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How Procurement Orchestration Drives Up to 5X More Savings

One of the most critical factors in cost savings and supply chain agility is procurement orchestration. Companies that adopt procurement orchestration can realize two to five times the amount of savings. 

So, what is procurement orchestration? 

Procurement orchestration is a game-changer that makes KPI reports actionable. Ultimately, procurement orchestration is the key to procurement teams realizing their potential to become strategic partners in their organizations. 

The pressure is always on procurement teams to deliver savings to their organizations. That requirement never goes away. More recently, events like the pandemic have exposed the global supply chain’s complexity (and risks) like never before. A Deloitte Insights report shows that, as a result, sourcing professionals have a greater potential than ever to become true strategic partners.

Many procurement teams adopt KPI reporting to meet these goals. Unfortunately, the reality is that KPI reports are time-consuming and backward-looking. It is difficult to implement change that is meaningful and ensures procurement is a strategic partner based on KPI reports that are not standardized and only look backwards. 

That is why procurement needs procurement orchestration. Here’s what you need to know about this revolutionary procurement concept.

 

What Is Procurement Orchestration? A Deep Dive

It’s a relatively new term, so let’s start by defining procurement orchestration.

Sourcing is a complex process that involves the supply chain as well as multiple internal stakeholders and individuals. Everyone has a part to play in the procurement process. The procurement team has a significant role here, but there are business stakeholders as well. The accounting department is involved. 

A classic arrangement is a procure-to-pay setup, with stages that include selecting suppliers, compliance, and invoice payment. However, with multiple stakeholders, information is often siloed. That makes coordination difficult.

Procurement orchestration actively coordinates all of the key activities across the supply chain. 

To succeed, procurement orchestration requires real-time data. That is a critical requirement and one where traditional procurement solutions are sorely lacking. 

 

Procurement Orchestration and Understanding Price

Many companies have a significant spend on MRO, logistics, packaging, indirect services, and contract labor. The procurement team can often negotiate terms with new or existing suppliers that represent substantial savings in these areas. However, they don’t always see the process through to its conclusion. They get pulled off to new priority tasks, or business stakeholders take over the purchase order. 

What price was paid for the product or service? The newly negotiated price that offers cost savings, or the price that had been paid previously? Typically, that information is only available as a historical report, after the fact. The data on these reports is likely to be aggregate, not at the line item level, making it even more challenging to analyze.

Too often, the savings that had been negotiated are not realized when it comes to payment. All the efforts of the procurement team were for nothing, and the company fails to achieve its cost-reduction goals.

 

The Power of Instant Forecasts

Procurement orchestration requires real-time data. Having access to this information unlocks the power of instant forecasts.

Instant forecasting leverages real-time quote data before it becomes a spend. Exceptions are caught before they become purchase orders. The procurement team can see details right down to the line item dollar and cent forecast of spending with a supplier. That can be compared programmatically (assuming they have the required software) against existing transactions at the time of initiation. The procurement team or the business stakeholder is then notified of an alternative, and they have the choice of whether to go ahead with the purchase order or to switch to another supplier. 

The exception isn’t caught after the fact through an audit. It’s caught at the quoting stage before a purchase order is issued. That offers huge cost savings potential.

To learn more about the importance of instant forecasts, be sure to watch this free webinar where panelists share their insights into the future of procurement forecasting.

 

Exception Engagement and Driving Value

Catching sourcing exceptions in real-time and at the line-item level also offers the advantage of engagement. Being able to pull in detailed data in real-time as the processes are running means a dashboard can be created that shows when spending moves toward or away from targets. That engages procurement teams and business stakeholders to act. No more blindly issuing purchase orders; they have the information needed to act to ensure savings targets are met.

 

Using Procurement Orchestration to Improve Purchase Orders

The power of instant forecasting is the power to translate intelligent data into intelligent behavior change. That is on full display when it comes to purchase orders.

During the quoting stage, any exceptions are flagged. That lets the procurement team decide whether to proceed. In some cases, they may even make the call to go with a more expensive quote because the firm bidding is a strategic supplier. That is another example of an opportunity for procurement to create value. With a fully open procurement system, approved suppliers can even be part of the procurement orchestration process. When these suppliers receive a notification of a big that tops theirs, they have the opportunity to match it rather than risk losing out on the business.

The bottom line is purchase orders that reflect significant cost savings and drive strategic value as well. By employing procurement orchestration, they reflect the result of intelligent behavior change.     

 

Take Action to See First-Hand How Procurement Orchestration Can Drive Up to 5X the Savings

Harvard Business Review recently published an article on procurement becoming a strategic partner in the digital age. The authors noted:

“The starting point for a healthy procurement ecosystem lies in creating a world-class data, information, and intelligence strategy that provides visibility into spending decisions, consumption patterns, performance and quality data, supply chain risks, market insights, and intelligence.”

Sourcing professionals understand how instant forecasting ability and procurement orchestration hold the key to spending visibility, big cost savings, and the ability to be a strategic partner. 

Procurement orchestration is what sets Arkestro apart from other platforms. To learn more about effective procurement orchestration, predictive procurement, and KPI dashboards, visit Arkestro for a demo of the advanced Orchestrate solution from this AI-powered Predictive Procurement Orchestration Platform.

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Rob DeSantis

Founder

As a former co-founder of Ariba running sales, Rob has deep expertise in the procurement space, having helped propel Ariba from zero to $250 million in revenue in four years and IPO of the year in 1999 before its acquisition by SAP a decade later. In addition to co-founding Ariba, Rob was also an early angel investor and board member of LinkedIn, the world’s largest professional online network.

More recently, Rob served as an investor and advisor to a small portfolio of companies including Bloom Energy, AEye, Inc., HiQ Labs, Agiloft, USEND and more. He is also a co-founder of Dibbs Technology and TrueParity. Rob holds a BSME from the University of Rhode Island.

Marty Meyer

Chief Financial Officer

A trusted partner and advisor on the executive team, Marty has a unique background having been the CFO of nine venture backed technology companies. Marty has raised over $300M in venture funding and has closed six strategic M&A transactions with a combined value of over $1B. Marty has deep domain expertise in ecommerce, consumer internet, networking, data security, data privacy, media technology and enterprise software industries. Marty is especially experienced in the finance and operations activities of SaaS companies and is driven by data and metrics to help create outstanding customer experiences and drive efficient growth.

Neil Lustig

President and Chief Operating Officer

Neil is a seasoned executive with over 30 years of experience leading and building teams in Tech. Neil brings insights from a variety of market spaces and company sizes. Most recently Neil was the CEO of GAN Integrity, an innovative SaaS Compliance technology company serving enterprise customers in North America and Europe. Before that Neil was the CEO of Sailthru, a leader in ML driven personalized multi-channel marketing communications for media and e-commerce markets. Prior to that Neil was the CEO of Vendavo, the leader in B2B price optimization and management for large enterprises. Before Vendavo, Neil led the commercial team at Ariba, the market pioneer that defined and created the eProcurement space. Neil served as the GM of Ariba Europe and subsequently the GM of Ariba North America. Neil started his career at IBM where he spent sixteen years, initially as a software developer, and then twelve years in a variety of Sales and Marketing roles

 

Neil has a BS in Computer Science and Applied Mathematics from SUNY Albany. He is a native New Yorker, Brooklyn born, and still resides with his wife and three children in New York City.

Bonnie Adams

Director of People Operations

Bonnie is a People Operations and HR veteran, with over a decade of experience establishing successful people and culture functions for early to mid-stage tech startups going through high growth phases. She has a passion for supporting and creating inclusive and collaborative work environments and is well-versed in driving positive changes in her organizations as a trusted leader. Prior to joining Arkestro Bonnie worked as the People & Culture Coordinator for Ionic Security, helping them scale from 5 to over 200 employees in addition to a $120M funding round. Most recently she was the Head of People & Culture for blockchain innovator Storj Labs and was the Director of Human Resources at PrizePicks, the largest independently owned Daily Fantasy Sports platform in North America.

Arym Diamond

Chief Revenue Officer

Arym Diamond joined Arkestro in January 2022 bringing over 20 years of experience in the enterprise software and consultancy industry.  He is responsible for the worldwide go-to-market revenue strategy. Prior to Arkestro, Arym was Chief Revenue Officer at CalAmp focused on Telematics and Logistics. He also served as the area vice president of North American Sales within the Salesforce.com Enterprise Business unit for Einstein Analytics & AI, where analytics and machine learning were re-imagined for the front office.  Prior to that, he spent over 10 years at Oracle in various sales positions. Arym holds an MBA from the University of Southern California Marshall School of Business, and an undergraduate degree from California State University.

2022 Gartner® Hype Cycle™
for Procurement and Sourcing
includes Arkestro.

2022 Gartner® Hype Cycle™ for Procurement and Sourcing includes Arkestro.

Gartner® Hype Cycle™ are registered trademarks of Gartner, Inc. and/or its affiliates in the U.S. and internationally and is used herein with permission. All rights reserved.

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