Don’t Leave Money on the Table: Learn How To Achieve Competitive Outcomes With Single-Source Suppliers
Today’s procurement teams are trapped in a vicious cycle. Their workloads are on the rise, yet team sizes are static. In 2024 alone, procurement workloads are expected to increase by 8%, creating a productivity gap of 6.6% and an efficiency gap of 6.4%.
On top of this, daily processes are labor-intensive, time-consuming, and error-prone. Cost savings and inflation remain a top concern for the majority of the world’s CPOs. Most procurement teams can’t get ahead of the next purchase order, meaning they can’t influence spend across the organization.
Risks and macroeconomic pressures are rising, causing further supply chain upheaval and fragmentation. Teams working with single-source suppliers can face additional challenges, holding onto the oft-misguided belief that multiple quotes are the only path to competitive outcomes.
In this complex procurement landscape, even the most seasoned professionals feel like they’re constantly falling behind. They’re trapped in reactive cycles and failing to add maximum value, lurching from one order to the next to churn through the backlog. Yet procurement teams simply can’t afford to be relegated to paper-pushing and checking the boxes in a one-size-fits-all approach.
In this blog, we’ll explain how new technology offers a welcome solution, helping teams close the workload gap and minimize money left on the table — even with single-source suppliers.
“If you have good baselines, you can get a lot done. Data is power, and if you have the data, you have the power.”
Solving Challenges With Predictive Procurement
Modern procurement challenges call for a modern solution. No, it doesn’t require replacing your existing ERP or P2P system. Instead, it’s about using that data to analyze buying history and supplier quoting patterns. It’s about giving you more competitive quotes, faster — and applying this to all areas of addressable spend, whether direct, indirect, or MRO.
There’s a reason 75% of companies say procurement data and analytics reporting tops their 2024 initiatives list. With Predictive Procurement Orchestration (PPO), procurement teams can leverage machine learning and behavioral science to make data-driven decisions, source more, and spend less. Even when working with single-source suppliers, they can gather data that acts as leverage for achieving the most competitive outcomes.
In particular, Arkestro’s platform allows teams to dramatically increase the number of live events they can run simultaneously. It empowers procurement to process quotes and negotiations with suppliers at a pace that would be impossible to achieve with people and pivot tables alone.
Thanks to our ability to provide price recommendations at the line-item level, procurement can optimize every element of spend for the first time, greatly enhancing their ability to influence outcomes and secure a market-competitive price every time. Finally, there’s no leaving money on the table.
“A vast majority of sourcing events are sent to one single supplier, and there are many good reasons for this approach.”
Are Single-Source Suppliers the Problem?
Traditional procurement theory says multiple quotes are the best (and only) way to achieve competitive outcomes. It’s easy to see why many procurement professionals still cling to this belief. After all, multiple supplier quotes help teams easily compare options to find the best fit in terms of relationship, quality, risk minimization, and more.
However, multiple supplier quotes also present a paradox of choice. Too many suppliers can be difficult and time-consuming to manage, especially when teams are short on time and resources.
In reality, multiple quotes are a means to an end. The real goal is establishing a solid baseline so teams can identify the best supplier option. But if that baseline can be established by alternative, more efficient means, multiple quotes aren’t as vital as they once seemed. In fact, a single-source supplier could be preferable, helping to save time, streamline procurement processes, and foster better supplier relationships.
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3 Best Practices for Achieving Competitive Outcomes With a Single Supplier
Arkestro research reveals that 80% of sourcing events with large companies are sent to a single supplier. Even if sourcing events are sent to multiple suppliers, the majority only get one response.
Although obtaining multiple quotes is advantageous in theory, it’s not always feasible. But, as we established earlier, if you already have a baseline, you can get the same competitive outcomes without the need for multiple quotes.
Here’s how to achieve competitive outcomes with a single supplier:
1. Establish a Baseline
In the world of procurement, data is power. Predictive procurement platforms like Arkestro allow you to harness data and leverage power without wasting time with multiple suppliers. Data and AI-driven insights help procurement teams challenge suppliers on price and achieve the most competitive outcomes, all while saving time and resources.
However, there are two caveats to consider for optimal results. First, baseline data must be geographically sensitive, especially for quotes at the plant or manufacturing site level. Second, procurement must look at granular components of the pricing, considering elements like shipping, order quantity, and more.
2. Build Systematic Processes for Challenging Single Suppliers
Some companies believe procurement teams simply aren’t motivated enough to get the most competitive outcomes. But in most cases, the reality is that they don’t have the time and resources to do so. When teams are stretched thin, they need systematic processes that make it easy to challenge single suppliers without collecting multiple quotes — such as Arkestro’s platform that leverages data. When these processes are in place, people will eagerly put them to use and start achieving better outcomes than ever before.
3. Embrace Automation
When procurement teams don’t have the time or means to collect multiple quotes, they need technology to fall back on. Arkestro does just that by automating intelligent counter-offers and freeing up procurement’s time for more strategic, value-adding tasks. Our platform leverages company data combined with market data to challenge single suppliers on price, offering incredible benefits to teams that are short on resources.
Many of today’s busiest suppliers have “quote fatigue,” and they won’t continue to engage with procurement teams if they feel they’re just being used as cannon fodder. Automated intelligent counter-offers help companies avoid this fate by focusing on getting the best possible outcomes from single suppliers, rather than wasting time courting other suppliers simply to gain leverage.
“You can achieve a competitive outcome with just one supplier by using data to challenge their offer effectively.”
Achieve Competitive Outcomes With Arkestro
At a time when procurement teams are under more pressure than ever, Arkestro offers the opportunity to transition from reactive to proactive strategies. You don’t need to spend the bulk of your day requesting quotes from multiple suppliers and scrambling to get through the backlog. Instead, you can strategically achieve better outcomes with single-source suppliers and remain competitive in a fast-paced market.
Curious to dive more into the topic of competitive outcomes with a single supplier? Join our Founder and CSO, Edmund Zagorin as he has a conversation with Spend Matters Senior Analyst, Bertrand Maltaverne on the topic.
If you’re ready to increase cost savings, run more events, and reach more addressable spend, get in touch with Arkestro today. We’ll show you how we’re helping procurement teams make their best buying decisions, faster and across all categories of spend.