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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 was sending an abundance of data to the Procure-to-Pay team every day, but amongst it all, it was difficult to locate the root causes of process inefficiencies and pain points.
With Process Intelligence, DTSE could pinpoint exactly where pain points were and what was causing them, then take corrective action to make Procurement 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 was able to see the time impact from low-value transactional tasks, uncover penalties caused by suboptimal delivery-date accuracy, and solve for both.
At Accenture, likewise, insights from Process Intelligence helped Procurement teams see where they were taking superfluous steps, as processes had become unnecessarily complex. With many of Accenture’s projects arising very quickly, they need to be responsive and fast, while adhering to numerous rules around risk and controls.
Process Intelligence gave Accenture the process visibility needed to slash requisition-processing time from 30 hours to around 15 overall. In one market unit, processing time went from 60 hours down to 15, a 75% decrease. These stellar efficiency gains have fed into improving Accenture’s overall request-to-order cycle time by 50%, reducing invoice approval times by 30%.
2. Speed up Procurement tasks with AI-supported error detection and correction
Procurement teams often spend lots (and LOTS) of their day-to-day 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.
Process Intelligence helped the State of Oklahoma’s Procurement department to process more than 24,000 POs worth $4.58 billion in less than 12 weeks. The Procurement team was also 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. All in all (brace yourself for another impressive stat), Process Intelligence made their PO management and auditing 200 times faster – or at, as Janet Morrow, Director of the Risk, Assessment and Compliance Division, 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 and accelerate requisition processing, with AI-powered automation. Improving contract usage minimizes the risk of POs being sent without pre-existing contract terms applied, helps you 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 an impossible amount for us mere mortals to memorize and keep on top of, 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. Understand and react to material shortages with real-time, end-to-end visibility
To prevent being caught off-guard by sudden drops in material availability, Procurement teams need a full view of their supply chains, including inventory levels and supplier performance. This gives them more time to adapt by reallocating materials or paying a premium for faster delivery, preventing material shortages from having an outsize impact on production or service levels.
German sealing specialist Freudenberg FST proves how Process Intelligence can provide this visibility and enable preventative action. A lack of supply chain transparency, and some 18,000 raw materials going into production, created a challenging combination during the major supply chain disruptions of COVID-19.
“We needed a tool that would show us exactly which of our suppliers couldn’t deliver, what inventory levels we had at what plant, and when these would reach critical levels - so we could inform customers in time and find solutions." -Kai Führer, Director, Supply Chain Measurements and Assessments, Freudenberg
Freudenberg’s Procurement team found it with Process Intelligence.
The end-to-end visibility Freudenberg gained through Process Intelligence illuminated interdependencies between bills of materials, inventory levels, the quantities that could be produced, and which customers could be served. Freudenberg was able to see all of its real-time data on raw materials in a single dashboard, so the team could spot potential downstream impacts early, make changes to allocations, keep customers updated, and minimize liability risks by solving issues before they became major crises.
“Celonis makes material shortages more transparent than ever. It helps us make better decisions and find better solutions,” said Führer.
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 process orchestration, ultimately reducing Procurement cycle times, creating more resiliency and flexibility, and positively impacting the bottom line.
Check out our demo on frictionless Procurement for a closer look at how you can use the Celonis Process Intelligence platform within your Procurement strategy, or read about how process mining finds & captures value in Purchase-to-Pay.
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