Before the advent of digitisation and automation in F&B procurement, businesses had to carry out a number of physical tasks as part of their source-to-pay processes. Procurement teams were laden with a plethora of manual automatable tasks like creating manual requisitions, negotiations, contracts, procuring and matching invoices, and approving payments. This often led to increased spends, longer procurement cycles, and low productivity in the procurement teams. Nowadays, with the help of AI-powered platforms, enterprises can simplify their complete source-to-pay processes. This article breaks down how digitisation and automation in procurement can help F&B businesses improve their time, money, and operational efficiency.
Why are digitisation and automation required in food and beverage procurement?
Procurement teams of the food and beverage industry have to procure a plethora of products both in direct and indirect categories. Here are a few reasons why digitisation and automation are required in the F&B sector.
Global supply chain instabilities: With global pandemics and wars breaking out, supply chains are affected to a great extent. For seamless business continuity, it is mandatory to maintain supply chain resilience and this requires businesses to strengthen their supplier ecosystem.
Price fluctuations: Procurement in F&B is heavily dynamic due to fluctuations in commodity prices. Due to these variations in prices, procurement teams go through a series of negotiations and renegotiations and managing contracts also gets increasingly complicated.
High transaction volumes: Production volumes are large and businesses are required to source their direct and indirect materials from a variety of suppliers. Procurement teams have to ensure that the right raw materials are sourced from the right suppliers at the specified quality and quantity.
Managing requirements of multiple locations: Generally, large-scale F&B organisations are located in multiple sites, and there is a possibility for duplication of procurement efforts.
What are the steps that can be automated in the S2P processes of F&B?
The procurement process of the F&B sector – right from sourcing to payments can be automated with advanced technologies powered by AI and ML. These are a few processes that can be modified.
Supplier Discovery: e-Sourcing technology solutions can help F&B enterprises find suppliers within their existing pool of verified suppliers or from a larger group by integrating with supplier databases or aggregator platforms. This helps them procure raw materials at specified grades from certified suppliers at the right market prices.
E-Sourcing Operations: The process of evaluating and selecting suppliers can involve a variety of tasks such as negotiations, auctions, contracts etc. All these automatable tasks can be streamlined and improved by using AI.
Automation of Invoice Processing: Invoice processing can involve a multitude of manual tasks right from intake to payment processing. These processes can be automated by using technologies such as OCR (automated invoice scanning for details) and Auto 3-way match (automatic matching of your invoice with your PO and GRN) that can reduce procurement workload.
Spend Analysis: e-Procurement platforms help in analysing the total list expenditures in an organisation. This helps in strategically planning and managing direct and indirect expenditures.
What are the benefits of digitisation and automation in F&B procurement?
When enterprises make large investments in new solutions like e-procurement, there have to be significant savings in terms of RoI. Here are a few key benefits that organisations can expect.
Better sourcing deals: e-Procurement technology can help enterprises strike better deals within their existing pool of suppliers or find a new supplier altogether. This ensures better monetary savings and can also ensure high quality of raw materials procured.
Improved productivity: By automating and streamlining all tasks in the source-to-pay process, it is possible to eliminate any unnecessary tasks and also improve the productivity of the procurement team.
Human errors: With system automated processes and intelligent insights, human errors can be eliminated and all decisions will be backed by data.
Maintaining compliance: e-Procurement solutions also prompt enterprises to maintain vendor payment cycles and ensure compliance with GST payments.
Data-backed Decisions: As all the transaction data is being recorded, better spend analysis can be done and all decisions can be backed by data.
Better vendor relationships: e-Procurement platforms allow for better visibility and transparency with vendors through regular updates on platforms that are comfortable to them. This can potentially improve vendor relationships and NPS scores.
Conclusion
There are many automated procurement solutions and software in the market that can help food and beverage businesses run smoothly. These solutions can be customised according to the individual business model and their needs.
In fact, with the advent of newer technologies such as Artificial Intelligence, smart computerised algorithms can further enhance the efficiency of source-to-pay processes and help procurement teams focus on high-value activities. With the increasing uncertainty in world economies, it is advisable to evolve to an AI-powered procurement platform that can empower the business.
(The author is co-founder and CEO, Aerchain)