Gaining A Competitive Edge Through Procurement Automation

Forbes

3 days ago

Mahesh Rajasekharan is the President and CEO of Cleo.
Can modernizing procurement give your company a competitive edge?
In this article we'll look at how to achieve the benefits of supplier enablement, orchestrating supply chain ecosystems and AI-driven automation in simplifying and streamlining your organization's procurement processes.
Procurement activity functions roughly as follows at most companies:
1. A buyer (e.g., your company) sends a purchase order (PO) to a supplier.
2. The supplier receives and acknowledges the PO—more than likely today this happens via an EDI 855 or similar response.
3. Goods are shipped by the supplier, transported using a logistics company and later received at your location.
4. The supplier sends you an invoice.
5. Your accounts payable (AP) team processes payment according to the agreed terms.
Simple right? Maybe, a lot more happens behind the scenes. Legally there are contract negotiations, service-level agreements (SLAs), regulatory compliance to onboard a new supplier. From the finance perspective there may be fuel surcharges, risk management insurances, bank settlements and more. Also, with every new supplier added, the trade routes and logistics flows need to be established and onboarded as well. While aspects like ordering and shipping are increasingly being automated, these other layers still often depend on human decision-making, legal review, or manually executed tasks—making fully automating procurement a real challenge.
Yet with the right tools and strategy, thanks to AI it's soon going to be possible to bring end-to-end digital efficiency to even the most complex procurement environments. It's important to start planning now given how deeply embedded manual procurement remains in many enterprises. Such limitations can be costly, especially in terms of productivity, visibility and relationships.
Consider these drawbacks of manual procurement:
Lost productivity: Routine tasks eat up time across AP, legal and supply chain teams.
Unpredictability: Delays and errors are more likely when humans manually track confirmations or send files via email.
Increased costs: Manual workflows require more full-time employees and introduce costly errors, chargebacks and inefficiencies.
Slower procure-to-pay cycles: This can delay production, create inventory imbalances or disrupt delivery schedules.
Expanded risk: Every emailed invoice or attachment download is a potential phishing vector.
Ultimately, poor supplier responsiveness—whether a late confirmation, an invoicing mistake or a shipment delay—has a ripple effect. Inventory gets misaligned, production slows, warehousing costs rise and delays can ensue, all impacting your ability to meet customer expectations.
So, what's the best path forward?
AI-driven supply chain orchestration can help standardize procurement processes, reduce friction and ensure visibility at every step.
First step: Categorize current and future suppliers into four channels:
1. Supplier EDI.
2. Ingesting PDFs and other structured data.
3. Portal-based collaboration.
4. Automating unstructured invoices and embedding the necessary technology flexibility to rapidly onboard and streamline all four categories of suppliers, big and small.
As more companies transform their procurement operations by integrating supplier interactions to support automation, real-time collaboration and proactive risk management, ecosystem relationships will grow stronger in several important ways:
End-to-end workflow automation: Automate from PO to invoice with EDI/API integration.
Prebuilt templates and logic: Accelerate trading partner onboarding by using AI to quickly adapt to industry-specific requirements.
Real-time visibility: Leverage dashboards, alerts and analytics to spot issues as they arise.
Predictive AI insights: Anticipate bottlenecks before they affect operations.
This is the route to reducing manual processes and orchestrating a smarter procurement lifecycle. The result? Faster transactions, fewer errors, and better alignment across procurement, operations, legal, finance and IT. Plus, better ecosystem networks, cleaner data, better decision-making, and stronger relationships.
How will you know if transforming your procurement processes is moving the needle? You'll need to introduce KPIs at various stages of the process to ensure your efforts are driving results. For instance:
Are orders accepted and fulfilled without changes or errors?
How quickly do suppliers acknowledge receipt of a PO?
Are goods arriving when expected and in correct quantity?
How many require rework or reconciliation?
Are you meeting targets without disrupting supplier relationships?
Can you track reliability, responsiveness and compliance?
Can you detect patterns in late shipments or error-prone transactions?
Since every business is unique, you'll come up with metrics that suit your needs. Bottom line: With AI-driven supply chain orchestration you can leverage real-time data to make better, smarter decisions. And in doing so ... keep your suppliers accountable without needing to micromanage every interaction.
It's important to realize procurement automation doesn't happen solely inside the four walls of your organization. It extends across your entire digital ecosystem. To unlock its potential, you'll also need to enable your suppliers. That means making it easier for them to integrate with your supply chain network via EDI or API. That way they'll be better able to respond quickly and resolve issues collaboratively.
When suppliers are supported in mutually beneficial ways like score-carding, alerting, easy-to-use templates with pre-defined business rules and overall enhanced visibility, everyone wins.
So, how can you get procurement automation rolling at your organization? Start by having a strategic business-technology discussion and answering a few strategic questions:
• Manual order entry?
• Delayed acknowledgments?
• Missing status updates?
• Reducing costs?
• Speedier response times?
• Improving supplier compliance?
• Inconsistent lead times?
• Payment delays?
• Communication breakdowns?
Answers to these questions will help you focus and prioritize your procurement automation digital transformation efforts to achieve the best solution for your enterprise.
Let's face it: Procurement is an essential supply chain function. Yet too many enterprises still rely on disconnected, manual workflows that increase cost, reduce responsiveness and elevate risk.
It doesn't have to be this way. By enabling your suppliers on your terms, your company can move from tactical procurement to strategic supply chain orchestration. And that will give you a true competitive edge.
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