Elevating Procurement: Autonomous Technology’s Role in Efficiency and Innovation
Data Science, machine learning, and automation technology are poised to disrupt nearly every industry over the next few decades, and the procurement space is no exception. By 2026, the procurement analytics market is predicted to grow at a compound annual growth rate (CAGR) of nearly 20%, equating to $8.36 billion in the U.S. This is largely driven by technological innovations shaking up the industry, with autonomous procurement at the helm.
In this blog, we’ll explore how autonomous procurement is reshaping procurement execution, freeing organizations to spend less time on routine tasks — and more time on high-value activities that further overall business goals.
We’ll define autonomous procurement and explain its business impact, then highlight how Arkestro’s Predictive Procurement Orchestration platform is helping organizations quickly find procurement opportunities and deliver value for the business.
What is autonomous procurement?
Autonomous procurement refers to the use of advanced technologies to streamline and optimize the procurement process. This approach leverages data science, machine learning, and automation to analyze large quantities of data and make procurement decisions with minimal human intervention.
The software works with real-time and historical data, including user preferences, past buys, supplier performance, and market trends. Systems use this data to automate routine procurement tasks and make informed decisions about sourcing, pricing, and supplier relationships.
Why is autonomous procurement important?
Procurement teams run at the highest level of efficiency with autonomous procurement. It empowers procurement professionals to focus on high-yield, valuable work, rather than on routine and menial tasks.
It can minimize the time spent determining what to buy, who to buy it from, and more. With all the time saved, procurement teams can dedicate their days to the most unpredictable and complex spend categories, leaving procurement software to handle the rest.
Ultimately, autonomous procurement enhances operations by giving organizations a better way to manage risk, build strong supplier relationships, and effectively allocate resources.
What is the business impact of autonomous procurement?
Organizations that implement autonomous procurement typically see an immediate and significant return on investment. By leveraging the latest technology to improve efficiency, organizations can increase cost savings, reduce risks in the supply chain, and enhance overall performance.
Here are some of the top ways autonomous procurement impacts businesses.
The average procurement cycle can take anywhere from one to six months, with complex procurement cycles taking six to 10 months. Autonomous procurement drastically shortens this cycle by streamlining processes, which reduces delays and bottlenecks.
By automating tasks like purchase order creation and invoice processing, it minimizes manual errors and administrative overhead. As a result, employees can dedicate more time to high-value tasks.
Arkestro customer, Westfall Technik, saw an immediate savings of 18% within 72 hours of implementing autonomous procurement. They were no longer asking for a quote but suggesting an offer to their suppliers.
Organizations that adopt autonomous procurement are able to optimize supplier selection and negotiation. This leads to better pricing and terms, reduced errors, improved accuracy, and reduced administrative costs.
For example, Dover Chemical Corporation has seen 10% savings year over year since implementing an autonomous procurement strategy. Likewise, automotive company Holman Enterprises saw 7% savings in just one day of using predictive procurement software, and Bel Brands used strategic sourcing software to achieve a 10% cost savings on its final bid.
Advanced procurement software generates actionable insights from data analytics. These insights guide procurement decisions and help identify trends, patterns, and opportunities for cost reduction and strategic sourcing.
Supplier Relationship Management
When routine tasks are automated, procurement teams can focus on building and nurturing strategic supplier relationships. This improves collaboration with suppliers and fosters innovation, better service, and long-term supplier relationships.
The average company experiences a significant supply chain disruption every 3.7 years. These disruptions typically last one to two months, equating to significant financial loss over the long term.
Autonomous procurement software helps mitigate these losses and reduce the impact of disruptions by proactively identifying supply chain risks in real time. It also helps to ensure compliance with procurement policies, regulatory standards, ethical sourcing practices, and more.
How can you leverage AI to optimize procurement?
Arkestro’s Predictive Procurement Orchestration platform empowers organizations to create better strategies — at a faster rate and across more areas of spend. Here are some of the key drivers we’re leveraging to help businesses make better buying decisions, faster and at scale.
Advances in AI Automation
AI technology that speeds up automation is changing rapidly. Recent advances in pattern recognition and machine learning allow us to improve the accuracy and increase the scope of spend that procurement teams can address. Here are a few ways we’re leveraging AI to improve business outcomes:
- Always-on monitoring quickly identifies opportunities and risks by analyzing real-time data, including supplier, commodity, and market factors.
- Game theory takes into account previous supplier behaviors and organization buying patterns to optimize future decisions to responses, while also motivating suppliers to be more competitive.
- Proactive and tailored alerts identify risks and opportunities, giving clear recommendations on next steps.
As automation capabilities increase, we’re able to enhance processes surrounding procurement, including sourcing and intake. Organizations can use Predictive Procurement Orchestration to address tasks that are often completed after an order is placed, including approvals and competitive bids.
Policy and Contract Compliance
Arkestro’s platform adheres to strict procurement policies, only buying from optimal suppliers. This diverts more spending to negotiated contracts, which increases the value those contracts provide.
Cost Savings and Operational Efficiency
Predictive Procurement Orchestration provides actionable recommendations that make an immediate impact on cost savings and operational efficiency. Our suggestions help improve buying strategies, identify supply risks, reduce friction with suppliers, and speed up negotiations.
Learn More About Autonomous Procurement
As the future unfolds, autonomous procurement will continue to redefine how organizations approach procurement, optimizing operations and strategic outcomes alike. Organizations that leverage this new technology will gain a competitive advantage by increasing efficiency, cost savings, risk management, and data-driven decision-making.
Have some extra time? Check out the 2023 Gartner® Hype Cycle™ report for Procurement and Sourcing Solutions to see where Arkestro is specifically mentioned as a Sample Vendor for autonomous procurement.
If your organization is ready to leverage the power of data science, game theory, and machine learning to improve business outcomes, get in touch with Arkestro today. We’ll share how our Predictive Procurement Orchestration platform can propel your procurement team toward better buying decisions, faster and at scale.