AI and Procurement – Breakfast with HICX Solutions
We had an enjoyable breakfast with HICX Solutions last week, talking about AI and Procurement. Hopefully our delegates got something useful from the session, as well as enjoying the amazing views from the top of the Gherkin on a beautiful London morning.
I started by giving two views on AI. Jamie Susskind, in his new book Future Politics: Living Together in a World Transformed by Tech, says that AI and related tech will have a huge impact, as it will gather data about our lives, causing us to avoid conduct perceived as shameful, sinful, or wrong. It will filter our perception of the world, choosing what we know, shaping what we think, affecting how we feel, and guiding how we act. And it will force us to behave certain ways, like self-driving cars that refuse to drive over the speed limit.
But the more cynical view might be that there is a lot of hype around, and even the AI “procurement assistants” that respond to voice are still not very effective, based on a couple of demos I’ve seen at conferences this year! However, I have little doubt that AI is going to become critically important in the procurement world. If you can imagine AI carrying out a task, and it is just computing power / cleverness that stands in the way (as in the case of voice recognition and responsiveness), then we have to assume it will happen.
That means it will potentially impact a lot more than just the transactional elements of procurement. AI will play a role in sourcing, risk management, contract management and other areas. I have little doubt about that, and the only question really is the pace of that advance. In terms of sourcing, for example, this is what I said last week;
“Firstly, under conventional “request for proposal” or “invitation to tender” processes, AI-driven tools will suggest which suppliers should be invited to participate in the exercise. Using evidence from past events, AI will suggest and help design the process, documents and support the evaluation, which will be heavily automated. AI will check that suppliers have accreditation or certification that they need for the work in question.
But eventually, AI might just cut through all this and just tell us who we should choose as a supplier, negotiate Ts and Cs with the supplier’s AI, and propose a final contract for our signature – digital of course. It will also play into the most complex sourcing optimisation exercises, which allow suppliers to propose how they want to meet our needs – and AI will increasingly automate the comparison of options and different constraints to help us choose the best solutions”.
So why were HICX involved in the event? Their software is all about supplier information management, isn’t it – what’s that got to do with AI?
The simple answer is “data”. As Costas Xyloyiannis, founder of HICX, explained, AI can only work well if it is working from accurate, robust, meaningful data. Otherwise the Garbage In, Garbage Out rule will apply, as it always has done in computing and indeed other forms of decision making. But with AI, there will be real dangers if we delegate more decision making to AI, but it works on fundamentally flawed data.
In the procurement context, a key aspect of that data is supplier related. From the basics of avoiding the situation where spend analysis shows 17 different names for what is really just “IBM”, to detecting fraud or helping to select suppliers, having a process and tools to manage “vendor master data” is vital is we want to get the best out of AI. And that is where HICX come into the picture, with their focus on exactly that.
So, if you want to know more about AI and data, you can have a look at the recent Raconteur report “The AI Revolution in Procurement”, which HICX sponsored. It includes more content from both Costas and me, and other experts, and you can download it here. Finally, thanks again to everyone who came to the breakfast and contributed to a good discussion too.
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