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In its 2021 survey of Chief Procurement Officers, Deloitte found a significant change. For the first time in a decade, cost reduction had dropped to second place among CPOs’ priorities. Taking first place was having procurement drive operational efficiency. Technology is the key to achieving both of these targets, and CPOs know it. That’s why digital transformation placed third in the list of priorities. All three of these CPO priorities are reflected in a key KPI: purchase price variance (PPV).

Procurement professionals rely on tools to maximize their performance. One of the most essential additions to the strategic sourcing toolkit is procurement KPIs or key performance indicators. KPIs provide the targets that the procurement team needs to hit, and they provide status indicators that make it possible to gauge whether the team’s performance is on track. After the fact, KPIs are essential to evaluating the team’s performance and can provide valuable insights to ensure the organization does better next time.

Anyone who follows the news has seen the headlines about the exodus of workers from many industries dubbed as “The Great Resignation.” In September 2021 alone, 4.4 million Americans quit their jobs — a full 3% of the total workforce. While analysts suspect that many workers simply changed jobs, US labor statistics indicate a substantial percentage of the resigners are actually retiring — 2 million more than predicted. A recent Gartner Survey showed how these trends impact procurement:

Predictive procurement is heavy on the letter “P.” However, when you start digging down into what this approach to procurement means, what’s needed to succeed, and the benefits of adopting it, you’ll find a whole lot more “P”s. Not convinced? We’ve put together a list of the five most important “P”s in predictive procurement.

At the end of September, Arkestro hosted a webinar covering the topic of predictive procurement. The focus was on how procurement technology and procurement strategy align with the digital transformation goals of many procurement teams; reducing manual work to free up time for delivering on strategic objectives around value creation and cost reduction.

Procurement and sourcing professionals who are researching advanced new procurement software often find two names that come up repeatedly: Arkestro and Fairmarkit. The two solutions aren’t necessarily in direct competition. In fact, there are even scenarios where some organizations might want to use both solutions for different aspects of their business. For example, Arkestro for sourcing and supply chain management and Fairmarkit for tail spend automation. 

Predictive procurement is no longer the future of procurement. For successful companies, it’s the “now.” By employing predictive procurement, companies can take advantage of the strategy’s unique benefits and advantages. Using this data-driven approach for sourcing, contracting, supplier management, and KPI reports is a proven advantage that will result in your business exceeding its goals and delivering faster savings.

Those that work in supply chain have all heard of predictive procurement. It’s often spoken of as the future of sourcing, with AI-powered predictive analytics delivering revolutionary change. Procurement becomes a strategic force in an organization—a far cry from its traditional reactionary role. In the 2021 report “The Race to Predictive,” KPMG analysts call predictive analytics:

When it comes to procurement, have you thought about the big picture? Too often, it’s focused on segmented demand and fails to account for overall demand. That’s why progressive organizations are making the shift to category management. 

Advances in artificial intelligence (AI), machine learning, and big data have led to breakthrough capabilities for procurement software. As the authors of Harvard Business Review’s “AI Can Help Companies Tap New Sources of Data for Analytics” point out: