Procurement, purchasing, product acquisition, and supply chain management always seem similar on the surface due to their similarities. In practice, these are different concepts and they use various automation tools. Understanding the difference between procurement and supply chain automation is vital to help you select the right tool for your needs.
Before we go into procurement automation, let’s first answer the question, “what is procurement?” and compare the meaning of procurement with that of the supply chain.
Procurement is the process involved in sourcing and purchasing (or acquiring) goods, services, or raw materials from vendors or suppliers. This includes actions required for and involved in sourcing and acquiring these goods, services, or materials, such as contracts, requests, approvals, control of business spending, managing suppliers, and tracking purchases.
A supply chain is a company’s network of manufacturers, logistics providers, suppliers, entities, people, resources, and functions that work together to get a product or service into the company’s hands. It also includes the jobs such as marketing, procurement, sourcing, quality assurance, contracting, and more to get products and raw materials services into the company’s hands. Supply chain management involves coordinating and managing all the stakeholders in the supply chain network for service delivery efficiency. Many companies are adopting supply chain automation to improve their efficiency.
Procurement is a critical aspect of the supply chain. This means the automation of one is often linked to the other.
Procurement automation involves using procurement software solutions to automate a company’s procurement processes. This helps reduce the time taken and errors in procurement and maximize procurement efficiency. This procurement automation software allows businesses to focus on critical activities like strategy and decision-making and reduce procurement costs. The critical procurement areas that many businesses automate are:
Supply chain automation involves using digital technology solutions to improve supply chain efficiencies, connect networks and streamline supply chain processes and operations. Supply chain automation is often more complicated than procurement automation because it incorporates intelligent technologies such as Digital Process Automation, Robotic Process Automation, Artificial Intelligence, and Machine Learning.
Nearly every aspect of any supply chain can be automated, partly because they’re often distinct aspects. However, three overarching types of supply chain automation are most beneficial:
Supply chain automation brings connectivity, removes manual tasks, and enables transparency and visibility of operations. This brings the efficiency and agility that supply chain operators need.
Regardless of industry and size, no business is self-sufficient. Supply chains and procurement help businesses acquire goods and services and manage the process of acquiring goods and services from third-party suppliers to manufacture products or maintain internal operations. Automation of the two processes removes manual tasks and improves efficiency and agility.