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3 Reasons Why Predictive Sourcing Means You Never Leave Money On The Table

Within many organizations, the procurement team is on the front line in terms of saving money. Never leaving money on the table is always a priority, and the idea is that predictive sourcing can achieve savings by negotiating better deals with suppliers. If cost savings can be achieved painlessly, that takes the pressure off the rest of the organization

This puts considerable pressure on procurement teams, especially someone like a category manager who is working on strategy and analyzing customer data.

There are different types of sourcing that attempt to tackle the challenge, each with a different approach. However, none has been proven to consistently deliver the results that satisfy everyone. That is, until predictive sourcing.


Can Predictive Sourcing Save You Money?

Predictive sourcing is a new approach to procurement. It did not exist until recently when a convergence of factors finally made it technically possible. The advent of centralized storage of procurement data combined with artificial intelligence (AI) and machine learning (ML) has been the key to unleashing this incredibly powerful tool.

Companies that switch to predictive sourcing save money, with results that are far more dramatic than any other type of sourcing. Here are three reasons why predictive sourcing ensures you never leave money on the table when working with suppliers.


Predictive AI Uses Statistical Models

Companies have years worth of historical supplier data to draw from. So much data that it’s virtually impossible for even teams of humans to analyze with any effectiveness. However, AI and ML have the power needed to process this data at lightning speeds.

This technology can also account for real-time updates for a wide range of variables that could impact everything from pricing to availability. The critical win from this deep data analysis is what artificial intelligence can do with it. AI “learns” from the data, detects patterns, and then makes use of that knowledge.

Predictive AI employs advanced statistical modeling that benefits the procurement process in many ways. It will catch any exceptions in supplier quotes, flagging them so a buyer or a category manager can take action. It can shortlist the most relevant suppliers for a bidding event, auto-populate demand data, forecast expected line-item pricing, and even recommend quotes to suppliers (which helps to set expectations around pricing acceptance).

Predictive AI is an incredibly powerful tool but what makes it even better is the fact that the AI also learns from every event. It just keeps getting smarter. Compared to bidding events that were run entirely by humans, predictive sourcing delivers better outcomes with substantial cost savings. It finds the money the procurement team had inadvertently been leaving on the table.


Predictive Sourcing Leads to the Best Business Outcome

Predictive sourcing is built on an archive of historical purchasing and supplier data. It’s that vast quantity of centrally accessible data that makes machine learning and predictive analysis possible. It’s what makes predictive sourcing the best of breed approach.

When companies make the transition from other types of sourcing to predictive sourcing, this shift also means the adoption of unified data. Going forward, all data relevant to the procurement process, including requisitions, logistics, demand, and buyers’ quote data, is also captured in the central data repository. So is all the supplier data such as performance statistics, compliance, and diversity.

In other words, all data relevant to procurement—historical, current, stakeholder, buyer, and supplier—is available to the AI.

With machine learning and artificial intelligence analyzing this massive trove of data, predictive sourcing can detect subtle patterns or trends that humans miss. It is then able to suggest the optimal path to achieving the best business outcome. This outcome accounts for important factors like maintaining supply chain diversity, meeting the quality requirements of stakeholders, and ensuring on-time delivery. But it also delivers the cost savings the organization is looking for procurement to deliver.

 
Predictive Pricing Including Intelligent First Offers Drive Savings and Quote Velocity

Artificial intelligence and machine learning can also be employed to enable predictive pricing. This is an incredibly beneficial capability. It saves time and eliminates human error by automating repetitive compliance tasks. It can predict demand for future sourcing activities, so the procurement team is one step ahead of business stakeholders. It can even forecast the quoted pricing on a bid for every supplier.

Predictive pricing is a crucial element of predictive sourcing. For example, utilizing Arkestro can bring cost savings of two times to five times the level of less advanced types of sourcing. In addition, predictive pricing significantly cuts down the amount of time required for a bid process. It can deliver quote velocity that’s 10 to 15 times faster.


See For Yourself How Predictive Sourcing Will Save Money

You’ve read about the power of predictive sourcing. Its ability to ensure your procurement team never leaves money on the table is an eye-opener. Now it’s time to see firsthand just how dramatic the savings will be. Visit Arkestro for a demo of predictive pricing in action to see how your team can predict, procure and win!

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Rob DeSantis

Founder

As a former co-founder of Ariba running sales, Rob has deep expertise in the procurement space, having helped propel Ariba from zero to $250 million in revenue in four years and IPO of the year in 1999 before its acquisition by SAP a decade later. In addition to co-founding Ariba, Rob was also an early angel investor and board member of LinkedIn, the world’s largest professional online network.

More recently, Rob served as an investor and advisor to a small portfolio of companies including Bloom Energy, AEye, Inc., HiQ Labs, Agiloft, USEND and more. He is also a co-founder of Dibbs Technology and TrueParity. Rob holds a BSME from the University of Rhode Island.

Marty Meyer

Chief Financial Officer

A trusted partner and advisor on the executive team, Marty has a unique background having been the CFO of nine venture backed technology companies. Marty has raised over $300M in venture funding and has closed six strategic M&A transactions with a combined value of over $1B. Marty has deep domain expertise in ecommerce, consumer internet, networking, data security, data privacy, media technology and enterprise software industries. Marty is especially experienced in the finance and operations activities of SaaS companies and is driven by data and metrics to help create outstanding customer experiences and drive efficient growth.

Neil Lustig

President and Chief Operating Officer

Neil is a seasoned executive with over 30 years of experience leading and building teams in Tech. Neil brings insights from a variety of market spaces and company sizes. Most recently Neil was the CEO of GAN Integrity, an innovative SaaS Compliance technology company serving enterprise customers in North America and Europe. Before that Neil was the CEO of Sailthru, a leader in ML driven personalized multi-channel marketing communications for media and e-commerce markets. Prior to that Neil was the CEO of Vendavo, the leader in B2B price optimization and management for large enterprises. Before Vendavo, Neil led the commercial team at Ariba, the market pioneer that defined and created the eProcurement space. Neil served as the GM of Ariba Europe and subsequently the GM of Ariba North America. Neil started his career at IBM where he spent sixteen years, initially as a software developer, and then twelve years in a variety of Sales and Marketing roles

 

Neil has a BS in Computer Science and Applied Mathematics from SUNY Albany. He is a native New Yorker, Brooklyn born, and still resides with his wife and three children in New York City.

Bonnie Adams

Director of People Operations

Bonnie is a People Operations and HR veteran, with over a decade of experience establishing successful people and culture functions for early to mid-stage tech startups going through high growth phases. She has a passion for supporting and creating inclusive and collaborative work environments and is well-versed in driving positive changes in her organizations as a trusted leader. Prior to joining Arkestro Bonnie worked as the People & Culture Coordinator for Ionic Security, helping them scale from 5 to over 200 employees in addition to a $120M funding round. Most recently she was the Head of People & Culture for blockchain innovator Storj Labs and was the Director of Human Resources at PrizePicks, the largest independently owned Daily Fantasy Sports platform in North America.

Arym Diamond

Chief Revenue Officer

Arym Diamond joined Arkestro in January 2022 bringing over 20 years of experience in the enterprise software and consultancy industry.  He is responsible for the worldwide go-to-market revenue strategy. Prior to Arkestro, Arym was Chief Revenue Officer at CalAmp focused on Telematics and Logistics. He also served as the area vice president of North American Sales within the Salesforce.com Enterprise Business unit for Einstein Analytics & AI, where analytics and machine learning were re-imagined for the front office.  Prior to that, he spent over 10 years at Oracle in various sales positions. Arym holds an MBA from the University of Southern California Marshall School of Business, and an undergraduate degree from California State University.

2022 Gartner® Hype Cycle™
for Procurement and Sourcing
includes Arkestro.

2022 Gartner® Hype Cycle™ for Procurement and Sourcing includes Arkestro.

Gartner® Hype Cycle™ are registered trademarks of Gartner, Inc. and/or its affiliates in the U.S. and internationally and is used herein with permission. All rights reserved.

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