The computers are taking our jobs! I say that tongue in cheek, but it’s not untrue. The speed and pace at which digital procurement and artificial intelligence is moving is unbelievable. I brought Hugo Evans onto a recent episode of Negotiations Ninja to answer some questions about digital procurement and artificial intelligence. Hugo is a brilliant man that’s very in touch with what’s going on in A.I. and digital procurement. His teachings center around how to use technological advancements to help the procurement process; use the technology instead of fear it. Other consumer-facing industries have embraced technology – now it’s procurement’s turn.
In order to put the fear A.I. and digital tools to rest, it’s important to first understand the differences in terminology. Hugo points out digital procurement is NOT A.I. Digital procurement means using analytics and technologies to solve business problems that were not solvable before.
There are two ways to use analytics. BI means looking into the past and getting an insight that can’t be changed. The information is valuable, but don’t spend too much time there. Getting stuck in the past isn’t useful. Just because you spent a lot with one supplier doesn’t mean it was the best supplier.
The other way to use analytics is to look to the future. Proactive insights can be generated, like predictive risk to generate outcome for specific commodities. Parameters can be changed to simulate scenarios and calculate optimization. Analytics is the marriage of reactive and predictive data.
The next layer of digital procurement, machine learning, is the ability of technology to use analytics and learn from them over time. It’s what makes procurement more sustainable and intelligent long term; the model should get smarter about risk for a particular commodity.
These tools make procurement and negotiating more efficient.
Procurement is currently at the stage where A.I. can be present at the negotiating table, which brings positives and negatives to the negotiating sphere. Hugo explains it’s up to us to train A.I. accordingly. Procurement has spent a long-time developing processes and techniques to avoid people gaming the system, and that needs to be preserved. However, having A.I. take over tedious and repetitive parts of the negotiation process so the procurement team can focus elsewhere is a good thing.
A.I. is coming, that’s a fact. Using it successfully is about looking at the big picture to see inefficiencies and gaps in process. I say embrace the inevitable. Critically think about the negotiating tasks you do that are mundane and how you could level up your process by focusing your time and attention elsewhere. The foresight might serve you well in the not so distant future.