Home Four Reasons to Use RPA in Procurement

Four Reasons to Use RPA in Procurement

by sol-admin
106 views

American Productivity and Quality Center (APQC) is a worldwide organization for benchmarking, best practices, process and performance improvement, and knowledge management. Based on APQC’s Open Standards Benchmarking data and its Sourcing and Procurement Blueprint for Success report, here’s how RPA can benefit procurement.

RPA can empower procurement teams to work with greater efficiency and productivity in core procurement processes. RPA also frees procurement staff from highly manual activities and allows them to focus on more value-added tasks that only humans can perform like supplier relationship management or strategic planning.

There are at least four reasons why RPA is a compelling option to automate procurement processes:

  1. RPA is quicker and cheaper to implement than many ERP projects (and requires less IT support).
  2. RPA provides an ROI of 30-200% in its first year.
  3. Chatbots can handle complex verbal information.
  4. RPA allows organizations to shift focus to more valuable procurement activities while eliminating errors from transactional work.

APQC’s research confirms that RPA technology improves procurement efficiency for the organizations that invest in optimizing it. For example, organizations that have fully optimized RPA for procurement processes have 84 full-time equivalents (FTEs) ordering materials and services per $1 billion purchases (at the median), whereas those with no RPA in place require 143 FTEs.

However, the quality of RPA, especially when incorporating artificial intelligence (AI) capabilities, will largely be a product of the maturity of the organization’s data management efforts. Poor data quality or the insufficient definition of business rules can lead, for example, to RPA ordering the wrong parts fast and in large quantities.

Another word of caution is in order – there is a point of diminishing gains and even productivity losses depending on the number of bots that procurement is using. It makes sense that a procurement team would add additional bots as it grows its RPA capabilities. For instance, 35% of organizations that are optimizing the use of RPA have more than 20 bots. Yet APQC finds that gains from RPA begin to reverse at this point. For example, organizations employing more than 20 bots have more FTEs ordering materials and services and process fewer purchase orders per FTE than those that use 6-20 bots.

The last word of caution is that, like any tool, RPA is only as effective as its inputs, and it isn’t always the right tool to use. Approaching RPA strategically and with care helps ensure that automation gains are substantive and that the tool solves problems rather than creating them.


The source