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How to Create High-Intent Purchasing in Procurement

One of the under-appreciated challenges facing procurement today is low-intent purchasing. It’s not something that immediately sets off alarms because it’s not necessarily obvious, and it’s something that tends to build up over time. Low-intent purchasing is a factor that muddies the waters when trying to make the procurement process as efficient and cost-effective as possible.

As a result, even if companies do everything else right, they leave millions or even billions of dollars on the table. The only way to address the problems it causes is to make the switch to high-intent purchasing in procurement.

Before unpacking the benefits of high-intent purchasing in procurement and how organizations get there, it’s essential to understand the terms.

 

What is Low-Intent Purchasing in Procurement? 

Purchase intent is the overall probability that someone will buy a product or service; low-intent means buyers are less likely to purchase. Low-intent purchasing in procurement is a problematic state common in many organizations. Classic signs of low-intent purchasing include the number of new suppliers constantly on the rise, an increase in purchase orders per supplier, and an increase in purchase price variance caused by having too many suppliers. 

Another sign is the number of suppliers involved with similar transaction clusters increases, resulting in spend fragmentation. Adding another degree of complexity to the procurement equation, many companies leverage their procurement teams’ expertise to manage other transactions. This includes tail spend and strategic transactions that had been under the umbrella of other departments.

Having too many suppliers results in inefficiencies, poor supplier relationships, bloated spend, and a host of other issues. A procurement organization caught in the low-intent purchasing trap can be doing everything else right, but the numbers are against them.

 

What is High-Intent Purchasing in Procurement?

High-intent purchasing means procurement and sourcing teams are likely to buy products and services from suppliers they’ve vetted through extensive RFx processes. Sourcing teams should be working toward the model of high-intent purchasing in procurement. Assessing for high-intent means determining the best supplier for a particular transaction. Doing so reduces the time required for the procurement cycle, results in higher satisfaction among both business stakeholders and suppliers, and makes it possible for procurement teams to deliver significant cost savings.

 

Procurement’s Problem in Creating High-Intent Purchasing

On the surface, the solution to low-intent purchasing sounds simple: adopt high-intent purchasing in procurement. However, the devil is in the details. In many cases, knowing which suppliers are the best—and not necessarily the lowest price—for any particular solution is anecdotal, qualitative, and left to personal preference. 

Even in the most organized company, the sheer amount of data to assess to determine the best supplier makes it a task that’s doomed to failure. Before a high-level analysis is complete for a given transaction, deadlines loom, and there may even be additional suppliers added to the mix.

 

How to Create High-Intent Purchasing

How do you create high-intent purchasing when the deck is stacked against you, and the problem is getting bigger by the day? 

The answer is in a concept introduced in 2004 by author and journalist James Surowiecki. In his book “The Wisdom of Crowds,” Surowiecki theorized that decisions made by aggregating the data generated by groups were better than those made by individuals.

Following the wisdom of crowds model, the key to creating high-intent purchasing in procurement is to leverage the organization’s data related to past transactions to choose the “best” suppliers that should be asked to bid on a transaction. In other words, you look for clusters.

For example, does one supplier frequently show up as a winner on purchase orders for a particular product or service? If so, they should be weighted more highly in the decision-making process. Does a specific member of the procurement team have a proven track record for picking suppliers that meet delivery and pricing targets? That may be because they know the suppliers well, understand requirements, and know exactly what to ask for. 

You have undoubtedly spotted the problem here. The data analysis required to use the wisdom of crowds methodology effectively is prohibitive. It’s difficult enough to do this after the fact but in real-time? In addition, companies are also under pressure to adopt predictive procurement. All of this data combined with tight timelines, inflation, and supply chain disruptions is a recipe for analysis paralysis. 

Fortunately, there is a way to effectively create high-intent purchasing in procurement while also supporting the tight timelines of the sourcing process: Predictive Procurement Orchestration.

 

Using Predictive Procurement Orchestration to Create High-Intent Purchasing 

PPO employs two advanced technologies that are changing the game for procurement AI and machine learning provide the ultra-high performance needed to analyze all of the data related to historical and ongoing procurement transactions in real-time. In addition, this advanced technology can determine the effectiveness of individuals within the procurement team and can weigh their decisions more highly in the data model. It leverages the greatest insights of a procurement team’s smartest people.

The result is that when it comes time to put a purchase order out for bid, Arkestro can automatically narrow the field down to the ideal suppliers and the target payment price. The organization has now effectively shifted from low-intent to high-intent purchasing procurement and has done so while also enjoying the benefits of predictive procurement.

To learn more about how we can open the door to both predictive procurement and high-intent purchasing in procurement, book a demo today.

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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.

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