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Top 5 Predictive Procurement Metrics

We don’t need to go into the myriad challenges that have disrupted procurement and sourcing over the past two years. Needless to say, since the COVID-19 pandemic first began, the supply chain has been upended—although the ultimate cause of the disruption might not be what you think. Two things have become clear. The first is that organizations are more dependent than ever on procurement for their success. The second is that the old way of doing things won’t work today, and predictive procurement metrics are key to measure success. 

In an October 2021 Harvard Business Review article called “A Simpler Way to Modernize Your Supply Chain,” the authors argue that digital transformation is key to modernizing procurement for today’s conditions. However, they make the point that these transformations do not need to involve millions of dollars in spending or multi-year projects. They note that firms reap considerable benefits using the following strategy:

“… firms assemble readily available data; use advanced analytics to understand and predict customers’ and suppliers’ behavior; optimize inventory, production, and procurement decision-making to cut costs and improve responsiveness; and add some automation to revamp existing processes and introduce new ones.”

We couldn’t agree more, especially on the use of advanced analytics, prediction, and automation. In fact, these capabilities—made possible by advanced AI—are the basis for Arkestro and its focus on predictive procurement orchestration (PPO). This is an approach that we feel is the future of procurement. This post will focus on an essential part of PPO, namely the top five predictive procurement metrics.

 

 1. Procurement Cycle Time

Traditional purchasing is a log jam of manual tasks. There is a lack of transparency into sourcing pipeline progress. Comparing pricing between different suppliers under different conditions is much more complicated than it should be and takes a long time. Cycle time is an important measure and benchmark for teams, and is often a target for time-saving. 

Arkestro employs AI-powered pricing recommendations to suppliers to reduce cycle time. This platform can go even further, allowing strategic sourcing events to be calendared in advance and even run automatically. This eliminates the manual labor delay in repeated tasks. Progress is automatically tracked through each step of the process, with status reports to all stakeholders. AI and machine learning can analyze masses of data instantly, providing a comprehensive total cost of ownership analysis and supporting quicker award decisions.

 

2. Supplier Diversity

Modern procurement has shown the importance of supplier diversity. This is not just practical (a diverse supply chain is more resilient), but it also has growing importance among customers. In some cases, elements of diversity may be part of a legal requirement.

Arkestro enables your procurement team to secure RFI, RFQ, and RFP participation and reporting from a diverse supplier base. You have full visibility into which suppliers have received various diversity certifications. The platform offers a complete audit trail for every sourcing project, so your organization has full insight into the role diversity plays in the awarding and selection process. Arkestro also features scorecard capabilities, allowing procurement professionals to set weighted preferences for various diversity categories such as minority-owned or women-owned companies.  

 

3. Supplier Lead Time, Supplier Quality Rating, and Supplier Availability

Traditional procurement systems suffer from many supplier-related issues, including stale or inaccurate supplier information and outdated or inadequate supplier performance metrics. Communicating and coordinating with suppliers is a challenge and often done through multiple channels—which then makes it difficult to track. Lead time can be miscalculated or wrong, and it is crucial to track.

Arkestro offers a centralized database of suppliers, which is always up-to-date. A full range of supplier engagement and performance metrics is part of the platform so our users can pick the supplier metrics that matter most to them. In addition, the entire supplier relationship—including messaging, tasks, and file management—is integrated. This supports full transparency and easy access at every step of the process. It gives procurement teams the ability to evaluate their suppliers based on overall value and not just price.

 

4. Price Competitiveness

Price is a huge factor in cost-savings and supplier selection. There are things procurement sometimes misses when focusing on price, such as lead time, order accuracy rate, and supplier availability. There are instances where it is difficult to know what a competitive price should be, which is why Arkestro is a helpful tool to procurement and finance. Arkestro suggests a price, analyzes market price, and can be customized to include other factors. 

 

5. Procurement ROI

One thing has become obvious in the new world of procurement: it can be difficult to measure procurement’s ROI with backwards-looking KPIs and analytics. However, procurement must show its effectiveness and that the function is going above and beyond its cost. Procurement needs to be seen as a revenue center and a necessity to the finance team. Manually pulling KPI reports and searching for metrics based on old data hinder efforts to show ROI. Why not pull the data in real-time using Akrestro?

 

Arkestro is able to increase quote velocity by 10 to 15 times compared to traditional, manual processing. This speed doesn’t just offer cost savings; it provides a significant competitive advantage when going up against competing procurement teams that use traditional methods, thus providing an opportunity for procurement to show immediate ROI to C-suite.

 

Next Steps 

Now that we’ve reviewed the importance of modernizing procurement to thrive in current conditions—and the top five predictive procurement metrics—it’s time to take the next step. See Arkestro in action today to see how Predictive Procurement Orchestration will amplify the impact of procurements influence.

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Feature Announcements

Arkestro Lands $26 Million in Series A Funding

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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