AI + Humans: Why Procurement Needs a New Type of Collaboration

Growing uncertainty in a disruption-prone new normal has made it imperative for businesses to anticipate potential risks and act proactively.

Replacing a traditional, reactive approach with a proactive one has necessitated a vital change in business strategy. It has also accelerated the adoption of advanced AI-powered technology solutions.

As businesses across different industries deploy artificial intelligence in one form or the other, there is another aspect that needs their attention. That they need their human workforce and machines to seamlessly work together.

While this may sound obvious, it isn’t so simple, considering the general reluctance and skepticism, at least in some parts of the workforce.

There is little doubt technology can provide accurate data analysis and insights. However, its role in decision-making and other complex tasks otherwise entrusted to humans is not immediately clear.

Some businesses are even finding it difficult to determine tasks that can be entrusted to technology.

And if tasks are performed by machines, what should be the responsibilities of human workers? Do they still need to monitor the output? Or can technology work independently?

How can the two work in tandem and achieve the desired results?

This has sparked a debate, one that can be addressed with careful analysis and some rigorous testing over a period.

How Businesses Can Address the Man Vs. AI Debate

Ever since the launch of ChatGPT and other generative AI tools, enterprises, big and small, have been exploring how to make the best use of technology.

But they have also witnessed increasing conversations and debates about the capabilities of humans and machines.

People working in different business functions have been talking about how the increasing use of technology can jeopardize their jobs. Some of their concerns are:

• Are machines better at decoding data sets?
• Can machines make informed decisions?
• Can machines shield businesses from external risks and potential disruptions in the future?

From sourcing and procurement to operations, accounts payable, finance, customer service and even marketing, this debate has extended to many domains.

How should businesses address the debate that is growing rapidly across different functions?

At the outset, they must understand specific use cases of technology and identify areas and functions that can be best performed by machines.

Automation and Access to Intelligence are the Key Benefits

Automation of routine, time-consuming manual tasks is one of the biggest use cases of technology.

Procurement organizations, for example, can leverage AI-powered technology to automate several processes including sourcing, supplier selection, contract creation and management and supplier performance management.

Automation of routine tasks not only saves time and minimizes error, but it also allows human workers to focus on core tasks that need more attention and can add more value.

Secondly, technology provides the intelligence needed to efficiently perform functions. It can bring together data from different systems, analyze it and even look at market trends to help businesses make well-informed decisions.

Such intelligence can be extremely helpful in the prevailing business environment. It can be utilized to forecast demand, anticipate customer behavior and spot bottlenecks in the supply chain.

The Need to Train Machines

The primary objective of deploying any kind of technology is to augment human capabilities. It should empower the user and give greater control to the user to efficiently perform functional responsibilities.

But to be able to do this, the technology itself needs to be first trained. It needs to learn how to perform the tasks that it is designed to do. Humans use what are called training data sets to teach machines to efficiently perform their tasks.

For example, complex neural networks and large language models were developed by initially training them on first principles — simple concepts such as predicting the next word in a string or sequence of words, says Babak Hodjat, chief technology officer for AI at Cognizant and inventor of the technology that powers Apple’s Siri. He was speaking at Innovate 2023, GEP’s annual procurement and supply chain event, recently.

According to Hodjat, simple training on first principles helped expand the capabilities of neural networks, which were then able to perform a variety of advanced functions.

There is also a direct correlation between the size of the neural network and its capabilities – the larger a neural network, the more powerful it becomes, he says.

Businesses Need Man and Machine to Work Together

The combination of human expertise and AI capabilities is set to transform almost all business functions. Smart businesses and professionals know this isn’t the time to contemplate whether AI will take away their jobs.

Instead, this is the time to explore how they can deploy AI to simplify different processes across business functions.

Technology can augment the capabilities of the human user. It can assimilate data from different systems in the network. It can analyze complex data sets and present the user with actionable insights.

The user can then look at these insights and use them to make informed decisions as well as to improve processes.

Commenting on the advantages of using AI technology in procurement and supply chain operations, Santosh Nair, vice president at GEP, says, “The user’s job becomes decision-making, making sense of the intelligence, not spending time filling out forms, not spending time chasing different data sets.”

Clearly, AI can complement human capabilities. It can empower users to quickly derive meaning from large data sets and use the intelligence to make informed decisions — decisions that are backed by data.

And this is how it can minimize errors, streamline processes and add more value to the business.