Automation opportunities abound for manufacturers' direct materials Procure-to-Pay (P2P) processes: New study

Although there are significant benefits to automating direct materials procurement processes, including creating faster, more precise, more cost-effective businesses, companies large, small and in between are still doing things manually. 

The findings come from recently released research from supply chain management research and advisory firm ChainLink Research.

"During our interviews, we heard some of the reasons," wrote analyst Bill McBeath in a new article on the firm's research findings. ChainLink surveyed and interviewed over 120 manufacturers about their use of direct materials P2P (procure-to-pay) automation, why they automate, the KPIs (key performance indicators) they use to measure success for their direct P2P, and more.

"Of the companies we surveyed, the average (mean) had 31% of their direct materials procurement spend automated," McBeath said. "Automation levels were higher among larger (over $1B) companies - the median being 45% of direct spend automated - and lower for smaller (under $1B) firms, where the median was 25% automated."

For some companies, it was a matter of not having enough money or staff to do the work. But for most, it seemed to be organizational inertia - "we've always done it this way," McBeath reported. And without a champion who is passionate about the cause and who has the political skills and influence to bring about change, it is less likely that a company will invest in and adopt P2P automation, he added.

"Conversely, just because there is potential for automation-intensity does not mean it is realized," he added. "Many companies still have manual processes, even where the potential for automation is high."

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