Large companies such as Walmart are now using artificial intelligence “chatbot” programs to negotiate some of their vendor contracts.
Walmart, shipping company Maersk, Wesco International, and other Fortune 500 companies are clients of Pactum, a start-up focused solely on automating negotiations.
“There are a number of macroeconomic conditions that affect retailers,” said Martin Land, co-founder and CEO of Pactam. “They need new technology solutions to help them manage this increasingly complex global environment.”
“Supplier negotiation is an underutilized strategy for retailers to deal with constant disruption,” said Rand.
Pactum says it “helps global companies digitally conduct personalized, large-scale deals.”
As an example of that scale, Pactum cited in a recent news release a study that found that its intelligent chatbot could conduct contract negotiations with up to 2,000 suppliers simultaneously.
Pactum explained its partnership with Walmart in January when the Mountain View, Calif.-based company was demonstrating the service at a National Retail Federation event.
“Walmart has deployed Paktum’s autonomous negotiation technology to offer better terms to suppliers and improve savings,” said Paktum.
Paktum said it closed deals with 68% of the Walmart suppliers it approached, saving the Bentonville-based retailer an average of 3%.
So far, these vendors have only supplied Walmart with store equipment such as shopping carts and office supplies.
Walmart did not immediately respond to a request for comment about working with Paktam.
However, two Walmart employees and two University of Arkansas professors wrote an article in Harvard Business Review in November detailing Walmart’s efforts as an early adopter of Pactum’s software-driven chatbot, called Pactum AI. Posted.
Mary Lacity, Distinguished Professor of Information Systems and Director of the Blockchain Center of Excellence at the University of Arkansas, Sam, said: M. Walton College of Business is one of the authors of this article.
Lacity said on Tuesday that many early adopters of AI-powered chatbots are starting with low-risk categories such as transportation, equipment and office supplies, as well as “tail-end” suppliers. “
“Success in low-risk areas gives us the confidence to expand into other categories of spending and other areas,” said Lacity.
The other author of this article and a member of the research team is Michael DeWitt, Vice President of Strategic Sourcing at Walmart International. Travis Johnson, Senior Director of Procurement Enablement Solutions, also at Walmart International. Remko Van Hoek, Professor of Supply Chain Management at Walton College of Business.
As the researchers do more case studies, Pactum AI is common, saying that it can be used in any type of negotiation “as long as it knows what the buyer wants and can articulate the trade-offs they are willing to accept.” It has been found that it can be applied to,” she said.
An example of a trade-off, according to Lacity, is a price discount if the buyer pays the supplier faster or introduces the supplier to other sales opportunities.
The technology “applies to any negotiation between a single buyer and a single supplier,” says Lacity.
“Buyers have to be large enough to justify the cost, but so far they can try a proof-of-concept cheaply,” she said.
Finally, Lacity said Pactum AI should not be compared to the popular generative chatbot ChatGPT.
“ChatGPT produces output with unpredictable results,” says Lacity. “Pactum’s results are predictable and do not create more choices for buyers than they deem acceptable.”
The use of artificial intelligence tools has exploded in recent months following the introduction of ChatGPT, which has increased the focus on artificial intelligence tools. Policy makers are trying to pressure companies to play it safe on emerging technologies.
Vice President Kamala Harris will meet today with the CEOs of Microsoft, Alphabet and OpenAI to discuss ways to reduce the risk of harm from the development of artificial intelligence technology.
Microsoft is working to build guardrails to mitigate potential dangers from AI tools, Microsoft chief economist Michael Schwartz told Bloomberg News. The company already uses OpenAI’s ChatGPT in its Bing search product, and Google released its rival Bard chatbot in March.
Schwartz warned that policymakers should be careful not to directly regulate artificial intelligence. “It’s going to be pretty disastrous,” he said.
Despite the risks, he said AI could help humans be more productive. “We should be in better shape as humans because we can produce more with less.”
AI will revolutionize the way most companies operate, he said, adding that it will take time.
“I would say AI changes nothing in the short term and everything in the long term,” says Schwarz. “This is true of any technology that has ever appeared.”
According to a World Economic Forum report released this week, AI is expected to be the main driver of disruption in global labor markets, impacting changes in nearly a quarter of global jobs.
Information in this article was contributed by Bryce Baschuk of Bloomberg News.
