The use of predictive procurement technology may make life easier sooner rather than later, as a software company kicks the can on significant investment to grow artificial intelligence.
The market for procurement analytics technologies is due to explode to US $8 billion by 2026.
This begs the question, will predictive technologies in procurement also make certain functions redundant, creating leaner and more powerful procurement teams?
Introducing Arkestro. This week Tech Crunch reported the company announced a USD $26 million Series A investment to help keep growing its platform which uses automation and intelligence to find the best prices automatically.
Traditionally, many companies still use email and spreadsheets or legacy tools to find the best price and come to an agreement with the supplier, as Tech Crunch reports.
But with supply chain pressures, finding the best price – and fast – is increasing in demand.
However, evidence suggests just 6% of enterprises surveyed have modernized their operating models for purchasing B2B services.
Arkestro leverages machine learning and “predictive procurement orchestration,” says CEO Edmund Zagorin.
“We use machine learning, game theory and behavioural science to simulate a procurement process before it begins. We suggest pricing and commercial terms to all of the parties involved. And then we help companies reach very fast agreements with their suppliers,” he told Tech Crunch.
He said it ticks boxes with all parties.
“Suppliers get faster purchase orders. Procurement gets faster savings, and the business ultimately gets the parts and services they need to please their customers,” he said.
The software is referred to as a “self-negotiating system”, removing much of the legwork to find the best price and appropriate supplier.
How predictive procurement works
Arkestro works with a network of global suppliers to help find the best and maintain services and supply levels.
“Predictive procurement orchestration is really about finding the right balance. So it’s not about getting too few or too many suppliers. It’s about understanding what meaningful optionality is. And so the opposite of low-intent purchasing is high-intent purchasing, and we describe that as having meaningful choices in your supplier network, and having the data to understand the business costs and benefits of each choice, and then being able to select the optimal choice of those that are available to you for each part, and really for each purchase order,” Edmund told Tech Crunch.
So is more predictive technology on the way? Economists suggest yes.
The procurement analytics market is predicted to increase from USD $2.6 billion in 2021 to USD 8.0 billion by 2026, at a Compound Annual Growth Rate (CAGR) of 25.3% during the forecast period.
Various factors such as increasing spending on marketing and advertising activities by enterprises, changing landscape of customer intelligence to drive the market, and proliferation of customer channels are expected to drive the growth.
Procurement analytics are used to apply predictive analytics on historical data sets of the organisations. These are known to provide predictions for the future and key decision making for procurement.
Arkestro’s funding exercise was led by led by NEA, Construct, Koch Disruptive Technologies (KDT) and Four More Capital, with input from Cervin, Correlation, El Cap, Forum, Illuminate and Tenacity.
The company, born as BidOps, launched in 2017, currently has around 50 employees, and is based in Atlanta.