Previous article
Four ways to optimize Procurement processes with Process Intelligence
If you’re looking to optimize supply chain processes, Procurement— that is, sourcing, purchase requisition, purchase order management, and contract management — is a good place to start.
Many of the processes that affect supply chain management KPIs and metrics begin in Procurement, and issues that occur in this link of the supply chain can ripple out across all the others, from Inventory Management to logistics and more.
With so many interdependencies and cost implications, it’s crucial that Procurement processes run as efficiently as possible.
To give you some ideas about how Process Intelligence might be able to improve your own Procurement processes, we’ve picked out four real-world examples of how some Celonis customers are using Process Intelligence to optimize their Procurement processes and address their Procurement challenges.
1. Find the root causes of underperforming Procurement metrics
First off is a wide-reaching benefit that applies across your Procurement function: Process Intelligence brings to light potential improvement opportunities within any and all of your Procurement processes.
Though Procurement teams often have a wealth of KPIs and data at their disposal, it can be difficult to diagnose what’s behind sub-optimal results or translate them into actionable insights for process flow improvements. This was the case for Deutsche Telekom Services Europe (DTSE). The Shared Services Center handled the Procure-to-Pay process for Deutsche Telekom, and within the abundance of data the process generated, it was difficult to locate and tackle the root causes of process inefficiencies.
With Process Intelligence, DTSE could pinpoint exactly where pain points were and what was causing them, then take corrective action to make Procure-to-Pay processes run more efficiently.
“Employees who were doing low-value transactional tasks in the past now have the time to select suppliers or negotiate better payment terms. This helps our teams achieve millions in savings throughout the year.”
-Christian Unterbusch, VP of Operational and Strategic Steering for Procure-to-Pay, DTSE
With the observability given by Process Intelligence, DTSE increased their no-touch rate significantly, which freed up capacity for tactical sourcing and resulted in savings of €12M. DTSE also uses Celonis to systematically analyze contracts for contractual penalty options, helping them to find €1.6M in penalties in 2019 alone.
2. Speed up Procurement tasks with AI-supported error detection and correction
Procurement teams often spend lots (and LOTS) of time handling tasks that involve manual processing and administration. One of the best ways to raise efficiency? Harnessing AI and process orchestration thanks to Process Intelligence.
Take the purchase order (PO) process. Reviewing a purchase request (PR) or PO is time-consuming. But because Process Intelligence is built with over a decade of process improvement knowledge and AI, it doesn’t just flag erroneous POs in real time: it also gives intelligent recommendations on how to correct them.
Before Celonis, spending by different state agencies was hard for the State of Oklahoma'sOffice of Management and Enterprise Services (OMES) to track and audit, and filled with rogue exceptions. OMES auditors were having trouble keeping track of all of the state's POs, and agency buyers were struggling to stay compliant. But Process Intelligence empowered both buyers and the OMES team. With Process Intelligence, OMES was able to audit the spending of the agencies in their purchasing process – all 122 of them – in four months. It could previously take up to three years to cover just one agency. Where compliance issues were previously found after the damage had already been done, Process Intelligence reset the clock, helping auditors get a real-time understanding of which buyers were out of compliance, highlighting POs that needed correction, and providing AI-powered recommendations for exactly how buyers could correct their POs.
All in all, Process Intelligence made their PO management and auditing 200 times faster — helping it run at, as Janet Morrow, Director of the Risk, Assessment and Compliance Division, OMES, describes it: “the speed of light.”
3. Get maximum value from supplier contracts
This next use case shows how Process Intelligence can help maximize usage of supplier contracts with AI-powered automation. Improving contract usage minimizes the risk of POs being sent without pre-existing contract terms applied, helps control spend under-management, and ultimately minimizes money being left on the table through contract value leakage.
Procurement team members at energy company Uniper process more than 70,000 PRs per year. Every single PR is forwarded to a Procurement specialist, who then has to determine whether a suitable contract with a supplier already exists. With 1,500 contracts in place, it’s impossible for mere mortals to memorize and keep on top of every contract, so Uniper explored an automated solution.
Working with Celonis, Uniper developed the P2P Contract Finder – a tool that uses AI to search existing contracts and find any matches with the requisition. This significantly upgrades the business’s ability to turn around its mammoth requisition stream, with fewer delays and bottlenecks. The goal is to reach 90% automation, from PR to PO, without Procurement being involved.
“Our goal of 90% for the stated KPIs is very ambitious and can only be achieved with technologies like AI and process mining.”
-Philip Höchstödter, Vice President Spot Buy/Operational Procurement at Uniper
Meanwhile, fewer opportunities for cash discounts pass them by in unmatched contracts, and supplier relationships are strengthened for ongoing business — a win for process efficiency and cost savings.
Interested in using your own supplier contracts more effectively? One of the Celonis platform’s most popular offerings is the Open Purchase Requisition Processing app. It automatically alerts Procurement teams to non-compliant PRs, and suggests contracts to purchase against for open requisitions, giving you a strong line of defense against contract value leakage.
4. Use total process visibility to transform cycle times
At Accenture, the end-to-end visibility gained from Process Intelligence helped the “Procurement Plus” team (Accenture’s internal Procurement function, covering the Purchase-to-Pay value chain from Procurement to Accounts Payable) find and focus on superfluous steps and overly complex processes.
One such process was Request-to-Order. Using the full, real-time picture of their processes provided by Celonis Process Intelligence, Accenture’s Procurement Plus team discovered that Procurement, Finance, and tax teams were all completing steps within Request-to-Order that were ultimately unnecessary, due to inherited processes, established ways of working, and a variety of other causes.
Working together, Procurement Plus and the impacted departments were able to eliminate those extra steps. Within one year, this reduced the Request-to-Order cycle time by 50%, from 30 hours to about 15 hours for requisitions. In one market unit, the reduction was even more dramatic: from 60 hours to 15 hours, a 75% decrease.
“Having that structured visibility, identifying the problems and how we can fix them, and reducing the variance in the process is extremely valuable for us.”
-Krisztina Hamara, Global P2P Process Lead, Accenture
Find out what Process Intelligence could do for your Procurement processes
At Celonis, customers are taking advantage of Process Intelligence to enable Procurement process visibility, actionable insights, and Procurement process orchestration, ultimately reducing Procurement cycle times, creating more resiliency and flexibility, and positively impacting the bottom line.
More blog posts on Process in Practice
