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Why Predictive Procurement in Health and Pharma is the Future

Harvard Business Review has a number of articles that provide an excellent primer on the background of procurement in the health and pharma industries and the extraordinary challenges they have faced during the COVID-19 pandemic. The researchers who have authored these articles point to the need for procurement to play a leading role in addressing the challenges. Ultimately, many of the findings explain the importance of predictive procurement, a strategy that will be critical to the future of health and pharma.

 

Done Right, Going Digital Enables Procurement to Be Strategic to the Business

Let’s start with a quote that is broader in nature. It’s not specific to the healthcare and pharmaceutical industries. It’s also not specific to the pandemic. However, it makes the point that digital acceleration should be a key goal for procurement teams across a wide range of industries. From April 2021’s “A New Paradigm For Procurement”:

“As enterprises increasingly depend on an expanding and evolving supplier ecosystem, better optimization of strategic planning and procurement is paramount. Critical suppliers are deeply integrated with day-to-day operations, and it is the successful management of these suppliers that delivers a competitive advantage leading to greater business impact. At the same time, digital acceleration and the need for agility have expanded the role of procurement and finance from cost-management functions to broader champions of risk management, strategic decision making, and business agility.”

 

The Pandemic Exposed Flaws in Traditional Approaches to Procurement

We all remember the early days of the pandemic and shortages in critical medical supplies. Procurement and sourcing teams worked tirelessly to find solutions to disrupted supply chains. It was clear JIT models needed to be updated and alternative suppliers were needed.

In the June 2020 Harvard Business Review article, “Why Investing in Procurement Makes Organizations More Resilient,” the pandemic’s impact on global supply chains is directly addressed.

“For decades, we’ve placed efficiency at the center of strategy: We’ve run operations as close to full capacity as we can. We’ve ordered from suppliers in ways that are tightly aligned with our production schedules. We’ve worked hard to minimize costs, ‘sweating assets hard’ under the guidance of the CFO, and we’ve delivered financial returns on a quarterly basis. In many ways, this is a system that has worked remarkably well. But as the COVID-19 pandemic has made painfully clear, it has a major flaw: It doesn’t help firms develop resilience.”

Organizations began to question traditional procurement metrics like cost savings and instead look at other measures like resilience, agility, risk mitigation, and supplier relationships. Being able to see disruptions before they begin has become crucial to high-performing teams. Predictive procurement is the priority of CPOs, CFOs, and the future.

 

Why Predictive Procurement in Health and Pharma is the Future

While the pandemic and its resulting supply chain disruption impacted all industries, pharma and healthcare were under extreme pressure to quickly address shortages.

Healthcare has been treating the millions of people suffering from COVID-19 infections. The pharma industry was required to ramp up the production and distribution of vaccines and medical supplies as quickly as possible.

In the case of these two industries, lives were literally at stake. Any failure at the procurement level wasn’t just an issue of profitability. Failure resulted in highly visible shortages, public scrutiny, and loss of life. The stakes couldn’t be higher.

 

Predictive Procurement Orchestration is Proving to be a Game-Changer

Organizations that adopt predictive procurement don’t need to get rid of their existing procurement software and move everything onto new systems. It’s unnecessary, so why add to the chaos by adding new software deployment, data conversion, and training?

The idea behind predictive procurement is that advanced technology (think machine learning and artificial intelligence) is used to analyze the massive amounts of current and historical procurement data now available. This is data on the scale that human analysis isn’t practical. Now it’s not only possible; it is incredibly accurate and can happen in real-time.

The adoption of predictive procurement addresses the issues referenced in the first half of this blog that the Harvard Business Review articles brought up. By adopting this strategy, procurement teams build supply chain resilience and agility. The “predictive” element—made possible by AI analyzing a dizzying array of variables in real-time—allows health and pharma companies to act in advance of rising prices and product shortages. Through orchestration, a predictive procurement platform like Arkestro is able to influence or steer decisions in the right direction. 

Predictive procurement is the key to health and pharma procurement teams avoiding supply chain disruption, championing risk management, and playing a critical strategic role in their organization. All while still maximizing cost savings.

 

Take the Next Step

Arkestro is the leading predictive procurement orchestration platform. Book your demo today to learn how Arkestro will help your procurement team predict and win faster cost savings while becoming a more important strategic partner.

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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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