The Three Ps of Predictive Procurement
Predictive procurement is no longer the future of procurement. For successful companies, it’s the “now.” By employing predictive procurement, companies can take advantage of the strategy’s unique benefits and advantages. Using this data-driven approach for sourcing, contracting, supplier management, and KPI reports is a proven advantage that will result in your business exceeding its goals and delivering faster savings.
This exciting approach to procurement also enables companies to act on market changes before they happen. We’ve seen how important this ability is with recent events like the global shortage of semiconductors that has crippled many auto manufacturers.
The Three Ps of Predictive Procurement: Predict, Prioritize, and Produce
It helps to break predictive procurement down into its key components. We like to think of these as the three Ps: predict, prioritize, and produce. Let’s examine what each means in this context.
Predict amounts to the ability of the procurement team to manage projects in a pipeline so that they exceed targets.
Prioritize means focusing on key performance indicators (KPIs) to measure the success of a project in real-time.
Produce is probably the most obvious of the three. Procurement teams that produce business results.
The Problems With Continued Reliance on Spreadsheets and Email
Can a company adopt predictive procurement—delivering on the three Ps—while using their existing systems? This is the stumbling block for many sourcing teams. The problem is that the systems currently in use, typically amount to spreadsheets and email, and they simply will not cut it.
For one thing, spreadsheets and email are largely manual, relying on human data entry and interpretation. This makes using them inefficient and time-consuming. That’s a problem, given that its impact on bottom-line revenue makes procurement time among the most valuable for any company. The manual operation also introduces subjective opinions and interpretations, outright errors, and additional delays in communication and collaboration that can delay a decision.
To get some idea of the problems that spreadsheets can introduce into a system, consider IBM’s report “The risks of using spreadsheets for statistical analysis.” IBM researchers determined that 88% of all spreadsheets contain at least one error. At least one. And these errors cascade in a spreadsheet, amplifying their effect. The paper lists a series of examples of how simple spreadsheet errors had catastrophic consequences, including the 2012 Summer Olympics in London selling 10,000 tickets to non-existent seats. The report concludes:
“Spreadsheet results can be unreliable when working with large datasets and/or performing complex calculations. If absolute accuracy is required, a spreadsheet may not suffice. Instead, a different, more reliably accurate tool should be considered.”
Let’s look at another example. An August 2021 article published by The Conversation looked at the issues with using Excel in genetic research. Obviously, genetic research has little direct connection to procurement, but the problem discovered is completely applicable. The authors surveyed over 10,000 Excel spreadsheets and found that in over 30% of them, the spreadsheet’s auto-correct feature had “mangled” at least one gene name. The same thing can happen with product names, supplier names, or other information specific to procurement.
When it comes to email, the challenges run the gamut from typos to multiple email addresses, key identifying data not showing up in subject lines, and fraudulent procurement-themed emails that are serious security risks. These challenges mean more errors are introduced, and more time is required.
The takeaway? Relying on spreadsheets and email makes it difficult to maximize procurement professionals’ time and limits their ability to deliver great results to their business. Using outdated tools makes predictive procurement all but impossible.
The Solution: Arkestro
The solution for those organizations looking to adopt predictive procurement is Arkestro. AI-powered and data-driven, Arkestro offers instant forecasts, KPI reports, flexible workflow, and supplier collaboration that provides valuable insights in real-time. Arkestro AI allows users to predict and win faster procurement outcomes.
Worried about complexity, onboarding, and cost? Arkestro can get your team live in under an hour and pays for itself in under 90 days.
Real-Life Arkestro Success Stories
Arkestro is being used by a wide range of companies that have embraced predictive procurement. Some of them have agreed to share their experience.
For example, UBC Biopharma has been using Arkestro for predictive purchase requests. Using Arkestro they took the entire supplier communication process out of email chains, creating a secure audit trail for business requirements and keeping stakeholders and suppliers engaged throughout the process. They saved nearly 14% on their final award outcome while increasing operational efficiency.
Holman Enterprises, an international automotive distribution and manufacturing company, transformed equipment purchasing with an immediate 7% savings in one day while consolidating spend from 40 to 5 suppliers.
Book Your Demo Today
To take advantage of the many wins of predictive procurement, you can’t rely on spreadsheets and email. Arkestro satisfies the three Ps of predictive procurement, making it a preferred solution for sourcing, contracting, supplier management, and KPI reporting. And Arkestro does so with best-in-class service. Book your Arkestro demo today to see first-hand how predictive sourcing drives faster savings.