Robotic Process Automation – The Next Big Thing in Procurement
Automation arrived in the industrial age as a boon to manufacturing industries as they could mass-produce their products by incurring lower costs and ensuring high-quality. Today, industrial automation is not just limited to manufacturing operations, and has expanded its application area across the logistics and supply chain function of an organization. Supply chain professionals are more reliant on enterprise process robots, which can automate an entire business process such as supply chain. For instance, robotics solutions can detect that a warehouse is full due to the lack of inventory movement and automatically alerts procurement teams to adjust to a new storage location. The notion that robots are stationery, blind, and can only perform repetitive tasks are rapidly disappearing due to new-age intelligent robots which are lighter, flexible, and can learn on their own to perform new tasks. So who are the companies behind such game-changing innovations that are contributing to the modern-day industrial revolution?
Siemens AG is a German conglomerate company which is one of the largest engineering companies in Europe. The company has amassed over 140 years of experience in engineering, making them known for their engineering excellence, innovation, and reliability. Industry, Energy, Healthcare, and Infrastructure & Cities are the primary divisions of the company. The company caters to a wide variety of industries including aerospace, automotive, chemicals, data centers, food & beverage, oil & gas, pharmaceutical, logistics, and utilities. In the fiscal year of 2016, employees from Siemens reported 7,513 inventions within the company and submitted over 3,500 initial patent applications. Some of the well-known inventions from Siemens include gas turbine, wind turbine, steam turbine, and x-ray tube.
ABB Group (ASEA Brown Boveri) is a Swedish-swiss multinational corporation which operates mainly in heavy electrical equipment, robotics, power, and automation technology areas. It is also one of the leading technology and automation company providing digitally connected and enabled industrial equipment and systems. The product range of ABB includes low voltage products and systems, control room solutions, drives, high voltage products, measurement and analytics, mechanical power transmission products, and medium voltage products.
Emerson Process Management
Emerson Electric is an American multinational corporation focusing on electrical equipment. Their products are used by chemical, food & beverage, marine, life sciences, mining, oil and gas, and power industry. They also manufacture automation solutions which can be broadly categorized into:
- Measurement and analytical tools
- Valves, regulators, and final control elements
- Systems, controllers, and software
- Other services.
Rockwell Automation Inc. is among the Fortune 500 companies that provides industrial automation solutions and information products. The company employs more than 22,000 people and depicts expertise in connected enterprise, consulting services, industrial maintenance and support services, industrial security, industrial networks, process solutions, and safety solutions. Their core product base consists of advanced process control, design, and operations software, distributed control systems, drives, drive systems, human machine interface, industrial sensors, programmable controllers (PLC), and motion control.
Schneider Electric SE is a French multinational corporation and is a global specialist in energy management and industrial automation. The company employs over 160,000 employees and provides solutions to manage energy and process in ways that are reliable, safe, efficient, and sustainable. They provide solutions for industrial as well as home users including building automation and control, low voltage products and systems, solar and energy storage, distribution and grid automation, and critical power, cooling, and racks.
For more information on industrial automation, programmable logic controller (PLC), SCADA, industrial robots, and automation solutions:
The developed parts of the world have enjoyed lowered production cost and higher profits by outsourcing services from various operations like production and customer service. With countries such as China, India, and Bangladesh being the major outsourcing services hubs due to lower labor rates, companies have been able to lower their cost base considerably. On a similar note, automation and artificial intelligence (AI) have also significantly saved large chunks of the cost for the companies. As a result, many analysts and experts have predicted that the days of outsourcing services will be outnumbered soon enough, with automation and AI eating up numerous jobs. So does the rise of automation and AI bring down the curtain on outsourcing? In this article, we have explained the reasons for this question.
How Automation and AI Impact Outsourcing Services?
Increasing Cost of Outsourcing Services
Although traditionally companies preferred outsourcing to save on labor costs, today the BPO’s charge higher fee for their services and add markups making those services expensive. Additionally, governments across the world also discourage companies from their outsourcing services and promote employment and production in home country instead. For instance, under the Obama administration, a $200 billion in tax relief and incentives law was put in place, which encouraged American companies to make an investment in their business and create new jobs. Other laws allowed businesses to write off all costs in new investment in equipment in the US.
Loss of Control
When businesses outsource their operations, they contract the work to other company, which means sharing company details, information, and data. The company will be at the mercy of the BPO. Also, quality and service delivery from the BPOs may vary widely.
Supply Chain and Logistics Efficiency
Outsourcing services of manufacturing and production operations may seem lucrative at the beginning with all those cost savings opportunities. However, businesses may incur unanticipated costs such as hidden fees, import and export duties, shipping costs, haulage, freight costs, legislative costs, and additional taxes. Additionally, due to the complicated logistics network, the time-to-market is also significantly increased. Consequently, businesses are looking to manufacture in the home country whenever possible by carrying out make-or-buy decisions.
Automation and AI
The most prominent factor that could signal the end of outsourcing services is the rising popularity of automation and AI. The technology is so advanced that it can eliminate the majority of human errors, and provide a quality output at a faster rate. Automation in manufacturing has been around for a long time. However, AI is threatening to replace service facing operations. For instance, with machine learning and cognitive computing abilities, companies can use chat-bots to solve customer queries and automatically reply to e-mails from the customer.
There has been a substantial leap in technological development in the field of procurement and supply chain with LevaData, a privately held company, announced the launch of its product Leva, which it claims to be the world’s first AI advisor for strategic sourcing and procurement. The product personalizes insights relating to finance, manufacturing, engineering, and procurement guiding procurement professionals through sourcing risks and savings opportunity. “Leva’s negotiation recommendations allow you to optimize decision making in the face of complex sourcing issues and large data sets.” Claims the company’s website. Additionally, it provides proactive guidelines, optimizes decision making, delivers quicker insights, and makes cognitive sourcing easier.
News Across the World Affecting the Global Supply Chain
GH$98m in Savings Through Stringent Procurement Process – Ghana
The Public Procurement Authority (PPA) has reported a savings of GH$98 million in savings through the stringent procurement process. The government agency expressed that cracking down on contract padding and procurement malpractices have improved the procurement efficiency of the organization. Some of these malpractices included tender rigging, collusion among teachers, bid or tender suppression, and coercing competitors to withhold offers and participation. The Chief Executive of Public Procurement Authority (PPA), Agyenim-Boateng Adjei, released a statement informing, “Procurement Officers and members of GIPS who misconduct themselves in their line of duties and found culpable of any ‘misprocurement’ through PPA’s procurement audits will be made to face sanctions as spelt out in the GIPS Code of Ethics and Conduct.”
SEAT ft. Telefonica – Promoting Digitalization in Automotive Industry
In an attempt to promote digitalization in the automotive industry, Telefonica has reached an agreement with SEAT to promote the use of blockchain and 5G technology in the car industry. The partnership will see Telefonica as the strategic IT supplier, with SEAT working in three key areas, namely, shared use of insights, applications of 5G connectivity, and digital transformation projects in the automotive industry. The move is aimed towards offering mobility solutions to simplify the lives of the user.
Shelves Scanning Robots in Walmart
Walmart is looking to change the face of retail procurement and supply chain with its recent move of rolling out shelf-scanning robots in more than 50 stores. These robots are approximately 2-foot tall and attached with cameras to check stock, identify incorrect pricing labels, along with missing or misplaced items. The robots are highly reliable in identifying stock outs and replenishing inventory faster, savings employees a lot of time. Jeremy King, CTO of Walmart U.S., expressed that store employees have time to scan shelves only about twice a week. Additionally, the company has also hastened the checkout process by allowing customers to scan their purchases and digitized operations like financial services and pharmacy in stores.
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There have hardly been any landmark changes in the banking services sector since the first bank ever was established back in 1397. Although banks have started to incorporate digital technologies to extend services regarding online banking, SMS banking, and internet banking, the modern day banks are yet to witness next generation banking services. This being said, the next generation banking services should be able to rapidly transform the way banking services are delivered which positively influences the customer experience.
Blockchain is hyped to potentially disrupt not only the banking sector but also the financial industry as a whole. Numerous players in the traditional banking sector are already looking to incorporate blockchain technology in their banking services. The blockchain technology offers banks to speed up the process of banking transfer securely without the help of any third party. So how does this benefit transform the service side of banking? Well, for the customers it would mean carrying out transactions smoothly, sharing relevant information, quicker and simpler asset exchange, and gaining real-time updates with high accuracy.
Automation in banking can increase productivity by streamlining the end to end process making it quicker and easier. For instance, an average mortgage application goes through multiple manual handoffs before completion. With a simple solution of using digital signatures, a substantial amount of time and effort could be saved to hasten the process making it more user-friendly. Additionally, the saved time could be utilized in improving products and services which have a positive impact on customer experience.
New Payment Mechanisms
Although practiced on a small scale, we see the rise in popularity of mobile NFC based payments. Apple Pay and SAMSUNG Pay are pioneers in this field allow bank details and payment card to be added to their payment system enabling the user to make secure payments. For the customers, though they can wave goodbye to the days when they had to remember card number, card details, pin code, and security number, as all it would require is one fingerprint or just the face.
Big players in the banking industry have already started to use CRM solutions to improve their service delivery. Developers of the CRM tools are innovating to incorporate real-time information to understand the customer and serve them instantly to increase their experience. The next level CRM solutions can effectively provide customized bundles to the customers, offer them the best deals, or sanctions loans and mortgages instantly.
While many emerging technologies may seem to disrupt the banking industry, the players in this industry should embrace the technology to transform the way services are currently delivered. As a result, it can drive the customer experience positively and thereby boost company profitability.
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Organizations are pushing themselves on all fronts to be competitive and sustain themselves in the modern marketplace. They are forcing all business functions to perform at their most efficient level. Improvements in selected business functions could lead to drastic changes in creating a competitive advantage. Supply chain management is one such business function where innovations and increased efficiency can lead to remarkable performance improvement. Add to that the fact that a modern-day customer is very demanding; it puts added pressure on supply chain management to innovate and introduce new and efficient practices.
So, here are some such trends and practices that are changing the landscape of supply chain management:
#1 – The Rise of Click and Collect Delivery Model
Numerous reports state that more than 10% of sales have come through the click and collect model for major retailers in the UK. The future for click and collect model looks bright as the numbers are constantly rising. The click and collect model also significantly improves a retailer’s revenue and customer satisfaction by ensuring faster and reliable deliveries, saving real estate cost, and increasing their reach.
#2 – Last Mile Connectivity
Last mile delivery is the most cost-intensive process of supply chain management. In an effort to get a hold of this cost, new methods have emerged in the market. For instance, Walmart has resorted to crowdsourcing to encourage its customer to deliver online orders to online shoppers located nearby by giving them discounts. Another breakthrough in last mile connectivity is the successful testing of Amazon Prime Air, which delivers a package with the help of drones.
#3 – Collaboration to Optimize Supply Chain
Majority of the supply chain models of companies do not operate at full capacity at all times. Businesses can save time and money by sharing resources such as a warehouse, transport vehicle, or delivery systems. For instance, Flexe is a collaboration platform that allows companies to rent out extra warehouse space to those organizations that need them.
#4 – Next-Gen Technologies
Supply chain management professionals increasingly depend on new technologies to boost their performance. The ability of millions of devices to communicate with numerous sensors opens up a wide range of possibilities from tracking the location of the product to disclosing its condition. IoT, big data analytics, and machine learning can create a paradigm shift in how companies manage their inventory, logistics, and forecasting so that they can reduce wastage and increase profitability.
#5 – Automation and Robotics
Automation and robotics have found its use in multiple aspects of supply chain management. They can be used in inventory counting, perform repetitive tasks, and assist in picking, packing, and sorting. Apart from robotics, automation could be leveraged to place an order, which is low in stock automatically.
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Procurement is an essential part of any business, from the manufacturing industry where raw materials are needed in order to operate, to the service industry where indirect procurement provides necessary supplies and equipment. The process often involves managing a large number of documents, suppliers, and other elements, as also filtering places where inefficiencies can creep in and details can be missed.
Procurement automation provides an easier way to manage the myriad details involved in the procure-to-pay cycle. It involves using e-procurement software to automate routine tasks, as well as to store and analyze data. Here are some of the many ways that automation can benefit your organization.
Efficiency: One of the most obvious advantages of automating procurement processes is that it saves time. Repetitive tasks that previously had to be done by a person can now happen automatically. This frees up time to perform more complex work and reduces the amount of labor needed to handle procurement.
Speed: Automation also speeds up the procurement cycle. It can reduce the purchase order cycle by up to five days, and reduce supplier lead time by two days.
Digital documents: There are numerous documents involved in procurement, and many companies still keep paper copies of all of them. This creates extra waste, and also takes up a considerable amount of space. Procurement software can securely create, deliver, and store electronic versions of these documents, reducing costs as well as environmental impact. Working with electronic documents rather than paper ones can also speed up interactions within the supply chain.
Control: Procurement software significantly increases visibility in every part of the process. It makes it easier to identify issues such as inefficiencies or high costs. With immediate access to analytics, it is possible to react quickly to problems and unexpected setbacks (such as a sudden need to change suppliers), and determine the optimal course of action.
Budgeting: With immediate access to every document, as well as built-in analytics solutions, budgeting becomes easier and more efficient. It is possible to generate in-depth reports and have a granular view of all expenses. This allows for more accurate predictions for future budgets, and helps identify places where costs can be cut.
Inventory management: A good procurement system can monitor stock levels and automatically re-order items once inventory falls below a specified threshold. It is expensive to run out of stock or to carry too much at a given time. Automating procurement can therefore reduce inventory expenses.
Supplier management: Working with multiple suppliers means that there are a lot of details to keep track of. Contact information, products, contracts, and payment terms are just some of the information that needs to be managed, and this can be challenging when working with many different companies. Procurement software can streamline this process.
Communication and collaboration: Procurement affects every other department to some degree. A comprehensive procurement platform makes it easier to generate reports and share information with other parts of the company, as well as receive input. This improves transparency and can result in better, more informed procurement decisions that benefit the entire company.