As many enterprises begin planning for a post-pandemic world, procurement leaders are finding creative solutions to ensure business continuity far into the future. In the past year alone, the office of procurement has gained significant momentum in evolving from a tactical organization to a strategic partner to the business.
One way organizations are fast-tracking this shift is by leveraging cloud spend management systems to automate sourcing tasks. In a new report by Harvard Business Review Analytic Services, 45% of procurement leaders surveyed say the pandemic has dramatically accelerated their plans for automation.
Often reliant on manual processes, spreadsheets, and email chains, the office of procurement has been historically overlooked when it comes to digital transformation. And while some teams may leverage traditional enterprise resource planning (ERP) software, those legacy systems can be complicated for users and slow the process even more.
To close this digital acceleration gap, leading procurement teams are turning to intuitive, cloud-based solutions for sourcing automation, helping team members evolve from reactionary to strategic roles. According to a McKinsey & Company report, nearly 56% of the source-to-pay process could be largely automated using technology.
By automating tasks like data entry, project and savings tracking, and supplier onboarding, procurement teams are winning back valuable time to act as trusted partners within the enterprise. Not only that, McKinsey & Company’s study also finds that for an enterprise spending $2 billion annually, sourcing automation helps stop profit leakage and can add up to $70 million per year to the bottom line.
These are just a few more ways procurement leaders are leveraging automation to drive major impact:
Traditional procurement processes that rely on manually updated spreadsheets and email chains can unintentionally keep stakeholders in the dark and expose the business to unnecessary risk. Sourcing automation, however, can give stakeholders, suppliers, and business partners a bird’s-eye view into the end-to-end procurement process while also dramatically decreasing the risk of human error. Procurement automation has helped organizations like The Metropolitan Museum of Art prioritize visibility while cutting its approval times by 83% and exceeding savings goals by a staggering 200%.
“Workday has allowed us to standardize and automate procurement and financial workflows, which increased The Met’s insight and control over source-to-pay processes.”Tiffany Sen Head of Procurement and Financial Operations The Metropolitan Museum of Art
Using automation, sourcing teams can have confidence in the data they present to their stakeholders and can easily track their projects through the procurement cycle. This visibility extends throughout the entire enterprise, demystifying the procurement process and increasing engagement from other business units.
A fundamental responsibility for all procurement teams is to protect their business from risk and ensure their enterprise complies with all local, national, and global regulations. Automation can take a load off procurement leaders by tracking necessary metrics to adhere to compliance standards.
For example, Australia recently passed new human rights legislation requiring businesses to report on the labor practices of their suppliers and their suppliers’ suppliers through every link in the supply chain. Businesses that invest in sourcing automation can bake compliance into their supplier onboarding and track the necessary regulatory metrics without missing a beat.
Automation can also significantly improve the supplier onboarding experience by tracking all necessary data on a single platform rather than through multiple email chains. By providing procurement, stakeholders, and suppliers alike a centralized hub to store information and collaborate with one another, automation ultimately strengthens the supplier relationship.
“Workday Strategic Sourcing enables end-to-end supplier engagement, where you’re not only being more efficient but can tap into that single source of truth for a powerful compliance audit trail.”Harry Lund Senior Sourcing Manager, Information Technology Biogen
Supplier automation can ensure that only vendors who comply with company standards can be onboarded into the system. And, with many enterprises relying on interconnected software ecosystems, automating supplier data can also help instantly migrate important information into vendor master systems.
Using automation, procurement leaders can dig deeper into their sourcing data to better anticipate the needs of the business and find new avenues for cost savings. With the data they need at their fingertips, chief procurement officers and other procurement leaders can understand historical trends and identify savings gaps.
Rather than spending time tracking down necessary information, business leaders can get the data they need when they need it to make strategic spend decisions. For Western Sydney Airport, this visibility resulted in significant results. After switching from a mostly manual process run on multiple platforms, Western Sydney Airport was able to consolidate their data into one system and make strategic decisions based on actionable insights.
“If you take a simple example like trend analysis against spend, previously I wasn’t seeing the information properly. I’d see trends sometimes two months after the actual event,” says Chief Technology Officer Tom McCormack. “Now, my finance colleagues and I can identify trends within days or weeks. So, we can make faster decisions, react quickly to new circumstances, and maintain our cadence against our cost envelope.”
Leading procurement teams are leveraging automation to elevate their organization in the enterprise and take a major role in strategic decision-making. From enhanced visibility to enterprise compliance to supplier onboarding to cost savings, automation is empowering teams to do more for their business.
As procurement continues to evolve, enterprises that empower their procurement teams will be better equipped to strategically manage spend and navigate the changing world of business.