Procurement Technology – The New Boys in Town: Artificial Intelligence, Intelligence Augmentation and Internet of Things
When anyone uses the term “Artificial intelligence”, a dramatic image of David from “A.I.” shedding a tear or Sonny from “I, Robot” fighting Will Smith for its own survival or even Jarvis, the friendly “Iron Man” assistant comes to mind. These may be movies but they do embody a genuine fear we humans have of machines having feelings, taking decisions (and acting on them) or even worse… taking our jobs! All this may seem a little farfetched, but there are several different definitions of Artificial Intelligence and some of them do incorporate what I am talking about.
Recently Facebook was trying to develop AI chatbots and experimented by making them negotiate and trade basic commodities like balls, hats and books, mimicking human trading and bartering. These chatbots (Alice and Bob), began to develop a language of their own to communicate, and Facebook decided to shut them down immediately! Well…mostly because humans can’t talk AI…mostly.
How does all this talk affect businesses in general and procurement specifically? The answer lies in Intelligence Augmentation, AI’s “human friendly” cousin. The difference lies in the fact that when IA finds a better option or a solution to a problem or figures out a pattern, it would then ask the “Human” which direction he or she wants to go in. Whereas an AI would rectify to make optimal and most efficient changes. At least to what its calculations show is most efficient.
Now every good manager needs a great executive. For IA, the perfect match lies in “Internet of Things”. IOT is a simple concept brought to life by the internet. With all physical machines, systems and processes connected and communicating on a real-time basis with themselves and the user, there are large amounts of data gathered and synthesized constantly. It is a known fact that big data analytics are very useful. Businesses can now synthesize a gazillion data points and find insights that can help them make better, more calculated business decisions.
To demonstrate how this might help procurement let me take the simplest example of procurement in our lives. Imagine this. It has been a long week at work and the groceries list you had prepared to buy on Monday is now longer than ever. Your spouse is out of town. On Friday, your team completes a major project and everyone decides to head out for a team dinner. Suddenly you get a message from your fridge letting you know that your fruits and vegetables are no longer in a healthy state and you would have nothing to eat at home for next morning. It then provides you a list of basic accoutrements that you will need and the best rates available for it. It also shows you by what time would they be delivered to your doorstep next day. So, you select everything you need and check the price. Then your fridge asks you one final time “Are you sure you want me to make payment for the following items?”
Are you going to click OK?