“Technologies available today could automate more than half of the source-to-pay process. The potential? Lower procurement costs, greater savings, and more opportunities to pursue new sources of value.” Is the opening paragraph of an article from the McKinsey&Company Operations newsletter, by Kalit Jain and Ed Woodcock, which plots the road map for digitising the entire source-to-pay process and reduce costs by at least 3.5%.

The role of emerging technologies

Jain and Woodward believe that five emerging technologies are particularly pertinent to source-to-pay:

• Robotic process automation
• Machine-learning algorithms
• Smart-workflow
• Natural-language-processing
• Cognitivinvoice-to-paye agents.

Automation potential

The authors “decomposed source-to-pay into a large number of discrete tasks” to assess how easily they can be automated. They then employed a “framework of capabilities,” developed by their colleagues at the McKinsey Global Institute. This framework showed the automation potential across the entire suppy-to-pay process:

Source & Copyright©2017 - McKinsey&Company 

An important finding was while the subprocesses show the most potential for automation, the more-complex tasks are at least somewhat automatable. For corporate treasury, a key finding was that a significant part of invoice processing is difficult to automate.

The starting point

McKinsey like all great consultants say, “the next step is to identify the best targets for automation within their own processes. Organizations can do this by first evaluating the current level of automation they have implemented, compared with what is technically achievable for each task in the source-to-pay process. They can then estimate the value of closing each gap.”

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CTMfile take: The importance of this analysis is that it raises the corporate focus onto the entire supply-to-purchase process made up of source-to-contract, procure-to-invoice, and invoice-to-pay which are inextricably linked, rather than just invoice-to-pay. Worth a download and follow up.