What is Sourcing Automation?
In a previous post of mine, I talked about the problems that modern procurement teams still face despite decades of technological advances. I introduced sourcing optimization as one of my top bets for introducing cost and time savings into your organization.
To recap: sourcing optimization allows you to speed up the analytical steps within your procurement process and provides you with the tools to help identify the most cost-effective suppliers.
Sourcing automation goes one step further, in that it tries to automate the repetitive manual steps involved in your sourcing optimization process. What exactly does this mean? Well, imagine that you are using an e-procurement platform to create, execute and analyze tenders. Using such a platform is much more time-effective than conducting your sourcing process manually by Excel and email.
Regardless of which platform you are using, this process, however, still contains a lot of mind-numbing manual steps: Every time that you wish to create a tender, you will need to either copy or import your bid sheet, invite suppliers, apply the relevant event configurations, set your cost models, and last but not least, configure your scenarios.
You will also need to update your event description, bidding instructions, currencies and exchange rates, supporting documents, and finally publish your event. You will then spend the next few days or weeks monitoring your event, managing supplier communication, and last but not least, generate your reports. If you are lucky, then that’s it! If you’re unlucky, then you will likely need to deal with outlier analysis, bad bid data and/or missed round closure deadlines.
Sourcing automation aims to speed up and simplify this entire process by taking the repetitive manual steps off of your hands. The theory hereby is that steps — such as determining qualified suppliers or sending out email invitations — that are likely to repeat themselves across tenders, and that are based on solid, easy-to-formulate criteria, can be handled automatically by software tailored to your business processes. Code, capturing your business logic and decision processes, is written once, deployed to the tender platform and then executed on a per-need basis (I explain how this looks in practice in my blog post on sourcing bots).
The idea of sourcing automation in itself is new and was an alien concept only a few years ago. But already various Fortune 500 companies are deploying sourcing bots to automate parts of their procurement processes, such as the maintenance of rate cards and the execution of mini-tenders.
The reason for the move towards sourcing automation is simple: information technology has sufficiently advanced, and e-procurement platforms have matured to the extent to which they can allow for the next step in e-sourcing. Where before sourcing optimization was a mountain to be scaled, it now acts as the mere bedrock for the new revolution in procurement.
Ready to learn more? Register now for Keelvar Konnect ’19 Zurich, November 6th.
Benjamin Jakobus is a senior software engineer in the sourcing optimization and automation space.