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Will Automation Replace Procurement?

By September 16, 2020June 24th, 2023No Comments

The idea of automating professional activities is nothing new. You only need to look at marketing over the last 10 years to see an example of the impact automation has had on a business function. Honestly, procurement is just late to the party.

So, everyone wants to know if automation will replace procurement… well it depends on the company you work for. At least that’s the perspective I shared with Iain McKenna in a recent episode of Procurement in 5 Minutes.

Think about the parts of your job that could be automated. Maybe some of your transactional responsibilities could be automated, including broad elements of the procure to pay cycle. Or maybe the guided buying of commoditized products could be handled through catalogs or online marketplaces.

Think about strategic sourcing. There is a company right now that is already automating the scoping, sourcing, negotiation, and contracting process for complex services. Another is focused more on automating the negotiation process. There are signs that capital is flowing into procurement today at a rate we’ve never seen before.

Nothing procurement does is immune to automation. At the same time, a lot of what we do is strategic; it needs to be done by humans.

That statement may seem pretty grim. But it is a reality we have to acknowledge. If we go back to our original question, “Will automation replace procurement?” the answer still depends on the company you work for.

Does your leadership team view procurement as a driver of business processes or a trusted advisor that plays an important role in helping overcome tough challenges?

If procurement is seen as a process enabler, you are in a tough spot. Once those processes are automated, what will be left to manage? Chances are, you are viewed as a process enabler because leadership doesn’t see a greater role for procurement… or maybe you just haven’t demonstrated procurement’s total value potential.

In companies where procurement is undervalued, transformation consultants or procurement software sales reps can easily pitch the c-suite with visions of replacing procurement altogether. Procurement slows down the process, upsets suppliers, and generally causes trouble.

The decision will be out of procurement’s hands.

On the flip side, procurement may be seen as a trusted advisor. Perhaps you have succeeded in building a value proposition so compelling that stakeholders are lining up to access your expertise and guidance.

If this is your situation, procurement leadership is already proactively looking at ways to automate as much of traditional procurement as possible. They will be going to the board for investments because they want their team to have the tools at their disposal to make the largest possible impact on both the top and bottom lines. When procurement brings in their own automation, talent becomes more important than ever before.

The question to ask instead of “Will automation replace procurement?” is “Who will replace procurement – us or them?” That is the real existential question all procurement teams need to ask and answer right now.

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