command of the strategic ones. Determining an organization’s procurement needs is likely to remain in human hands for the foreseeable future, while deciding how to meet those needs — and proceeding to meet them — is left to the new technologies. For example, a user may initiate a process, only later to be informed of subsequent actions taken by the system, requiring human approval for only certain types of decisions. Or a user may employ a set of fully trusted, self-learning analytical applications, which humans merely tweak as needed. Procurement professionals remain in control, adjusting their level of intervention per the needs of the business.

For many businesses, procurement has held fast to the technologies of yesteryear for far too long, leaving value untapped and miring employees in drudgery rather than strategy. As autonomous functionality takes shape, procurement teams can harness a powerful new tool to fuel growth and operational agility at a time of disruption.