A Guide to Predictive Procurement & Autonomous Sourcing

Procurement teams today often find themselves caught in reactive cycles instead of forward-thinking strategically. Perpetually under-resourced and overwhelmed, one of the best ways procurement can break the cycle is by applying digitalization to tasks like sourcing through orchestration, automation, and AI.

Adopting these new technologies is unsurprisingly a top priority for leadership. A recent Economist Impact survey found that accelerating digitalization is the highest procurement priority over the next 12-18 months, with AI adoption cited as a top priority for 44% of respondents. However, while excitement about new technologies abounds, the reality is that many procurement executives remain reticent about procurement’s ability to achieve the outcomes that such technology promises.

For example, only 32% of executives say they’re highly confident in procurement’s ability to automate, and just 16% are highly confident in procurement’s ability to manage spend. Compare this with Gartner’s estimate that 40% of sourcing events will be executed by non-procurement staff by 2027, and you’ve got a conundrum on your hands.

A better understanding of how procurement technology works can quell these fears and help procurement leadership understand how platforms like Arkestro enable their teams to manage more spend, automate sourcing, and even scale both.

This article breaks down autonomous sourcing and predictive procurement, providing a few examples of both in action to ensure your team is confident in your tech stack when it comes to procurement.

Defining Autonomous Sourcing and Predictive Procurement

In a market where demands often outpace capacity, autonomous sourcing is a solution that refers to the use of AI and automation to make the procurement process more efficient across the entire source-to-pay process. By automating tasks such as vendor selection, cost optimization, and risk management, autonomous sourcing enables procurement professionals to spend less time on manual tasks and more time on strategic work.

Autonomous sourcing makes it possible for companies to leverage historical and market data  to improve their negotiation strategies, which in turn optimizes their supplier base and drives better outcomes faster, at scale. By boosting efficiency in this way, procurement teams can save money, turn around contracts quicker, and impact more spend.

Predictive Procurement leverages demand signals (e.g. requisition queues, historical purchase orders/invoices/receipts, commodity indices) to proactively anticipate, coordinate, and automate procurement’s seemingly never ending to-do list of tactical tasks. Predictive Procurement solutions free up time – and thereby enable procurement teams to address the “bottle problem” that plagues the industry today. 

Needless to say, synchronization between different procurement functions improves operational efficiency and workflows. Procurement orchestration is a solution more and more teams are adopting due to the obvious benefits — a unified experience is faster, less expensive to run, and more agile to changing conditions.

Leveraging Predictive Procurement for Business Success

The time to adopt predictive procurement and autonomous sourcing tools is now. With a clear leadership imperative to adopt emerging technology across the procurement landscape, there is a massive opportunity for teams to shift historical legacy systems into ones prepared — orchestrated, even — for the future. Especially in an environment where outside factors impact procurement regularly (supply chain issues, geopolitical tensions, and inflation), having trusted tools embedded in procurement teams is key for success. It’s the difference between becoming a key influencer in the organizational value chain and maintaining the status quo.

Benefits of autonomous sourcing and Predictive Procurement include:

• Better decision-making: With real-time and historical data behind your procurement decisions, you’ll achieve better outcomes than before.
• Enhanced flexibility and efficiency: By scaling sourcing activities, you can address more spend while at the same time reducing bottlenecks and clunky workflows.
• Cost savings: Reducing the number of manual tasks represents a huge amount of cost savings over time, but you can also save more per sourcing event by improving negotiation strategies with suppliers.

Arkestro’s Differentiators

Arkestro’s platform leverages orchestration and autonomous sourcing in a few unique ways:

• Data-driven, automatic negotiations: By automatically suggesting offers to suppliers ahead of securing quotes, we steer negotiations based on a high-fidelity blend of supplier demand and historical and previous buying behavior.
• Line-item level granularity AND scale: With our ability to provide input at the line-item level, you can get your arms around every nut and bolt of spend for the first time, greatly elevating procurement’s ability to influence outcomes, secure a market-competitive price every time, and stop leaving money on the table.
• Dynamic feedback: Through autonomous dynamic feedback, we nudge suppliers throughout the process to give them a sense of how they are doing in the negotiation — and crucially, what they need to do to win.

Learn more about Arkestro’s platform to see how autonomous sourcing and predictive procurement can transform your procurement team today.