Robotic process automation (RPA) may still be a newly emerged technology in the world of procurement but it has already shown the potential to make a huge difference in the digital transformation of global procurement. Today, robotic process automation is widely adopted in various of industries including banking and financial services, IT, telecom, logistics, manufacturing, and healthcare. Just like in other industries, robotic process automation in procurement is also expected to be increasingly adopted and continue to transform this sector over the near future, mainly due to its benefits of efficiency improvement, effectiveness of operations and employee engagement.
What is Robotic Process Automation (RPA)?
Robotic process automation refers to a type of software or solution that can mimic the activities carried out by a human. With the support of other technologies such as cloud computing, artificial intelligence, and machine learning, RPA can complete repetitive and rule-based tasks on a much larger scale, faster speeds, and without any mistakes. In other words, RPA is more like a kind of virtual and intelligent workforce that can help or even replace human employees to complete those repetitive and time-consuming tasks more efficiently and accurately.
Robotic process automation in procurement has also shown its superiority to make the business process cheaper, faster, and much more effective. During the procurement cycle, RPA is often used to input and transfer data between applications, such as retrieving sales data or inventory data from a PDF reader and entering that data in a spreadsheet. Such a task, which normally takes hours of human labour to complete, can be done by robotic process automation solution within seconds.
The capability of RPA in procurement is actually far beyond from simply dealing with sales data, as it now has been developed and adopted in much wider procurement functions, including contract management, supplier relationship and risk management, supplier onboarding and enablement, account payables, procurement performance management, tactical procurement, category management, master data management, and spend management.
Global Robotic Process Automation in Procurement Market Overview
According to the recent research report from SpendEge, the global spending of robotic process automation in the procurement sector is expected to register a strong CAGR of more than 62% from 2017 to 2022. The global robotic process automation market can be segmented into cloud-based and on-premise in terms of mode of deployment. By the end of 2018, the cloud-based segment was the leading segment for the category and accounted for more than 50% of the total market share. In terms of market segmentation by end-user, the global RPA market can be broadly segmented into BFSI, healthcare, telecom and IT, retail, e-commerce, and manufacturing. The telecom and IT sector accounts for the largest share in the global RPA market, with more than 30% of the total market share (in terms of RPA spend).
SpendEge has been closely monitoring the latest robotic process automation in procurement trends to create the best-in-class sourcing and procurement market intelligence solutions. These reports and solutions are designed to help our clients mitigate different types of procurement risks and develop effective strategies to optimize their sourcing and procurement excellence. Have a look at SpendEge’s Global Robotic Process Automation Category – Procurement Intelligence Report and download your free sample report now!
3 Ways RPA Transforms the Procurement Process
RPA Solutions Reduce Operational Costs for Procurement
The spend on RPA in procurement is expected to accelerate rapidly during the next few years, primarily due to the enhanced customer experience offered by RPA. For instance, RPA is being increasingly used in the banking industry for processing loan applications. By verifying and sending loan applications to concerned departments with no errors and significantly lower time compared with manual operations, RPA can expedite the loan approval process and thus lead to increased customer satisfaction.
According to recent estimations from SpendEdge procurement analysts, an RPA bot can perform the same work at approximately 40%-50% lower costs when compared with the average labour rates in major outsourcing hubs such as India and the Philippines. The cost savings offered by RPA are thus predicted to be the largest growth driver in the near future.
RPA solutions are being adopted at a rapid pace by the services sector in developed regions. For instance, in Europe, more than 90% of all companies are predicted to adopt RPA to varying lengths, thus giving a significant boost to category adoption in the region. Consequently, category spend budgets in the EU are expected to grow at a CAGR of nearly 60% during the forecast period. Similarly, in North America, organizations are increasingly leveraging RPA to reduce their reliance on offshore employees. As per SpendEdge estimates, organizations that have adopted RPA have been able to reduce their outsourcing costs by nearly 30%-40%.
RPA Offers Enhanced Regulatory Compliance
The regulatory framework surrounding the privacy and usage of user data is increasingly becoming more stringent across the globe. RPA is playing an active role in helping organizations stay compliant with the evolving regulatory framework. RPA minimizes the information gap that exists between the data collated from multiple sources and maintains a detailed log of the all the actions undertaken by the RPA bot. The detailed logs thus facilitate active recognition and management of any compliance issues. Additionally, the lack of human intervention ensures that instances of non-compliance are minimized, and organizations can focus on their core operations. In addition, the ability of RPA bots to actively learn from user activity makes them suitable for use across a wide range of industries.
RPA Solutions Provide Higher Flexibility and Scalability
Buyers are increasingly focusing on the flexibility and scalability of the solutions so that they can achieve their targeted cost savings and optimize the TCO for the category. Suppliers are thus increasingly focusing on offering solutions that help buyers scale up in minimum time. For instance, leading suppliers are now offering buyers with the flexibility to create new robots through online platforms. These robots can then be immediately licensed by suppliers and become ready for deployment.
Similarly, suppliers have developed solutions that provide developers with the flexibility to incorporate highly customized legacy codes into automation solutions, irrespective of the complexity or the size of the code. Additionally, the new code generated can be stored in online libraries and readily reused by other teams, thus significantly cutting down implementation costs and time, while improving the business efficiencies.