Table of contents
To understand how automation can help, it’s useful to start with the two main functions of procurement: planning and purchasing. From there, we’ll look at four questions that will probably make the benefits of procurement automation pretty obvious.
Procurement in Two Acts: Planning and Purchasing
The Planning Puzzle
Planning is about answering a deceptively simple question: What do you need, and when? That means wrangling inventory levels, looking at production schedules (from a spreadsheet or an ERP system), and pulling in manual requests from sales, engineers, or anyone else who needs parts for something urgent.
The result of planning is a “horizontal plan”—industry jargon for a schedule showing which parts are needed, in what quantities, and when. The horizontal plan can be built in Excel, or it’s a core function of ERP systems. The plan is made at the final assembly level and translates to a list of buy actions for each part, quantity, and due date.
The Purchasing Gauntlet
Once the planning is done and requirements are clear, purchasing begins. The buyer (whoever has been assigned that role) now has to source offers for each part, sometimes by searching supplier sites, sometimes by sending RFQs (requests for quote) or emails, and sometimes by tracking distributor inventories online.
Preferences are an important concept. There will be situations where availability is more important than price, especially if a project or customer deadline is looming. Automation can’t predict every scenario. Good procurement automation systems allow the flexibility to introduce shifting preferences as they occur and help you make decisions by providing the right information at the right time.
Now, let’s take a look at four key areas and see if you think automation would help you.
Requirements Planning
What happens here:
- Gather inventory levels.
- Compile production plans and manual requisitions.
- Net out how many of each part you actually need, and when.
Automation can:
- Instantly pull data from ERP systems or spreadsheets, read inventory, and project requirements.
- Surface trends, flag shortages, and eliminate most of the manual guesswork.
Human intervention:
Most of the time, automation can do the heavy lifting. But there will be occasions when new priorities or unexpected needs emerge: maybe a last-minute customer demo or a sudden change in project direction. In those moments, a human can step in and adjust the plan when unknown or unknowable preferences come up.
Automation assists by:
Making it easy to review the impact of different decisions before you commit. For example, showing if pulling 10 units for a demo today could cause delays for a larger customer order next month, or flagging when a future build might slip because of current lead times. Automation lets you see those “what-if” scenarios up front, so surprises don’t catch you off guard.
Example Scenario:
A company with five PCB assemblies, each containing 100 unique parts, must plan for the upcoming production cycle. This means juggling inventory levels, forecasting demand, and making strategic decisions on stock.
Key Question:
Would you rather let automation handle demand planning and step in only when needed, or try to manage every decision manually?
Sourcing Opportunities
What happens here:
- Identify potential suppliers and gather quotes.
Automation can:
- Automatically solicit and compile quotes from a range of suppliers, aggregating key data points like cost, lead time, and availability.
- Collect offers that arrive in different formats; emails, spreadsheets, web portals, PDFs.
- Normalize all supplier data into a single format that allows apples-to-apples evaluation of price, lead time, availability, and other terms.
Human intervention:
Human input may be needed to include non-traditional or new suppliers in the quoting process, define unique or special contract requirements, or incorporate distinctive offers such as auto-replenishment, kanban arrangements, bundled pricing, or other special terms.
Automation assists by:
Presenting comparison dashboards and predictive insights that clarify trade-offs, making it easier to review and adjust priorities if needed.
Example Scenario:
With 400 unique parts, each typically having three potential suppliers, the sourcing team must gather and compare approximately 1,200 offers. This involves collecting and evaluating prices, lead times, availability, and other key details for each offer from multiple distributors.
Key Question:
Would you rather let automation compile 1,200 supplier offers in diverse formats, or compile every offer into some format manually?
Evaluation of Sourcing Options
What happens here:
- Compare and analyze the gathered offers to determine the best supplier for each part.
Automation can:
- Use algorithms to rank offers based on cost, delivery, quality, and other key metrics.
- Identify and highlight parts where decisions on one offer might impact other components or future production, such as when choosing one supplier affects timelines or costs elsewhere.
- Present “what-if” scenarios and possible cascading effects if certain offers are selected.
Human intervention:
Human input may be needed to resolve prioritization ambiguities (for example, choosing between faster delivery and lower cost), to account for specific business or project requirements, or to incorporate information not captured by supplier offers—such as risk assessments, supplier reputation, or the impact of a delayed part on critical builds.
Automation assists by:
Making it possible to visualize trade-offs, review how individual choices ripple through the production plan, and quickly evaluate multiple scenarios before making a final selection.
Example Scenario:
After collecting data for all 400 parts, the team must evaluate the options by comparing prices, lead times, and quality. This includes considering how delays in one component might impact the overall production schedule.
Key Question:
Would you rather let automation analyze and visualize all supplier offers and their effects, or try to manually evaluate every offer and downstream impact yourself?
Final Decision and Purchase Execution
What happens here:
- Select the optimal supplier for each part and place orders using the required method (email, portal, API, or other).
- Track order confirmations and manage communications with suppliers.
Automation can:
- Automatically generate purchase orders and transmit them to suppliers in their preferred formats.
- Track order confirmations, flag any discrepancies, and update internal records.
- Standardize and automate routine purchase approval workflows.
Human intervention:
Human input may be needed for approving exceptions, handling unique cases, ensuring compliance with special contract terms, or resolving issues that fall outside standard processes.
Automation assists by:
Highlighting anomalies, surfacing exceptions that require attention, and making routine transactions more efficient and less error-prone.
Example Scenario:
Once the best suppliers are selected, the team generates purchase orders, which need to be conveyed in ways unique to each supplier (e.g., via email, API, or hard copy). This adds administrative complexity.
Key Question:
Would you rather let automation generate and send purchase orders for each supplier in the correct format, or handle every unique order transmission manually?
The Elephant in the Room: Preferences
Automation can only act on the preferences and priorities you’ve defined in advance. But real-world requirements change. Maybe you need to rush an order for a customer demo, choose a familiar supplier for peace of mind, or approve a last-minute change based on new information.
Good automation executes known preferences and augments your decision-making when unknown or emerging preferences appear. The best systems present the options, highlight the trade-offs, and make it easy to override the process when necessary. You remain in control, with clear data to support every judgment call.
Conclusion
Automation in electronic component procurement is about reliably executing your known preferences—handling the repetitive work, normalizing data, and processing transactions according to the requirements you’ve set. When priorities shift or special circumstances arise, you still have the ability to intervene, adjust, or override the automated process as needed. This combination gives you consistency for routine work, while preserving flexibility for the exceptions that matter most.
The four questions above clarify where automation delivers value at every stage—from planning and sourcing to evaluation and purchase execution. The more routine you can automate, the more capacity you have to focus on changing requirements and true decision points.
Ready to let Cofactr handle sourcing, negotiations, storage, kitting, and delivery while your team focuses on building products? It’s free to get started with Cofactr today.
Frequently Asked Questions
What is procurement automation?
Procurement automation uses software to manage planning, sourcing, evaluation, and purchasing tasks, reducing manual effort, normalizing data, and supporting better, faster purchasing decisions.
How does procurement automation help with planning?
It automatically pulls inventory, production schedules, and requests from systems like ERPs or spreadsheets, projecting requirements, flagging shortages, and enabling clear what-if scenario analysis.
Why does manual procurement become difficult at scale?
As parts, suppliers, and timelines grow, manual processes struggle to track inventory, compare offers, and understand downstream impacts, increasing errors, delays, and decision fatigue.
Can I still override decisions when using automation?
Yes, good procurement automation executes defined preferences while allowing humans to step in, adjust priorities, and override recommendations when unexpected needs or changing conditions arise.
How does automation improve sourcing opportunities?
Automation gathers quotes from multiple suppliers in different formats, normalizes pricing and lead-time data, and presents clear comparisons for faster, more informed sourcing decisions.
What is a horizontal plan in procurement?
A horizontal plan outlines which parts are needed, in what quantities, and when, translating production requirements into specific buy actions across assemblies and timelines.
Is procurement automation only useful for large teams?
No, it benefits first-time buyers and small teams by handling repetitive tasks, reducing guesswork, and letting people focus on exceptions, priorities, and strategic decisions.
Where does human judgment still matter most?
Human input is critical when priorities conflict, risks must be weighed, supplier relationships matter, or unique situations arise that cannot be fully captured by predefined rules.
When does automation add the most value in purchasing?
Automation shines during evaluation and execution, ranking offers, visualizing trade-offs, generating purchase orders, tracking confirmations, and flagging exceptions requiring attention.
Do I need to automate everything at once?
No, teams can automate routine, high-volume tasks first, gaining efficiency and insight, while gradually expanding automation as confidence and process maturity increase.