Procurement, traditionally a complex and time-consuming process, is facing increasing demands.  

According to Hackett Group’s 2023 report, procurement workloads are expected to surge by 10.6%, highlighting the urgent need for greater efficiency. 

But what if these challenges and inefficiencies can be solved with minimal human intervention? What if a single software can automate the procurement process? 

These questions give rise to autonomous procurement. 

Autonomous procurement is a data-driven model that leverages advanced technologies such as Artificial Intelligence (AI), Machine Learning (ML), and Robotic Process Automation (RPA). These technologies help businesses identify and procure the best suppliers, products, or services at reasonable prices. 
 
For instance, Walmart leveraged autonomous procurement to automate the negotiation process, save time and resources, and enhance the overall resilience of its procurement operations. 

Autonomous procurement isn’t just a buzzword anymore. It has become an instrumental tool for procurement teams in automating complex and time-consuming processes, managing supply chains, making informed data-driven decisions, and enhancing overall effectiveness.  
 
It’s a breakthrough that promises to streamline and enhance procurement operations, using historical and real-time data such as consumer preferences, market trends, and past purchases. 

But is automation the answer to all your procurement challenges? 

We’ll explore the emerging trends of autonomous procurement, its benefits, the opportunities it offers, and the challenges that must be overcome to implement its benefits entirely. 

So without any further ado, let’s get the ball rolling. 

4 Emerging Trends In Autonomous Procurement 

Autonomous procurement is gaining traction among companies looking to enhance the efficiency, accuracy, and scalability of their procurement processes. Here are some key trends that are shaping the future of autonomous procurement: 
 
1. Artificial Intelligence (AI)

AI analyzes massive amounts of data, including historical and current purchasing patterns, market trends, and supplier performance. Later leverages its ability to generate smarter purchasing decisions, leading to informed data-driven decisions. 
For instance, Unilever, a global leader in consumer goods benefitted from AI in its supply chain, boosting their sales by 15-35%.  
 
2. Predictive Analytics

This tech leverages historical data to predict future and current demands. This forecasting helps businesses to manage their stocks and inventory more effectively. Additionally, it helps to anticipate market fluctuations in advance and avoid situations like stock-out or over-stock.  

Starbucks leverages this approach for demand forecasting to optimize store locations. By analyzing several variables like demographic data and foot traffic patterns, Starbucks identify the most suitable location for installing new stores. This helps expand their stores and potentially increase their success. 
 
3. Robotic Process Automation (RPA)

This trend enables businesses to automate repetitive tasks in procurement such as order processing, invoice management, and reduction of human errors.  

For example, Siemens- a global industrial manufacturing company implemented RPA to automate its procurement process, leading to a 20% cost reduction in procurement cycle time and a significant reduction in manual errors.  
 
4. Blockchain

Blockchain technology is an emerging trend that brings transparency and traceability to the supply chain. It offers a decentralized ledger that enables secure and fair transactions without the need for intermediaries such as banks. It also helps to verify the authenticity of products/services, track deliveries, and ensure compliance with sustainable and ethical sourcing practices. 
Nestle, one of the world’s biggest food and beverage giants leverages blockchain in its procurement process. Since 2017, the company has been utilizing this trend to track the origin of its cocoa beans and achieve end-to-end traceability of its food items. 

Benefits Of Autonomous Procurement 

The main objective of autonomous procurement is to analyze past experiences, real-time data, and market trends for accurate decision-making in the supply chain systems. By leveraging that information and insights businesses can get the following benefits: 

1. Streamline Supplier Selection

Choosing the right suppliers is often time-consuming and error-prone. With AI-driven tools, businesses can automate the process by analyzing bidders’ past performance and contracts, leading to faster, more accurate supplier onboarding. Companies using AI in procurement are 90% more likely to find the right suppliers, according to McKinsey & Company Reports. 

2. Analyzes Massive Data

Previously, procurement professionals used to rely on networking and online research to gather supplier information. This massive data was reflected in informed decision-making, leading to the demand for data cleaning. Now, with the integration of our data cleaning solutions, companies can save up to 6% in TCO (Total Cost of Ownership), 95% in OTIF (On-Time, In Full) delivery, 15% reduction in lead times, and 20% reduction in PR-PO (Purchase Requisition, Purchase Order) Cycle Time.  

3. Increases Productivity and Efficiency

A new study by Hackett Group quantifies that AI can increase employee productivity by 44%. Implementing AI in procurement can automate the system, cut down cycle times, and reduce the chances of errors. This approach enables teams to handle complex procurement tasks precisely and accurately.  Additionally, by leveraging AI in procurement, businesses can potentially speed up all the processes efficiently, freeing up teams for strategic activities. 

4. Saves Cost

According to a Deloitte study, companies using AI in procurement can reduce their costs by almost 40%.  By implementing AI, businesses can minimize errors in data entry & billing processes and optimize supplier selection to ensure more profitable deals. This approach can cut down on unnecessary expenses and increase profitability.   

Opportunities in Autonomous Procurement 

Autonomous procurement is continuously evolving, opening doors to strategic approaches that drive long-term business success. These strategic approaches include supplier relationship management, better collaboration and innovation, optimized inventory management, and improved supplier negotiations. 
 
By integrating AI in procurement, teams can automate routine tasks and redirect their focus on priority activities that demand attention, including: 

1. Focus on strategic supplier relationships. 

2. Drive innovation through supplier collaboration 

3. Enhancing supply chain flexibility 

4. Supporting sustainability 

5. Prioritize Corporate Social Responsibility (CSR) Initiatives 

6. Derive informed data-driven decisions. 

In short, autonomous procurement has the potential to enhance supply chain visibility and transparency by leveraging trends and technologies. 

Challenges Faced in Autonomous Procurement Implementation 

As we discussed the benefits and opportunities of automating procurement, it would be unfair to tell you about the challenges that come along with it.  
 
The procurement industry often operates traditionally and implementing technology in it is a big change. With the growing potential of AI capabilities, many companies have already adopted autonomous procurement but still hesitate to some degree of insecurity.  

Let’s discuss the challenges faced by procurement teams while implementing technologies in procurement and ways to overcome them.  

1. Output Accuracy 

The procurement processes heavily rely on precise data and a single inaccuracy can impact the entire process. AI can gather past and real-time data of suppliers, but even a tiny mistake can lead to poor purchasing decisions, supplier disputes, financial losses, or severe situations. Decisions based on this data directly affect business-supplier relationships. 

Here’s how we can overcome the challenge 

It’s important to note that AI is a technology without human emotions. Relying solely on AI decisions might result in huge mistakes. Therefore, procurement teams should incorporate AI into their systems, but under human supervision, the final decision should be made. 

2. Privacy Concerns 

AI constantly crawls external sources and internal data to collect as much information as possible as part of its machine-learning capabilities. Lack of belief in AI privacy and security systems is a major concern and challenge for procurement experts. 

The only way to address this challenge and overcome the fear of AI privacy and security breaches is through constant monitoring of AI functioning. Companies can implement cybersecurity measures like encryption and biometrics to avoid attackers. Developers are also trying to build robust systems that can be trusted without fear. 

3. Adoption By Workforce 

Employees accustomed to traditional procurement methods may struggle to adapt to technology, and automation may generate fear of redundant roles in employees. 

Furthermore, training all the employees and making them comfortable with the new technology is a big challenge and will require considerable time and resources. For the long-term success and effectiveness of the implementation of autonomous procurement, it is critical to ensure that every employee fully understands, learns, and adopts the technology. 

Conclusion

The rise of autonomous procurement is significantly transforming the way businesses operate while presenting both opportunities and challenges. As companies navigate these challenges and benefits, the key to successful implementation of technologies lies in balancing technology with human intervention.  

With AI promising enhanced efficiency and innovation, careful planning and strategic implementation are also crucial. Companies that strategically implement and leverage autonomous procurement are well-positioned for future success. 
 
Ready to automate your procurement processes? 
 
Explore how at Moglix our team can help you implement autonomous procurement strategies that align with your business objectives and drive efficiency and innovation.  

Contact us today!