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! 

Procurement managers play a crucial role in securing quality materials at the best possible prices. Negotiating for ferrous pipes, particularly GI (Galvanized Iron) pipes, requires a balance of knowledge, preparation, and strategy.  
 
This blog outlines actionable strategies to help procurement managers negotiate effectively for ferrous pipes, ensuring an optimal balance of cost efficiency and quality. 

1. Research Market Trends and Pricing 

Staying informed about market trends and price fluctuations is critical for successful negotiations. Keep track of raw material costs, industry demand, and supplier competition. 

• Why it matters: Suppliers often set prices based on market dynamics. Having up-to-date information gives you an upper hand in negotiations. 

• How to research: Utilize industry reports, network with procurement peers, and employ digital tools to monitor ferrous material pricing trends. 

Tip: Always compare prices from multiple suppliers to establish a baseline before initiating talks. 

2. Build Long-term Supplier Relationships 

Establishing trust and rapport with suppliers can lead to better deals over time. Suppliers often provide better discounts and terms to loyal and trusted customers. 

• Key actions: Communicate regularly with suppliers and make timely payments. 

• Value of partnerships: Strong relationships can help you secure exclusive offers or priority delivery during high-demand periods. 

Tip: Aim for mutually beneficial arrangements that strengthen supplier relationships. 

3. Bulk Purchases and Volume Discounts 

Procuring in bulk can significantly lower per-unit costs, making it a key strategy for effective negotiations. 

• Plan ahead: Forecast your organization’s pipe requirements and place larger orders when feasible. 

• Leverage economies of scale: Suppliers prefer larger contracts as they provide stability, making them more willing to offer discounts. 

Tip: If storage is a concern, explore staggered delivery options to manage inventory without compromising on discounts. 

4. Evaluate Quality Standards 

Quality often drives pricing in the ferrous pipes market. Make sure to specify your quality requirements upfront. 

• Why it matters: Suppliers might charge extra for superior coatings, higher tensile strength, or corrosion resistance. 

• Actionable approach: Ensure the supplier meets industry standards (e.g., IS or ASTM specifications). Compare the cost-benefit ratio of premium pipes versus standard ones. 

Tip: Request quality certifications and conduct thorough inspections of samples before finalizing an order. 

5. Negotiate Beyond Price 

Price isn’t the only factor that can optimize costs. Expand negotiations beyond price to include aspects like: 

• Payment terms (e.g., extended credit periods). 

• Free or discounted shipping. 

• Additional services like customized sizes or pre-cut lengths. 

Tip: Prioritize the overall value proposition rather than solely focusing on the price. 

6. Time Your Purchases Strategically 

The timing of your purchase can significantly impact pricing. 

• Optimal timing: Suppliers often offer discounts during off-peak seasons or at the end of a financial quarter/year. 

• Market observation: Monitor when raw material costs dip or when suppliers run promotional offers. 

Tip: Be proactive and place orders before high-demand periods, such as infrastructure project launches or peak construction seasons. 

7. Prepare for Negotiations 

Effective negotiation requires thorough preparation. Engage suppliers confidently, backed by data and a well-defined strategy. 

• Preparation checklist: 

• Define your budget and acceptable price range. 

• Highlight your potential as a repeat customer. 

• Present alternative quotes to validate your position. 

Tip: Adopt a professional tone and remain open to compromise when necessary to secure long-term benefits. 

Negotiate Best Prices for Your Next Ferrous Pipes Purchase 

Effective negotiation for ferrous pipes involves balancing cost savings with quality and fostering strong supplier relationships. By researching the market, building partnerships, and employing strategic negotiation techniques, procurement managers can achieve optimal outcomes. 

Ready to enhance your procurement process? Discover our extensive selection of high-quality GI pipes and request competitive quotes today. 

MRO, which stands for Maintenance, Repair, and Operations, is a buzzword that’s of great significance in industrial procurement. Often overlooked in favor of other purchases, most businesses’ MRO procurement supply chain is highly fragmented and greatly dependent on manual procedures. This can be a costly mistake because digitizing MRO procurement can bring in savings as high as 15%.^[1]

Although the procurement of various other inventories and services like raw materials, capital equipment, and facilities contracts are witnessing rapid digitization, MRO procurement remains weighed down by tedious manual procedures. If your organization has yet to catch up with e-procurement solutions, the time may be just right to bring about some much-needed digitization in MRO now.

4 ideas to help your organization save big on MRO procurement:

• Cost savings via vendor consolidation

The network of vendors for MRO procurement is highly fragmented. This makes it much harder for businesses to manage vendor contracts and standardize procurement costs. Digitization of the process helps turn this around by identifying and consolidating the best vendors in the market. Your organization can then rely on a streamlined network of vendors to meet its MRO requirements in a cost-effective manner and bring you real-time track and trace visibility of your current suppliers. 

• Optimization of inventory

Ineffective inventory management may lead to a shortage of MRO supplies or overstoring MRO items can slowly eat your costs.  In fact, poor internal MRO supply chain practices lead to over 40% of unplanned downtime.^[2] Rushed procurement to meet emergency needs can then result in cost-based compromises. But with digital procurement plans in place, you can be assured that MRO inventory in your organization will be sufficiently optimized to meet demand seamlessly and keep logistics cost reasonable.

• Reduction of losses related to compliance and quality issues

Compliance and quality issues in MRO supplies often lead to unexpected additional costs for organizations. A digital interface makes compliance easier and simultaneously offers quality assurance for MRO supplies. In turn, this allows organizations to save money on rectifying or dealing with the problems associated with low-quality MRO inventory.

• Complete automation of the purchase-to-pay journey 

Digitization in MRO also eliminates a host of low-value tasks in the journey from MRO purchase to payment. E-invoicing, digitization of inventory management, ERP integration, and digital payments all help plug cost leakages in the manual purchase-to-pay journey. Automation also improves the overall efficiency of procurement processes and gives your organization a competitive advantage. 

Transform your MRO procurement today

Chief Procurement Officers across the globe are prioritizing e-procurement in the MRO supply chain. To stay ahead of the curve, you need to give your MRO purchases a digital upgrade with the latest solutions from Moglix. We revolutionize conventional procurement procedures with a digital transformation approach and optimize procurement through Vendor Consolidation, Digital Catalog for MRO supplies, Moglix-powered stores, and VMI to manage your inventory. Looking forward to transforming your procurement? Just send us your business query at info@moglixbusiness.com

It’s amazing what a vendor managed inventory system can do to your supply chain. There is a lot to learn from the most successful vendor managed inventory systems for CPOs.

One of Indian auto industry’s leading manufacturers has put in place a  successful vendor managed inventory system.  The VMI program has enabled it to sustain cost leadership over the long term. Here is an overview of their VMI program.

75% of Components Sourced from Local Suppliers

The auto manufacturer has focused on building strategic relationships with suppliers from the ground up through vendor consolidation. A key aspect of its localization has been to develop captive suppliers that hold inventories at their warehouses.

These suppliers’ warehouses are located within a defined logistical radius. Vendor managed inventory systems allow the auto manufacturer the convenience of on-demand onsite delivery within a short period of time.

100% Visibility into Clean Procurement Data

The auto manufacturer uses an automated inventory replenishment and reordering system. All strategic suppliers have integrated their inventory holding data with that of the single digital procurement solution of the auto manufacturer.

Collaborative data sharing has paved the path for collaborative planning among the auto OEM and its suppliers. Each stakeholder in the supply chain has complete visibility into the evolving dynamics of demand and supply.

JIT Delivery and Lean Inventory Holding

The automotive manufacturer has a well-defined system for suppliers to send their industrial goods to its plant premises.  The auto manufacturer allows suppliers’ trucks to enter its plant premises 30 minutes before the scheduled time for stock replenishment.

This has radically reduced working capital blockage. It has also unlocked more real estate for storage of multiple categories of indirect procurement items, and reduced warehousing costs.

6s, Kanban, and Bin Card at Supplier’s Warehouses

The automotive manufacturer conducts periodic visits at its suppliers’ warehouses. During these visits they audit the total quality management systems and best practices of suppliers. As part of the vendor managed inventory program suppliers are required to adopt 6s, kanban and bin card systems at their warehouses.

Moglix provides vendor management inventory solutions that enable both agility at scale and reliability to your indirect procurement. To know more about vendor consolidation and  vendor managed inventory solutions for indirect procurement, visit https://blog.business.moglix.com/optimize-mro-procurement

While a project site is a self-contained system, it relies on specific processes to keep things running well. This is where a project manager and their team come in to ensure that each system delivers the needed relationships and output on time and budget.

From managing the staffing to controlling the raw materials that flow in, this is the job of a site manager. Of course, one of the most critical materials used in almost all construction sites is concrete. Depending on construction, a structure may include beams, slabs, columns, and foundations.

The total volumes of each structural element or part of a member will determine the volume of concrete required for this structure. Knowing how much to order is incumbent on understanding the use and volumes needed to complete the structure.

The Application of Concrete in Construction

Concrete consists of coarse aggregates (particulate elements including sand, gravel, crushed stone, and slag) bound together with cement. Cement is a compound that binds things together, such as aggregate, by bonding to them and drying over time. Although many other cement forms exist, Portland cement is the most popular and used in concrete, mortar, and plasters.

Prerequisites for Right Quality Concrete

Proper concrete demands proper mixing for the creation of robust and homogeneous concrete. Concrete production is time-sensitive, and because it is manufactured as a viscous fluid, it must be poured before it hardens.

For applications that demand a short set time, certain concrete is specifically engineered to harden faster. Concrete is also blended into dryer shapes in some manufacturing settings to make precast concrete goods such as concrete walls.

Factors That Improve the Strength of Concrete

The strength of the concrete can be increased during the early stages of curing by keeping it damp. This is accomplished by using procedures such as spraying concrete slabs with chemicals that form a water-retentive coating or ponding, which involves submerging concrete in water and wrapping it in plastic.

Knowing the process and the outcome is essential, as this will determine how to assess the consumption. With this knowledge, the site manager of infrastructure companies can build a bill of materials for all the necessary raw materials.

The Absolute Volume Technique to Calculate Infra Material Quantities

The absolute volume technique can determine the quantities of ingredients for concrete, such as cement, sand, and aggregates, needed to produce the required amount of concrete with given mix proportions.

According to this technique, the volume of fully compacted concrete is equal to the absolute volume of all concrete components, including cement, sand, coarse aggregates, and water.

Site managers, site engineers, civil engineers, and mechanical engineers need to work together to assess the procurement of raw materials. The best way is to use one of the many calculators available freely online. These calculators also highlight the importance of other factors that affect concrete procurement for infrastructure development projects.

“My target is to achieve 100 km per day of highway construction,” said Nitin Gadkari, Union Minister for Road, Transport & Highways, addressing a virtual event organized by industry body CII in August of 2021.

This was the road development goal he set for the various EPC companies in India and the different governing agencies to pull up their socks and build using sustainable material, but to also build faster!

The emergence of the National Infrastructure Pipeline is suggestive of what to expect from India’s government going forward.

The National Infrastructure Pipeline (NIP) is a five-year package of social and economic infrastructure projects in India with a total sanctioned budget of 102 lakh crore (US$1.4 trillion). The pipeline was initially announced by India’s Prime Minister Narendra Modi during his Independence Day speech in 2019.

As part of the NIP, roadways, expressways, highways, road construction projects in India, railways and power sector assets will encompass over 66% of the total estimated value of the assets to be monetised. The remaining upcoming sectors include telecom, mining, aviation, ports, natural gas, and petroleum product pipelines, warehouses, and stadiums.

For EPC companies in India, this boom in road development projects means they are now in a position to build back better. However, procurement of construction materials will be critical for them to complete these infrastructure development projects within budgeted time, cost and quality.

Timeliness: EPC companies in India will require an agile supply chain for on-time procurement of construction materials. With a digital procurement solution, they can now streamline their sourcing, logistics, and even payments. 

It results in the faster delivery of turnkey projects than a traditional model of offline procurement. Simple aspects like being able to digital monitor the various stages of the logistics journey lead to better visibility into the time to sustain in case of a disruption.

Cost:  EPC companies need to ensure they are in the best position to negotiate the best cost. A diverse and inclusive supplier base is the key to getting the most competitive cost quotations on construction materials. 

A diverse supplier base managed through a single point of contact enables raw material suppliers to be competitive. EPC companies can get the best product at the lowest price point, without skimping on delivery, quantity, or quality.

Quality: Meeting the custom quality specifications for materials like TMT bars, cement, plates, steel, and ready-mix concrete is critical for EPC companies to build high quality roadways, expressways, highways, and bridges. With clean procurement data, EPC companies can reduce the risks of order-supply mismatches.

EPC companies in India will be the change-makers, enabling transformation and fueling the growth of infrastructure development projects in India.

Being in the unique position to enable the procurement of construction materials such as TMT bars, cement, plates, and ready mix concrete, gives EPC companies an edge to deliver the value that the National Infrastructure Pipeline seeks to create.

If you are in the business of infrastructure, construction, or development, then chances are you will benefit from Moglix procurement solutions for infrastructure development projects. To know more visit https://business.moglix.com/our-solutions/infrastructure

Tesla has weathered its share of supply chain disruptions in a manner “unrivaled in the auto industry”.  While other automobile manufacturers have reported a decrease in sales, Tesla has bettered it’s net earnings. 

It had posted USD 1.14 billion in the second quarter of 2021.  In the third quarter, Tesla posted a record quarterly net earnings of USD 1.62 billion and sales of 240,000 vehicles.

What Tesla Got Right But Others Did Not? Managing Multiple Supply Chain Disruptions

All automobile manufacturers were affected by global semiconductors shortages, which left procurement professionals in the automobile industry short on accessible stock and consumers with fewer options.

Many issues, including semiconductor shortages, port congestion, and rolling blackouts, have hampered automobile manufacturers’ ability to maintain plants functioning at full capacity.  Even Tesla has conceded that global supply chain disruptions had made the achievement a little challenging.

However, Tesla got three things right that allowed it to navigate across troubled waters. These are supplier base management, collaboration with suppliers, and better forecasting and planning.

Supplier Base Management and Chip Substitution: Agility at Play

Elon Musk, CEO of Tesla, revealed that the company handled the worldwide chip shortage by upgrading its car software to handle alternate processors.

Due to a growing demand for new automobiles, the gap in supply upended the auto industry. It resulted in factory shutdowns, longer wait times, and higher pricing.

However, Tesla has over the years invested in its supplier base management program. It has built a diverse and inclusive supplier base enabling it to switch to different chips and develop the software in a few weeks.

Working with Vendors to Co-Create a Custom Product: Collaboration in Focus

Tesla was able to quickly put together a custom product. Tesla’s ability to identify the right supplier through a pre-defined approval system enabled it to co-create the customized product in a very short period of time.

It enabled the production, engineering, and supply chain teams to quickly move forward and build the product according to specifications that were pre-set. Tesla’s collaboration with suppliers enabled it to demonstrate agility at scale for its indirect procurement.

Early Visibility for Better Forecasting and Planning: Digital Supply Chain Transformation

Tesla was able to identify the challenges quite early on. Its digitally integrated supply chain with multiple suppliers, logistics services partners, and warehouses onboard worked as an early warning and control system.

Early visibility into the divergence of its supply chain KPIs from expected values allowed it to pierce the mist on the screen. It enabled the automobile manufacturer to forecast and plan better.

To know more about how an indirect procurement solution can work for automobile manufacturers, reach out to Moglix.  Explore the best indirect procurement solutions for automobile companies. Click here to know more: https://blog.business.moglix.com/optimize-mro-procurement