From intelligent sourcing and predictive analytics to automated contract analysis and risk mitigation, AI is enabling procurement teams to focus on strategic activities while delivering significant cost savings and improved supplier relationships.
A recent study, Procurement in the Age of Automation by MIT Sloan Management Revie, found that companies using automated procurement negotiations consistently saved money compared to those engaged in traditional person-to-person negotiations. Automated negotiations helped enhance supply chain resilience by identifying more qualified suppliers.
Additionally, automated negotiations boosted buyer productivity, enabling them to dedicate less time and effort to tasks now managed by software.
Another study by EY Canada revealed how AI-based negotiations lead to improved working capital and cost reductions. AI tools enable companies to negotiate better deals at scale by using a total value function that considers various negotiation elements beyond price, facilitating win-win outcomes.
The study reveals that the above approach demonstrated significant savings and improved supplier terms, as seen in a case study in which a major retailer used AI chatbots to achieve 1.5% savings on negotiated spend and extend payment terms by 35 days.
Emerj Senior Editor Matthew DeMello recently sat down with Jennifer Sieber, Senior Director of Center of Excellence, Gilead Sciences, Len DeCandia, Chief Procurement Officer, Johnson & Johnson, and Edmund Zagorin, Founder & Chief Strategy Officer, Arkestro, to discuss the transformation of procurement, the adoption of digital tools, specialization, and proactive strategies to enhance efficiency, manage complexity, and position procurement as a strategic business enabler.
Johnson & Johnson develops and manufactures a wide range of healthcare products, including pharmaceuticals, medical devices, and consumer health goods. Arkestro, on the other hand, is a Predictive Procurement Orchestration platform that leverages machine learning and data science to optimize procurement processes, and Gilead Sciences is an American biopharmaceutical company that specializes in researching and developing antiviral drugs for the treatment of diseases.
The following analysis examines two critical insights from their conversation:
- Transform procurement into a strategic hub: To position itself as a crucial source of business intelligence, procurement operations must embrace digital tools and specialize in critical areas like supplier management.
- Eliminate silos and redundancies to drive operational efficiency: Adopt AI-driven tools to streamline workflows, align teams, and reduce bottlenecks across procurement, supply chain, and commercial functions.
Guest: Jennifer Sieber, Senior Director of Center of Excellence, Gilead Sciences
Expertise: Supply Chain Management, Procurement, Project Management
Brief Recognition: At Gilead Sciences, Jennifer is responsible for building and implementing the Procurement digital roadmap and is accountable for the Procurement Service Desk. She has previously worked with Abbott, Nestle, Kraft Foods Global Procurement Director, Procurement Group Manager, and Deployment Team Lead, respectively. She earned her Master’s in Business Administration from Northern Illinois University.
Guest: Len DeCandia, Chief Procurement Officer, Johnson & Johnson
Expertise: Sourcing, Supply Chain Management, Manufacturing
Brief Recognition:
Guest: Edmund Zagorin, Founder & Chief Strategy Officer, Arkestro
Expertise: Entrepreneurship, Research, Artificial Intelligence
Brief Recognition: Edmund Zagorin is the Founder & Chief Strategy Officer at Arkestro. With a background in network analysis and auction theory, Edmund is a thought leader on the emerging role of AI/ML in procurement and supply chains. Prior to founding Arkestro, Edmund worked as a consultant focused on data-driven supplier negotiations for large healthcare providers, contract manufacturers, and multi-campus retail brands.
Transform Procurement into a Strategic Hub
Len opens the conversation by emphasizing the need for procurement to evolve as organizations adopt more structured digital environments. In the past, procurement professionals handled multiple roles, but with digital transformation, Len believes they must now specialize in specific areas. He lays down two critical factors for organizations to excel in the supply chain today.
- End User Support: Procurement must be seen as enabling success for the budget owner or end user. Their role should be to empower these stakeholders to achieve their goals.
- Shift from Reactive to Proactive: Procurement professionals need to transition from reactive “firefighters” to proactive “fire preventers.” The differentiation means using data insights to anticipate needs and better collaborate with internal and external partners.
In response, Jennifer highlights the growing complexity of her role at Gilead Sciences due to the increasing number of niche players and tools entering the market. These new entrants, she says, offer innovative solutions across various procurement functions, such as intake, orchestration, and autonomous sourcing, making her job both exciting and challenging.
Her key challenge is determining which tools are best suited for Gilead, balancing sustainability, budget, impact, and value to ensure the chosen solutions effectively meet the company’s long-term needs.
She emphasizes the importance of procurement fundamentals, particularly in the context of category strategy development, as her team transforms. She explains that to shift from reactive firefighting to a more proactive approach, procurement teams need a robust and well-defined category strategy, which is shaped by the broader business strategy.
She believes these alignments help procurement professionals anticipate and tackle challenges strategically rather than constantly responding to emergencies. The ability to adapt to business changes is essential. Still, the core fundamentals—like strategy development—remain consistent across industries and categories, helping procurement teams stay proactive and aligned with overall business goals.
Edmund builds on Jennifer’s point about the unchanging fundamentals in procurement but highlights how technology now allows for new possibilities. He provides an example from life sciences, where Arkestro helps teams that buy direct materials predict prices before approaching suppliers and uses game theory to secure competitive pricing.
Edmund notes that in industries like manufacturing, where switching suppliers is often tricky, buyers may feel they lack leverage:
“What’s been interesting to see is that when you go back to the basic seven-step process for strategic sourcing, there is the ability, now with artificial intelligence, to simulate alternative quotes without necessarily needing to go and collect them. So, if the original purpose of some of these processes was to get a competitive outcome, is it possible to get the result without running the full process as it was originally foreseen?
And so those are some what-if questions that we think technology can bring to the table in terms of thinking of process transformation, where now that this is possible, what does that mean for what the steps in the process should be, and which stakeholders should be involved in each of them. That is something we’re seeing in life sciences.”
–Edmund Zagorin, Chief Strategy Officer at Arkestro
Edmund observes that industries such as life sciences, food and beverage, and consumer packaged goods are rethinking how they bring products to market. AI-enabled price assessments have given suppliers the confidence to offer price guarantees they previously wouldn’t have. He also notes that industries facing volatility, like energy, are adopting resilient supply chain strategies better to handle challenges like geopolitical conflicts and extreme weather, adapting processes to be more flexible than traditional supply chains.
Len shares with Emerj that success hinges on two key factors: the quality of people within the organization and their ability to manage supplier relationships effectively. He emphasizes that while many professionals are trained in general management, they often need more skills in supplier relationship management, which is now crucial in procurement, especially for life-saving drugs. Procurement teams play a vital role in helping budget owners, researchers, and manufacturers identify suitable third-party suppliers to solve specific problems efficiently and cost-effectively.
Eliminate Silos and Redundancies to Drive Operational Efficiency
Jennifer emphasizes the critical role of procurement in removing barriers to speed and execution, especially when it comes to risk mitigation. She explains that the global procurement team’s responsibility is to streamline the buying process for goods and services, allowing supply chain and commercial teams to focus on their strategic functions. For the supply chain, risk mitigation is a top priority.
She provides a powerful example from Gilead’s business unit, which focuses on getting materials from the patient (such as cells for therapy) to its research location, developing the treatment, and then quickly returning it to the hospital. The goal is to ensure that patients receive the life-saving treatments they need as fast as possible.
Len further highlights the complexity of managing modern pharmaceutical supply chains, particularly with advanced therapies like cell therapies, where the “raw material” is the patient’s blood. He explains that pharmaceutical companies are responsible for overseeing the entire process, from collecting the patient’s blood to ensuring the treatment is customized and returned to the patient with precision. Developing such 360-views of operations involves multiple stakeholders, including the patient, physician, and payer, making the process intricate and transparent. Len stresses that technology, especially AI, is essential to manage these complexities.
As an example, he recalls his experience during the pandemic where his team was part of the race to develop a traditional vector vaccine. They had to conduct a massive global clinical trial involving 45,000 patients in a short timeframe. AI played a key role by helping them identify the best locations for trials and ensuring participation from the populations most affected by the virus. Without AI, it would have been impossible to manage the complexity and scale of such a trial.
Len underscores that AI and technology are now critical for accelerating drug development, managing supply chains, and enhancing procurement. In procurement, where resources are often limited to working only a small portion of the total spend (following the 80/20 rule), technology can broaden its influence, enabling more comprehensive spend management and support across the organization.
