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Top 3 Reasons Predictive Procurement Orchestration is the Future of Procurement

Predictive Procurement Orchestration (PPO) is the future of procurement. Why do we say that?

The goals of procurement in an organization used to be relatively simple. Ensure your company has a steady supply of what it needs to produce its end product on time and at the lowest possible price.

With the advent of globalization, things got more challenging. Companies had customers across the world but also had to compete for suppliers with organizations in other countries. Strategic sourcing was in the spotlight. Things continued to evolve.

In the aftermath of the COVID-19 pandemic, it’s clear that a new approach to procurement is the key to success and the future of the industry. That is Predictive Procurement Orchestration (PPO).

 

Ongoing Supply Chain Challenges

In a March 2022 article in The Harvard Business Review titled “Are the Risks of Global Supply Chains Starting to Outweigh the Rewards?” Harvard Business School professor Willy C. Shih tackles the wide range of supply chain challenges that procurement professionals suddenly have to account for. He writes:

“The conflict in Ukraine is only the latest jolt to global supply chains. Disruptions caused by the Covid-19 pandemic, climate-related events, and geopolitical tensions were already undermining their rationale. As companies rethink sourcing, they will have to consider new factors concerning geography and geopolitics, logistics, decarbonization and sustainability, and suppliers’ health.”

This unprecedented series of shocks to the global supply chain has exposed the weaknesses in traditional procurement approaches. It’s no longer about what components cost and which suppliers are the cheapest. As Dr. Shih explains:

“As managers navigate this dynamic, they need to think beyond product costs and supplier choices.”

The question is, how do CPOs, CFOs, and procurement teams navigate this new terrain? The knee-jerk reaction might be to move to a new procurement app. However, that is proving to be the wrong approach. Forcing the procurement team to adopt all-new software simply adds chaos to the mix. It still leaves individuals making the decisions without the adequate data and still manually doing a lot of the work. Instead, organizations need to be thinking about PPO or predictive procurement orchestration.

There’s a better option. Here are three reasons why PPO is the future of procurement.

 

1. Predictive Procurement Orchestration (PPO) Minimizes Disruption

One of the most disruptive exercises a company can undergo is to shift employees from one software application to another. Onboarding takes time, including training and deployment. Some employees are inevitably resistant to the change. There is a strong possibility that the new software won’t do everything the old system did, requiring workarounds. In a complex functional group like procurement, there are often multiple systems in use simultaneously. This increases the risk that new software will fall short.

The idea of PPO is that it is a platform that runs in the background. Procurement team members and people from other business teams continue to use the applications they are familiar with. The Predictive Procurement Orchestration platform integrates with these other systems, making full use of the data they capture. PPO being an embedded platform means the adoption rate is extremely high.

 

2. PPO Takes Advantage of Data that Procurement Already Has 

Predictive Procurement Orchestration isn’t about installing a new app or software. It’s not a user-driven process. Instead, orchestration uses the data already captured by the various apps, systems, and platforms in use by the different teams involved in the procurement process. PPO addresses data where it lives and it is results-driven.

This combination means organizations that adopt PPO enjoy the many benefits of predictive procurement without having to ditch the solutions they’ve adopted over the years. They don’t have to go through expensive and lengthy onboarding processes. They can keep doing what they’ve been doing, with the advantage of PPO running in the background steering procurement toward desired business outcomes.

 

3. Predictive Procurement Orchestration Makes Optimal Decisions 

User-driven software relies on the decisions and actions of individual users to meet goals. That leaves a wide door open for results to go sideways. All it takes is one procurement team member to pick the wrong supplier based on faulty assumptions or something as small as a typo. 

According to Patrick Reyman, Research Director, Procurement and Enterprise Applications at IDC,  in Top 10 Issues for Procurement Application Buyers

Artificial intelligence (AI) and its subset, machine learning (ML), are trending buzzwords in the application space, but what do they mean? More specifically, what is the compelling use case for a buyer? The drive for AI and ML comes from the need for applications that can drive automated intelligent and augmented processes that bring greater insights of information so better decisions can be made. This need is driven in part by staffing challenges and supply chain bottlenecks. Applications that can automate even the most common of tasks and “learn” over time to optimize performance and throughput are game changers that can provide added utility to buyers.

Leveraging AI, predictive machine learning, game theory and behavioral science, PPO uses all of the data that’s been captured by the various apps and systems it’s plugged into to make optimal decisions. It’s up to the organization to set goals and objectives, but from there PPO works automatically. It uses all the data available—including past transactions, historical data, and metadata—to predict outcomes based on advanced simulations while providing real-time visiblity.

PPO is results-driven. The issue of human behavior interfering in a decision because of a sense of personal urgency or instincts is eliminated. Rather than relying on preference, PPO makes the optimal decisions based on business goals and data. This makes it more strategic.

With the disruption we’ve been seeing in the global supply chain, staying one step ahead is critical. It’s the difference between organizations being high-performers or losing market share to peers. That’s why PPO is the future of procurement. 

 

Predictive Procurement Orchestration is the Future

You might be wondering, how does it work?

Our AI runs transaction simulations in real-time, based on the data collected by an organization’s procurement systems and software. It’s not just AI making choices based on what it “thinks” is best. Arkestro’s AI accounts for business objectives, preferences, and historical transaction data. It gets smarter with time, increasing your win rate. 

Based on the desired outcome—the business goals set by the procurement team—Arkestro is able to deliver optimal transaction versions. The procurement team can then act on those transactions, which are sent to team members through a choice of methods, including email and other channels. For repeated processes, Arkestro can even be used to automate transactions. 

To see first-hand why Arkestro is the leader in PPO and the future of procurement, book a demo today.

 


IDC, Top 10 Issues for Procurement Application Buyers, Doc # US48623621, January 2022

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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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