How Procurement Orchestration is Revolutionizing the Source-to-Pay Cycle
In many organizations, the role of procurement is not merely limited to monitoring costs. Instead, the function is now expected to contribute to more strategic goals including risk mitigation, sustainability and strong relationship building with external partners.
Increasing Complexity in Procurement
With all these added responsibilities, procurement is likely to become increasingly complex.
In fact, 90% of procurement leaders expect increasing complexity in sourcing and procurement in the next two years, according to a Gartner report. This complexity comes from the systems, data and processes.
As the function’s responsibilities continue to increase, decision-making also becomes more complex, making it harder for the team to take fast and informed actions.
Again, 70% of organizations are prioritizing data and analytics as a top procurement investment by 2030, states the same report. This makes data and analytics the number one investment area, followed by generative AI and sustainable procurement.
The key point here is that we don’t need more data, we need better insights to drive decision-making and actions, says Alex Zhong, director of product marketing at GEP in this webcast.
The Gartner report also suggests that 40% of sourcing activity is likely to be conducted by non-procurement staff by 2027.
With more casual users engaging with procurement systems, there is a need to provide a smooth and transparent experience while ensuring procurement compliance at the same time.
Organizations across industries are facing significant challenges in the current state of procurement technology.
Systems are siloed, with data scattered across multiple platforms making it difficult to gain clear, actionable insights, says Zhong.
Even when data is available, inconsistent and misaligned processes result in delays and inefficiencies.
Procurement teams are also burdened with manual tasks that need to be automated. All these time-consuming tasks slow down the process and result in a frustrating user experience.
Also, as businesses grow, they struggle to scale their operations.
The need for a unified and streamlined procurement solution has never been more apparent.
From Intake Management to Total Orchestration
As the name suggests, intake management involves the initial step of routing purchase requests. It includes elements such as advanced guided buying, personalized control panel and workflow configuration to enhance the user experience. This gives casual users intuitive tools to work with the system and get things done quickly and efficiently.
But as discussed earlier, procurement today has a much larger scope than simply managing intakes.
The need of the hour is total procurement orchestration. This focuses on streamlining workflows across the source-to-pay (S2P) cycle to drive better business outcomes. It includes elements such as process automation, lifecycle management, collaboration space, imbedded intelligence and persona-based control towers.
Procurement orchestration ensures that all users can access the tools, data and insights they need in the process. As a result, teams can collaborate more effectively and deliver better results.
Effective procurement orchestration has three key components:
- Process alignment
- Data integration
- User empowerment
Technology is the enabler that brings all the above components together. Technology has evolved from point solutions to S2P suite solutions. With the rise of AI, we now have end-to-end procurement orchestration solutions.
This AI-based orchestration empowers procurement with unified data and streamlines processes, delivering more value to the business.
Orchestration is not just about technology, but it really is how to use technology to unlock human potential and drive outcomes, says Zhong.
How AI Drives Procurement Orchestration
AI is a key enabler of procurement orchestration, which is used not simply to automate tasks but also to elevate human capabilities.
Let’s try to understand what has led to the evolution of AI.
There has been a massive change in infrastructure, hardware and cloud-computing capabilities, says Santosh Nair, head of product at GEP.
We now have closed-source foundation models, open-source foundation models and model hubs.
These developments have changed two things.
Firstly, users can engage with the application in a natural language and interact as they would with a human. This fundamentally changes how users interact with the software.
Secondly, there has been huge development at the back end. The ability of the reasoning engine to infer user intent, connect data points and provide insights and predictions has significantly increased.
As a result, the user can now focus on strategic goals such as supplier relationships, business engagement, stakeholder communications and long-term planning.
The orchestration platform can act as a co-pilot and take care of tactical activities such as searching, entering information, …
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