When considering a greater investment in automation, companies have to remain focused on end results; if everything goes well, where will the new additions leave the business? The results of this inquiry will determine whether the time is right for a new technology investment. This is a relevant discussion in sourcing and procurement departments at the moment, with a great deal of attention surrounding the transactional processes involving contracts.
The move toward a greater strategic role for the supply chain depends upon businesses committing to more heavily automated operation. This shift in the way companies view and use their sourcing and procurement departments is a convincing point in favor of automating but not the only factor in play. Several smaller operational elements change when supply chains remove some of their manual operations.
Saving time and money
Contributing to EBN Online, Scout RFP's co-founder and vice present of operations Andrew Durlak recently listed several problems experienced by companies that haven't automated. For example, he indicated that the process of comparing suppliers is far longer and more complicated when supply chain operations are too heavily manual. Getting the financial department and sourcing leaders on the same page, working to vet potential suppliers and determine the best match for a business, is significantly less complicated when digital data is flowing through a heavily automated set of sourcing technologies.
The transparency possible with heavily automated sourcing can go well beyond finance. Data from such a procurement process is much easier to share with the rest of a company than information gathered during a manual and hands-on bout of sourcing. Transparency in operations is its own advantage, allowing leadership and other departments to become more aware of the work the sourcing department is doing to get them the goods they need.
Today's business improvement initiatives often revolve around analytics and the improved decision-making that flows from these powerful algorithms. Giving these programs access to raw data means gathering information in a digital format, which is a natural part of automated procurement and sourcing. Companies still stuck with many manual options may end up unable to make analytics work for them.
Beginning or continuing an automation project in sourcing can come down to determining which manual processes are costing the organization the most. In a new year's round up of key metrics for supply chain leaders, Mylan EMEA Commodity Manager Barbara Toth told Spend Matters it pays to study procurement cycle times. When they zoom in on how long it's taking to get key materials and supplies, they may find surprising elements causing continued inefficiency. Toth recommended either automating these problematic processes or eliminating them outright.
When organizations consider carefully how their current procurement systems work, they may realize that not only does automating their operations make sense, but also it may be costing their organizations a significant amount of money to stay with inefficient legacy processes. The next step for these businesses is making intelligent technology investments in line with their overall goals, making a graceful step into the next generation of procurement.