What is your Procurement Strategy? Value for Finance, Procurement, and Stakeholders
If you’re involved in procurement and procurement strategy, you know Arkestro as the AI-powered, predictive procurement orchestration platform. Arkestro has earned a reputation as a leading solution that will keep its customers ahead of the market in the most challenging times.
Arkestro’s use of advanced procurement technology has made it even more valuable to organizations during the challenges of the pandemic and to provide strategy to organizations. The disruption of the global supply chain has cost companies that rely on outdated procurement strategies dearly.
However, even advanced technology like artificial intelligence can only do so much. It must be applied in a manner that delivers value. Otherwise, AI is just a marketing bullet point. That’s why it’s important that Procurement professionals designed Arkestro. We understand how the industry works and built this system to be easy to use and to deliver results.
How does Arkestro stay on top of what our customers need? After all, the past two years have taught us that change can come in the blink of an eye, and it can change priorities.
The Arkestro Advisory Council and Better Procurement Strategy
Arkestro stays ahead of the curve through consultation with our advisory council. It’s made up of CPOs, supply chain experts, and senior procurement professionals from top organizations across the globe. The Arkestro Advisory Council provides invaluable feedback on our features, benefits, and what we should work on next. Recently, the Arkestro Advisory Council participated in a session to decide on the most critical value drivers for procurement organizations. We surveyed top companies to find out their goals and strategies.
What Goals Drive Your Organization?
The goal of the advisory council meeting was to determine the key ways that procurement professionals see procurement driving strategic value in their organizations. To start the conversation, three categories of value were established: value for procurement, value for finance, and value for stakeholders.
Within each of those categories, four value drivers were identified. The meeting attendees voted on the most important value drivers within each category. The results provide valuable information on the priorities of CPOs going into 2022. This data is not only important for procurement teams; it’s critical for the Arkestro development team, the platform, and the future of predictive procurement orchestration.
Value for Procurement and CPOs
The four value drivers for the procurement department were:
- Predictable cost savings
- Predictable cost avoidance
- Improve and incentivize supplier performance
- Consolidate spend
Among the categories, predictable cost savings edged out the need to improve and incentivize supplier performance as the most important and strategic value driver within the procurement organization. However, all value drivers received votes. Each of these is of primary importance within at least one participant’s organization.
Value for Finance
This category is an interesting one, and it reflects the speed at which priorities can change. One of the value drivers for Finance was originally the reduction of third-party risk through consolidation. By the time the advisory council meeting took place, CFOs reached out to Arkestro to replace that value driver with one reflecting their growing concern about inflation.
The four value drivers for Finance were:
- Ensure the stability of supply
- Reduce maverick spend
- Getting more out of the procurement team’s hours (efficiency)
- Inflation strategy
All value drivers received at least one vote. However, the clear winner in terms of procurement’s strategic importance to Finance was to ensure the stability of supply. Inflation strategy ended up placing third in terms of votes.
Value for Stakeholders
The four value drivers for Stakeholders were:
- Getting the right items
- Increased stakeholder confidence in the process
- Reduced time in the procurement process
- Reducing the cycle time
Continuing a theme, all value drivers received votes. In fact, there was an even distribution of votes. However, one rose to the top: reduced time in the procurement process. This showed that the most important strategic value procurement can provide to its Stakeholders is to get their required item as quickly as possible. This might incorporate a reduced cycle time, but the bottom line is that for a stakeholder, how things get done is not relevant. They want results and as quickly as possible.
The Bottom Line on Value and Procurement Strategy
The message from the latest Arkestro Advisory Council session was clear: CPOs only talking about hard cost savings are stuck in the past.
As we look to the challenges of 2022, CPOs have many potential concerns. They must deliver value through predictable cost savings, reduce the time required for the procurement process, and ensure supply chain stability and resiliency for their company. However, the meeting showed there is tremendous diversity in the value CPOs can deliver to their organizations. Depending on the industry and the company, the big wins may be something outside of the top three.
That diversity shows the importance of flexibility in designing procurement software. A one-size-fits-all approach doesn’t work. Having an underlying framework that takes all of the requirements into consideration and supports optimization based on organizational needs is critical.
Interested in learning more? To learn more about how Arkestro will help your organization meet the many challenges of 2022 through AI-powered predictive procurement, book your free demo today. To join a future Advisory Council Meeting check out the Arkestro Events page for updates.
Hear more about how Arkestro has helped clients during the Optimal ’22 predictive procurement in action case studies.
How Using Human Behavior Science and Game Theory Benefits Procurement
Arkestro users have the advantage of a predictive negotiation process based on behavioral modeling and game theory.
A vast range of variables is considered, including supplier reputation, historical raw material prices, competition, and product budget. In a short time, Arkestro’s embedded platform performs a comprehensive analysis for quick award decisions and can then recommend a price.
Not only does this cut costs, but the speed of Arkestro’s embedded platform also offers a significant competitive advantage by beating others to the market.
In addition to the advanced abilities of predictive procurement, Arkestro delivers a wide range of critical features:
- Real-time collaboration
- Advanced supplier management and evaluation tools
- Evident transparency throughout the procurement process
- Easy integration with other commonly used software
Arkestro: Elevating Chemical Manufacturing Procurement
Procurement technology is changing the decision-making landscape of chemical producers.
Predictive Procurement Orchestration represents the leading edge of the new wave of digital procurement. It influences all addressable spend and leverages a unique approach to predictive pricing.
Arkestro pulls in your company’s internal data, including purchase orders, supplier master, category data, and contract data. It also pulls external data, including supplier information, ESG, and diversity datasets, and then cleanses and validates the data.
Arkestro does this using three broad motions: Simulate, Send, Select.
- Simulate: Arkestro simulates a sourcing or purchasing event to predict prices and terms.
- Send: Akrestro emails a recommended offer to the supplier(s) for review, revision, and acceptance.
- Select: Arkestro recommends holistic awards and approvals using many possible scenarios. Awards reflect an organization’s intent and are based on KPIs and the unique purchasing and pricing history of the line items involved. Arkestro’s award recommendations can be tweaked or manually overridden, so the procurement team is always in the driver’s seat.
Procurement teams end up with tangible business results:
- Quicker and more impactful supplier engagement
- Greater amount of spend actively influenced using predictive models
- Increased cost savings and/or cost avoidance across more spend
- Better and faster quality decision-making across the organization
- Incorporation of supplier ESG, diversity, and risk metrics into spend decisions
To learn more about how Arkestro can elevate chemical manufacturing procurement to a new level, see Arkestro’s predictive purchasing in action.