RPA in Supplier Management

Through the use of artificial intelligence (AI), RPA offers great benefits to companies, especially with the daily recurring tasks involved in the procurement processes. In concrete terms, this means a reduction in non-value-adding manual activities for employees, quality improvement in data acquisition and verification, cost reduction through process security and transparency, significant time reductions for internal processes and workflows, and automation of recurring processes as well as control over reminder notifications.

The principle of robotic process automation is mainly rule-based. For process steps that require human decisions, it is essential to use software that prepares and structures the data using AI bots.

Data on the use of RPAs in purchasing and procurement processes

A survey of the participants of the BME live web seminar “Robotic Process Automation (RPA) in Purchasing – Challenges and Opportunities for your Procurement” conducted in January 2020 provided corresponding figures that encourage the use of robot-supported process automation:

• 45 percent of the participants stated that they have not yet used an RPA or planned projects.
• However, 20 percent already use software with RPA solutions in their company and a total of 35 percent plan to invest in this area in the short to medium term or have already implemented test phases.
• The use of such solutions can be integrated in the most diverse business areas (within a company or organization.
• 77 percent of respondents use RPA in purchasing, 41 percent in finance, 20 percent in supply chain management and 20 percent in customer service.

Use Case: Supplier assessments in Synertrade’s cloud-based platform Accelerate

As suppliers are regularly subjected to a performance review as well as an evaluation according to different soft and hard facts, manual evaluation of suppliers involves an enormous amount of data maintenance.  In order to remove this burden from the purchasing department, these processes should be standardized and automated.

Consider the example of a customer in the logistics sector which has connected 2,500 suppliers and categorizes its products into 280 commodity groups. Synertrade uses various models within our cloud software, Accelerate, to automate the approvals process. For all suppliers of all commodity groups above a minimum limit of 20,000 euros purchasing volume p.a., regular periodic evaluations are conducted. Through regular evaluations, the quality of the deliveries and services provided is documented and monitored providing the capability to act quickly in the event of quality deterioration.

The evaluation questionnaires are divided into product groups, for example, construction services, supply of materials, rental services and freelance services such as civil engineering and architecture.

All orders are transferred from the SAP system to Accelerate. Using cumulative purchase order values over a period of six months in combination with merchandise categories, to which an evaluation frequency is linked, an algorithm/bot is used to determine the frequency and timing  with which vendors with certain specific attributes, such as department and which version of a questionnaire was completed, should be re-evaluated. Accelerate automatically creates the evaluation events, including specific tasks for the evaluators and monitoring the deadlines for completion.

After the evaluation is completed, an overall evaluation is created in conjunction with the hard facts. If the evaluation is worse than 2.5 (school grades 1-6), a follow-up evaluation will be prepared in 3-6 months, depending on the product group and order value. This in turn is included in the overall evaluation. The supplier will be informed about the evaluation results in detail. If a constant or further decline is detected, actions plans are automatically initiated depending on the categories in which the deviations have occurred. These actions range from discussions with the suppliers to conducting a procurement market analysis in order to search for replacement suppliers.

This evaluation is carried out early in the process, during the project/order execution phase, in order to be able to act early on during the project. In addition, after accounting – final invoice indicator – the contract and invoice processing is also evaluated from a commercial perspective. This last step rounds out the evaluation at the end of the project.

All evaluations of all projects or deliveries are included in the overall evaluation contained in the Supplier Scorecard. Supplier Scorecards are then used for future invitations to tender, incorporated into the evaluation of bids and the corresponding recommendations for awarding contracts and reviewed prior to contracts awards/renewals. All data is then transferred to a BI system to fill the reports.