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AOP Blog

Will Automation Replace Procurement?

By June 9, 2021No Comments

Automating professional activities is nothing new. You only need to look at the marketing function to see the impact that automation has had on a business function over the past 10 years.

Procurement isn’t exempt, we’re just slow to the party.

Think about the parts of your job as a procurement professional could be automated. Some of the more transactional activities may be the first to come to mind, as well broad elements of the procure to pay cycle. Or maybe guided buying, allowing technology to become the domain of commoditized products that are bought through catalogs or online marketplaces.

But a lot of what procurement does is strategic, right? It needs to be done by humans.

Not so fast.

Think of the sourcing process. There is a company that is automating the scoping, sourcing, negotiation, and contracting process for complex services. Another is focusing more on the negotiation process. In fact, there is an inflow of capital into the procurement industry right now like we have never seen before.

I say all this to suggest that nothing that procurement does, when it comes down to the actual physical activities that we do, is immune to automation.

That may sound pretty grim, but it’s not. It is a reality I think we have to acknowledge. With that in mind, if I go back to the original question: will automation replace procurement? I said it depends on the company you work for. Here is why.

Does your leadership team look at procurement as a driver of business process or a trusted advisor who plays an important role helping them overcome tough challenges and take advantage of new opportunities?

If procurement is a seen as a process enabler, you are in a tough spot. Once those processes are automated, what’s left? Chances are, you are seen as a process enabler because your company’s leadership doesn’t see a greater role for procurement… or maybe you haven’t appropriately demonstrated that procurement can play a much greater role.

In those companies, it’s going to be the transformation consultants and procurement software sales reps that pitch your c-suite with visions of replacing procurement altogether – you know, all those people in procurement that just slow down the process, upset your suppliers, and generally cause trouble.

The decision will be out of procurement’s hands.

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

If you work in a company like this, procurement leadership will already be proactively looking at ways to automate as much of the traditional procurement role as possible. They will be going to the board for investments because they want their team to have all the tools at their disposal to have an even bigger impact on the bottom line, and, more critically, the top line. In these companies, talent and talent investments become even more important than ever before.

The question to ask is less about will automation replace procurement – but rather, are you going to be reactive or proactive to automation? That’s the existential question for all procurement teams right now.