With a global supply chain and disruptive events like a worldwide pandemic in the mix, it’s become clear that technology itself must advance. Organizations and supply chains were put under extreme duress by COVID-19, and it illustrated that future-proofing is needed across the world’s supply chain.
Artificial intelligence used for predictive sourcing is proving to be the factor that provides organizations with a winning competitive advantage.
Arkestro is a Predictive Procurement Orchestration Platform powered by AI that allows customers to predict pricing, improve negotiation cycle time, and gain better visibility into exceptions in supplier quotes. To show just how effective it is, here are three short use cases that show how real-life customers successfully leveraged Arkestro’s AI in procurement.
BASF: Multinational Chemical Company and the Largest Chemical Producer in the world Executes Multi-Vendor Negotiation to Achieve Savings
BASF, the largest chemical producer in the world, required industrial fasteners. Besides a deadline to acquire the necessary components and the need to do so within a target budget, there was an additional complication to this negotiation. There were 1,000 line items as part of the order, and there was uncertainty around which suppliers would offer a quote and which of the line items each would be bid on.
It was a multi-vendor negotiation, which made it difficult to determine the competitiveness of each quote.
However, BASF partnered with Arkestro. Arkestro’s AI generates a unique anchor price for each of those 1,000 line items, then, analyzes each suppliers’ submitted quote. The predictive sourcing software reports on the bid process’ likely outcome from start to finish in real-time, including notifying BASF’s procurement team when a vendor’s quote shows a negotiation opportunity.
With AI involved, the process of live supplier quotes took only 60 minutes.
The majority of suppliers accepted the anchor price that Arkestro AI had generated, then accepted coaching from the AI to make their bid more competitive (each had a maximum of five bids). As a result of using Arkestro, the sourcing team from BASF was able to achieve $590,000 in savings on a $3.6 million contract.
The magnitude of savings was significant enough for the senior management to recognize the procurement team’s impact on revenue.
UCB: Global Pharma Firm Leverages AI to Drive Savings and Shorten Cycle Time
UCB Pharma is a global pharmaceutical company that was using a legacy system for procurement. The limitations to this system included its complexity, which made onboarding difficult. There was no support for collaboration. Suppliers struggled to submit bids through the system, and stakeholders often resorted to using e-mail as their primary means of communication.
Time is critical in the pharmaceutical industry, where products are saving lives. Unfortunately, due to the challenges and obstacles presented by the legacy sourcing solution, the procurement team was viewed as a bottleneck instead of being a value-added partner within the business.
The introduction of Arkestro meant a user-friendly strategic sourcing platform that encouraged collaboration. It streamlined the process. Intelligent first offers allowed UCB to complete sourcing events far faster with the ability to reach best-value award decisions rapidly. Arkestro has the capability to forecast every suppliers’ quoted pricing to get customers better quotes faster.
Using Arkestro saved both time and money.
The sourcing manager at UCB, Claudie Hayes, praised the digital transformation that Arkestro delivered:
“Arkestro is a very solid and robust solution that has the promise to deliver something we could only dream about a couple of years ago. It’s great because you can just let the AI do the job and provide you with the end result.”
From using Arkestro, that end result was a 13.68% savings on the bid reward and measurable improvements throughout the sourcing process. The rest of UCB now sees the procurement team as a strategic partner. The boost in productivity from Arkestro also frees up the function to focus more on strategic projects, allowing the team to have a larger overall impact on the organization.
Dover Chemical Manufacturing: Excels Despite Sourcing Remotely During COVID-19
Dover Chemical Manufacturing is a leading chemical manufacturer with two primary goals that drove the decision to adopt Arkestro for the sourcing team.
The first goal was to improve efficiency of procurement.
The company’s existing procurement solution was a mash-up of legacy and off-the-shelf software. This involved a maintenance system integrated with an ERP system, with sourcing events done manually by sending Excel spreadsheets. Procurement was a costly and time-consuming process.
The second goal was to enable sourcing to continue effectively while staff worked remotely because of the COVID-19 pandemic.
Dover chose to trial Arkestro in a test run for an annual contract of valve hardware.
Since Arkestro is a cloud-based system, it’s ideal for distributed workforces and also saves money compared to purchasing software. It’s built from the ground up specifically for procurement and promises two to five times savings in sourcing events from predictive sourcing technology. The remote accessibility, ease of use, and support for collaboration also made Arkestro an excellent choice for inviting suppliers to participate in the trial run.
The annual contract of valve hardware traditionally took multiple weeks, but the final duration each year was unpredictable due to all the manual processes involved. Arkestro reduced it to a four-day, planned bidding process, and automated much of the process, including generating the accurate recommending pricing to suppliers to reduce the negotiation period.
It automatically notified participating suppliers of the next steps, freeing up procurement staff from having to micro-manage the process. Ultimately, Arkestro’s use resulted in a contract that was negotiated for 21% less than the previous years’ while fully supporting participants who were working remotely.
The cost savings and the fast turnaround elevated the procurement team’s strategic importance within Dover. They are now deploying Arkestro across additional spend categories.
Your Next Step
Each of these success stories provides a high-level view of how Arkestro allows companies to be even more competitive and achieve more sourcing success. Visit arkestro.com and get a demo to see how leveraging AI in procurement will take your sourcing process to the next level.