The Power of Process Mining for Procurement

For decades, complex business processes and inefficiency went hand-in-hand. The more touchpoints, teams, and stakeholders involved in critical processes and workflows, the greater the chance for inefficiency, blockers, and leakage to creep in.

Early generation business intelligence and insight tools went some way towards solving that — providing basic insight into process issues, and showing teams which KPIs their current processes were failing to deliver against.

But, knowing you’ve got a problem is just one small part of the puzzle. Before an organization can fix a process problem it needs to know exactly where it’s coming from, why it’s happening, who is involved, and what knock-on impact it’s having on other processes. That’s where Process Mining comes in.

What is Process Mining?

Process Mining is a new analytical discipline, designed to help organizations visualize and monitor processes as they really are, rather than how people think they run. But how does it do it? It uses knowledge, data, and event logs from live information systems like ERP platforms to generate a truly reflective picture of process performance against various KPIs.

In doing so, Process Mining grants objective, fact-based insights that can easily be translated into actions to help improve your existing business processes. There’s no need for additional analysis or hypothesising over its outputs. It simply shows you where there are problems in your processes, and helps you understand where those problems originate from so you can take the right action to resolve them — often automatically.

What is the difference between Process Mining and BI?

When you use BI to understand KPI performance, there are always questions about the data used to generate those insights. Where has it come from? How reliable or comprehensive is it? And can we really trust the results it’s generating for us?

Process mining is unique from a data perspective, because it looks at data directly in the source system and uses it to recreate a view of how a particular process is running. In that sense, it’s irrefutable — everything it tells you, and the insights it surfaces are all generated from live, in-use data, rather than a static, point-in-time snapshot.

Process Mining also makes determining next steps much easier than working purely with BI tools. It enables you to dig into issues and anomalies with such granularity that you can immediately see where poor performance is coming from, and where the gaps in your processes are.

In short, Process Mining gives you both the confidence and visibility needed to act on insights immediately, and start taking targeted action to improve process performance and close those process gaps.

How does Process Mining work in Procurement?

For Procurement teams, Process Mining can grant a similar depth of process understanding as an explorative consulting exercise, and start delivering results in weeks instead of months. Plus, it’s always on and always available, providing ongoing visibility of process and performance blockers, instead of a single snapshot of performance.

Getting started with Process Mining is far simpler than many people expect. To begin, all you need is a PM solution from a provider like Celonis, and a few data connectors to pull data from your live systems into that PM tool. From there you can add apps and connectors for specific analysis, and build your ideal view of process and KPI performance.

Common applications of Process Mining in the Procurement function include:

• Identifying the impacts of free-text requisitions on processing time and compliance ratio KPIs
• Identifying the sources of late deliveries and their impact on process efficiency
• Quantifying the cost of manual rework on purchase orders, and gaining a better understanding of where manual rework is creeping into touchless processes
• Detecting and preventing retrospective purchase orders
• Detecting maverick buying and where it’s coming from

Use cases for Process Mining in Procurement

Process Mining can be applied to gain deep visibility of a wide range of Procurement activities, and can be used in different ways depending on the needs and priorities of the organization it's deployed in. Here are three of the most common use cases in Procurement:

Use case #1: Improving touchless PO rates

Process Mining gives you an end-to-end view of your procure-to-pay process, exactly as they are. And a reliable view of performance against all major Procurement KPIs.

It enables you to dive into KPIs like no-touch rates for POs, and see the drivers behind current performance levels, as well as the factors leading to poor performance. For touchless POs, that could mean showing you all instances of manual price changes, including their sources, their impact on other KPIs, and crucially, their financial impact on the Procurement organization.

Equipped with that insight, you can quickly see the individuals, customers, and processes triggering the need for manual price changes, and take action right away to reduce those instances. That approach enables Procurement teams to tactically close the hidden gaps preventing them from achieving their goal of 100% touchless PO processes.

Use case #2: Reducing free-text requisitions

Free-text requisitions represent significant cost control and compliance risks for Procurement organizations. To tackle and reduce them effectively, you need to be able to identify their sources quickly, and resolve the underlying issues that drive them.

With Process Mining, you can gain a clear view of how free-text requisitions impact the efficiency and performance of your requisition processes by adding extra time to them, and see the dollar cost of those delays. But, more importantly, you can dig into that data, and see the vendors, teams and even individuals involved in the creation of those free-text requisitions.

Equipped with that information, Procurement leaders can adjust processes to ensure that catalogues and approved suppliers deliver everything teams need, reducing the need for free-text requisitions — and improving compliance and reducing spend in the process.

Use case #3: Identifying opportunities for Procurement automation

Because Process Mining gives you a reliable, complete view of performance and process gaps across procure-to-pay processes, it’s a powerful tool for identifying automation opportunities.

It can show you the parts of processes where manual work is causing delays, where automation could be applied to improve results. It can even help organizations see potential time savings and efficiency gains in dollar terms, making it easier to prioritize automation investments and efforts.

Crucially, by highlighting friction points, process gaps, and areas of inefficiency within your processes, Process Mining can also help you identify areas and practices that you shouldn’t automate. These are problem processes that need to be fixed before they’re automated, or you risk simply automating inefficiency and ensuring that said inefficiency continues ad infinitum.

Who is Process Mining in Procurement for?

Process Mining will be of interest to process excellence teams, dedicated business transformation teams, Procurement leaders, or anyone that’s in charge of a project to drive better performance in the Procurement organization.

Why choose process mining over a direct consulting engagement?

Plenty of consultants use Process Mining in their engagements, so it’s not really an either/or situation. There are certainly a lot of parallels between process mining and direct engagements with consultants. Both map out your processes, dig into them, and generate recommendations about how to improve them. Process Mining — or consultants who use Process Mining — can generally deliver those recommendations faster.

The other big reason that you might want to choose a process mining tool is that PM capabilities enable you to continuously track process performance, rather than just seeing a snapshot of it. As you make changes and optimizations, you can track the impact of your decisions, and identify further issues within your processes as they develop.

What key Procurement challenges can Process Mining help solve?

By improving the visibility of the procure-to-pay process, and helping teams uncover the root causes of reduced performance against KPIs, Process Mining can help Procurement tackle some of its longest standing challenges, including:

Reducing manual rework

Process Mining can help Procurement teams detect the root causes of manual rework to POs, surfacing issues with master data. This enables ongoing improvements in master data quality and supports improved productivity and higher touchless rates across the function.

Detecting maverick buying

Tackling and preventing maverick buying is difficult, but it’s far easier when you can trace its sources. Process Mining gives Procurement teams a simple way to track maverick requisitions back to their source, so that appropriate action can be taken to prevent them happening again.

Reducing material prices

Process Mining increases the traceability of POs, helping Procurement teams push back against unplanned price increases, and ensure that vendors adhere to negotiated prices across all contracts and requisitions.

What are the challenges associated with applying Process Mining in Procurement?

Process Mining is relatively simple to get started with, and is designed to be intuitive for stakeholders across Procurement and beyond to engage with — assuming you choose the right solution. However, there are a number of cultural challenges that can impact its effectiveness.

Firstly, Process Mining requires teams to change the way they think about insights generated from ERP data. Teams used to working with BI tools will naturally question the insights handed to them, so it may take some time to adjust to the quality and reliability of Process Mining insights.

The other major challenge is that while Process Mining can help you detect a huge range of issues and blockers across Procurement processes, it doesn’t actually solve any of those issues on its own. To do that, you’ll need complementary capabilities like machine learning, automation, or pre-built applications designed for Procurement.