Could predictive procurement orchestration be the future?

The future is here! And it’s in the form of predictive procurement orchestration. According to recent insights from predictive procurement software provider Arkestro (formerly known as Bid Ops) the increasing pressures to embed supplier selection criteria into everyday purchasing cycles is driving the need for this new market. 

While the goal for procurement used to be relatively simple - ‘ensure your company has a steady supply of what is needed to produce an end product on time and at the lowest possible cost’.

“With the advent of globalisation, things got more challenging,” said Kait Ries, Head of Content at Arkestro.

She adds: “Companies had customers across the world but also had to compete for suppliers with organisations 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).”

It is clear that ongoing supply chain challenges will continue to send shock waves throughout the industry, and it is these challenges that have brought to light the weaknesses in traditional procurement practices. 

Today, procurement is no longer about costs and savings alone, this new environment will require the function 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,” says Ries.

She adds: “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 adequate data and still manually doing a lot of the work. Instead, organisations need to be thinking about predictive procurement orchestration.”

Three reasons why predictive procurement orchestration (PPO) is the future

1. The ability to minimise disruption

“One of the most disruptive exercises a company can undergo is to shift employees from one software application to another,” explained Reis. 

Faced with onboarding, training and deployment, all of which take time, leaders also have to navigate resistants to change and the possibility that new software won’t do exactly what the old system did, resulting in the need for 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,” said Reis. 

She adds: “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. Taking advantage of procurement’s data

Instead of installing new applications or software, predictive procurement orchestration isn’t a user-driven process, instead, it harnesses the data already captured by the procurement function. “PPO addresses data where it lives and it is results-driven,” says Reis.

She adds: “This combination means organisations 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. Make optimal decisions

While user-driven software relies on the decisions and actions of individual users, leaving the door open for results to go wrong, PPO uses AI, predictive machine learning, game theory and behavioural science to make data-driven decisions. 

“It’s up to the organisation 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 visibility,” explained Reis.