Will Artificial Intelligence impact the future of Procurement?

As we have recently entered a new year, it is time to have a look into the far-fetched future and see what Artificial Intelligence (AI) might do for procurement.

AI has a huge potential impact in the way our society works. It seems to act as an engine for many theories of what our future might look like, both for many sci-fi geeks as well as it has inspired quite a few Hollywood movies.

If we break AI down a little further, put it into a real world context and look at it from a procurement perspective, I hope I can provide some thoughts and as well as some inspirational reading:

At a very high level; AI can be broken into 3 parts:

  1. Artificial Narrow Intelligence (ANI). ETA: Now
    Sometimes referred to as Weak AI, Artificial Narrow Intelligence is AI that specializes in one area.Your smartphone is in short a little ANI warehouse, you can have one app helping you with directions, one app to recognize your favorite songs and another app with which you can have a conversation, and it can help you perform some basic functions. If any of this sounds familiar to you, then you have actually already used ANI.Potential impact on procurement: Several procurement software developers have in one way or another already incorporated ANI into their solutions. There are many examples out there and they range from advising on which sourcing strategy is best for a specific category/region, assisting buyers to select the right product/service and classifying the (limited) data on an incoming invoice.
  2. Artificial General Intelligence (AGI). ETA: 2040 (???)
    Sometimes referred to as Strong AI, or Human-Level AI, Artificial General Intelligence refers to a computer that is as smart as a human across the board—a machine that can perform any intellectual task that a human being can.Creating AGI is not a matter of just combining multiple ANI apps, since AGI would require the software to reason, plan, solve problems, think abstractly, comprehend complex ideas, learn quickly, as well as learn from experience.  True AGI would be able to do all of those things as easily as you can (but then with the speed of a future microprocessor).Potential impact on procurement: Imagine entering into any form of negotiations where the other party is assisted by an AGI which can communicate as a human being and can look up, process and perform actual reasoning on any amount of data in the blink of an eye. Not only would this speed things up during the negotiations but this would also give the other party huge advantages. The only thing I can imagine there is that you probably would want to have some AGI support on your side as well…
  3. Artificial Superintelligence (ASI). ETA: 2060 (???)
    Oxford philosopher and leading AI thinker Nick Bostrom defines superintelligence as “an intellect that is much smarter than the best human brains in practically every field, including scientific creativity, general wisdom and social skills.” Artificial Superintelligence ranges from a computer that’s just a little smarter than a human to one that’s trillions of times smarter—across the board.” ASI is also the reason why the general topic of AI is so appealing for science-fiction enthusiast and predictions on the impact go from “immortality” all the way to “extinction”.Potential impact on procurement: Would a corporation be willing to let ASI determine the strategy and run the process from demand recognition, (contract) negotiations, ordering and paying the invoice? A fair question to ask is to what level are humans ready to let computers decide on what is the best outcome for any given situation. But I have to say that your guess on this is at least as good as mine…

As of now, humans have conquered the lowest caliber of AI (ANI) in many ways, and it’s everywhere. For procurement, AI has so far mainly focused on making the job easier to perform on a transactional level and through easy access of (strategic) data. But the AI Revolution is the road from ANI, through AGI, to ASI—a road which is certain to have an impact on procurement as we know it.

Curious to read more about procurement? Check out our guide Ariba – Strategic Sourcing in a nutshell

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