Fairmarkit raises $11 million to automate procurement with machine learning
Tail spend — the purchases enterprises make outside their large, ongoing expenses — is a tricky business. While direct spend is usually well managed, that’s rarely true of indirect spend, despite the fact that an estimated 40% of U.S. businesses devote 40% of procurement to it. In fact, a recent survey from Deloitte found that 65% of companies have limited or no visibility beyond tier 1 suppliers.
That’s where Boston, Massachusetts-based Fairmarkit comes in. The startup, which offers a suite of tools for optimizing enterprise tail spend end to end, today announced that it has secured $11 million in a round led by Insight Partners, with participation from undisclosed seed partners. Cofounder and CEO Kevin Frechette said the fresh capital will bolster development of Fairmarkit’s products, with an advisory board of executives hailing from Blue Cross Blue Shield of KC and others.
The news comes as Fairmarkit reaches a number of milestones on the procurement front. The two-year-old company says its platform has awarded $180 million to vendors to date and has processed over 300,000 supplier bids and more than 25,000 request for proposals and quotations. Currently, Fairmarkit counts among its client base big-name brands like ServiceNow, Univision, PCI, and Zebra, as well as the Massachusetts Bay Transportation Authority and agribusiness giant the Andersons.
“We’re thrilled to welcome Thomas Krane and the whole Insight team to the Fairmarkit family,” said Frechette, a former Dell EMC account executive who cofounded Fairmarkit in 2017 with Tarek Alaruri and Viktar Kushch. “Insight shares our vision of driving automation across the historically manual procurement industry. Although we’ve gained traction with dozens of Fortune 500 customers, our new partnership will dramatically accelerate the permeation of AI-powered technologies into procurement processes.”
Fairmarkit’s eponymous cloud-based platform taps machine learning and AI to automate monotonous and repetitive procurement tasks. It handles communication with vendors and automatically minimizes the volume of purchase orders created by bundling requisitions, as well as spotlighting vendors that aren’t providing competitive prices or responding to requests to optimize the overall vendor pool. Fairmarkit also audits spend performance to ensure it’s in alignment with departmental and strategic objectives, and it connects directly to existing enterprise resource planning and procure-to-pay internal systems from Oracle, Workday, and others, along with an ecosystem of over 300,000 suppliers, including Wesco, Fastenal, Tools Unlimited, Radwell, CDW, MSC, and Shi.
On the vendor side of the equation, Fairmarkit invites suppliers to relevant opportunities as soon as they’re posted — based on bid history and catalog data. Additionally, it shows the status of all bids within a collated dashboard while analyzing sales across every partner.
“ServiceNow’s Fairmarkit implementation enables a streamlined procurement process through automation,” said ServiceNow director of spend management Joe Frederick. “With their AI-powered technology, our procurement department has been able to better focus on strategic initiatives, and we have realized significant cost savings on non-strategic purchases. We’re excited to continue our partnership to expand that seamless user experience throughout the procurement process.”
Fairmarkit claims that the average customer saves 30-40% on purchases while yielding requisition savings amounting to about $2,000. It also says its tools have collectively saved buyers $28 million to date, with 90% of requests receiving a below-benchmark bid within four hours. Results like those have kept it a step ahead of competitors in the soon-to-be-$8-billion procurement software segment, according to Insight Partners VP Thomas Krane.
“We found Fairmarkit’s tail spend management platform to be well-situated to disrupt manual procurement processes and help businesses save time, energy, and money,” said Krane. “We look forward to working closely with the Fairmarkit leadership team as they scale the company and accelerate the adoption of the platform across a wide segment of enterprise customers.”