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5 steps for implementing automation in procurement
Workflow mapping and stakeholder engagement should happen before companies select technology for procurement automation. Learn more about steps for CPOs and CSCOs to follow.
The reason for automation initiative failure is usually not because the technology is inadequate but because the organization was not prepared for the initiative and its results.
Insufficient operational groundwork and a gap between the technology's promises and its results can lead to issues with procurement automation initiatives. However, following a simple, structured path for implementation can make companies more likely to succeed.
Chief supply chain officers (CSCOs) and chief procurement officers (CPOs) who follow each step instead of skipping straight to the technology selection will likely experience faster time to value and more durable results.
1. Map current workflows
Before their company selects any platform or tool, CSCOs should map out the reality of how procurement operates instead of how the organization's process documentation says it should operate. The two rarely align.
The mapping exercise should include identifying which tasks are repetitive and rule-based, which would make them strong candidates for automation. Repetitive and rule-based procurement tasks may include purchase order processing, invoice matching and, potentially, supplier onboarding.
The mapping exercise might also reveal data quality problems that will hamper any automation investment.
2. Engage stakeholders
Resistance to change is one of the greatest obstacles to new technology adoption for procurement or other functions. Employees who have built their professional identity around skills such as negotiation and supplier relationship management may worry about what automation will mean for their roles. C-level executives, procurement professionals and IT departments must be engaged and aligned before implementation begins.
C-suite executives should directly address employees' concerns and frame automation as a business transformation in which the procurement team will participate. Involving employees in the design of the automation workflows instead of presenting them with a finished system can help improve the design results and reduce employee anxiety.
Companies should also engage early with their external stakeholders -- particularly suppliers -- about automation efforts.
3. Select and evaluate platforms
The platform selection technical criteria that matter most are integration with a company's existing ERP, scalability and vendor support during implementation. However, considering which processes will be automated first and evaluating longer-term architecture are also important.
CPOs should resist choosing the platform with the most features, as organizations often struggle if they start using sophisticated systems before they have established the required data quality or process maturity.
For example, a mobile app might improve a company's overall processes more than a complex, integrated platform.
4. Redesign processes if needed
Automating a broken process only leads to a faster broken process, so, before the automation process begins, CSCOs should direct their teams to optimize the workflows the company is planning to automate. Simplifying approvals, merging redundant steps, standardizing data and embedding compliance checkpoints will all help the automation process go more smoothly.
Redesigning processes includes establishing governance frameworks, such as which decisions require human review, which thresholds will trigger escalation and what a complete decision record looks like. Redesigning now can benefit not only the current automation project but also any future automation layers built on the same foundation.
5. Pilot, measure and scale
CSCOs should scope initial pilots to specific departments or process categories and establish clear metrics before launch. Metrics to keep an eye on include cycle time reduction, processing cost, compliance rates and user adoption, which is frequently underweighted.
After a successful pilot, consider how best to scale. Building on the data and process foundations the pilot established is better than simply replicating the same technology stack in new areas. Carrying out performance monitoring, including review cycles and feedback from procurement teams, will ensure that automation is aligned with how the organization actually operates.
Organizational readiness is crucial. CSCOs who ensure these steps are carried out instead of delegating the program to IT or a systems integrator will help their organizations experience sustained returns from automation.
Donald Farmer is a data strategist with 30-plus years of experience, including as a product team leader at Microsoft and Qlik. He advises global clients on data, analytics, AI and innovation strategy, with expertise spanning from tech giants to startups. He lives in an experimental woodland home near Seattle.
