There is much talk of Artificial Intelligence (AI) becoming a game-changer over the next decade, with a number of recent CPO surveys ranking it among the top 3 priorities for the function. Some of the benefits are purported to include:

• Supplier identification / selection through automated reasoning and machine learning

• Category-based supplier rebalancing

• Predictive analytics on pricing and margin to support negotiations

• Automated supplier management and performance reporting

• Risk management analytics; augmented by supplier intelligence

All of which are geared to support and speed up our decision making process, in the pursuit of becoming a more agile and better informed business function.

But, what if your ‘gut’ was telling you something else? Maybe not something entirely contrary to the AI-driven data, but something that could nonetheless take you down a different path of exploration. Perhaps the ‘bot’ has a blind-spot in its algorithm, the same way that any individual can have multiple blind-spots. Or, there is something unique about the circumstances.

What if it’s the human in the room you’re engaging with, the person that under a unique set of circumstances may react in an unconventional or innovative way when challenged. Or simply, experience tells you things will play out differently.

Intuition

There’s a great article on the World Economic Forum’s webpage, written by Dr. Travis Bradberry (author of Emotional Intelligence: 2.0) that talks about the things intuitive people do differently. The article explains…

“Intuition comes from the primitive brain…it’s an artefact of the early days of man when the brain’s ability to detect hidden dangers ensured our survival. These days, we use this capability so little that we don’t know how to listen to it properly. Whether you listen to it or not, your intuition is healthy and functioning.”

It also goes on to talk about following your inner voice…

“One of the primary reasons that some people are more intuitive than others is that they actually listen to their gut feeling instead of dismissing it or doubting it…that doesn’t mean that they ignore their analytical mind and their critical thinking skills; there’s a difference between using reason as a system of checks and balances and using it to talk yourself out of what your intuition knows to be true.”

…and empathic accuracy…

“They [also] practice empathic accuracy…it’s not magic; it’s an intuitive awareness of what other people are thinking and feeling, using cues such as body language and tone of voice. It’s an extremely powerful form of empathy that helps foster deep connections with other people.”

If we think of this in the context of just a few elements of the procurement process (stakeholder engagement, supplier management and negotiations), we can see how intuition is key, and can lead to genuinely different outcomes.

Stakeholder Engagement

I read an article the other day where the author claimed there was an ability for a comprehensive category strategy to be built through the collation of responses, from what seemed like an infinite number of checklist questions…and that over time this could become automated.

But, how does that build something meaningful and help connect with the business? How does that tease out the potential uneasiness some stakeholders may emit (those cues Dr. Bradberry refers to) if you properly sat down and engaged with them, which in turn could be understood and harnessed to shape a collective approach? Rather than ‘extracting’ an automated (and assumed) set of requirements.

Supplier Management

There’s no doubt that KPIs and supplier management frameworks have a purpose in actively managing suppliers and in time much of this may well become automated. In fact, in some regulated industries the absence of such frameworks would be operationally prohibitive, but what if your intuition (based on experience and dialogue with the supplier) suggested there was some underlying issue that wasn’t coming through in the automatically generated red-tinged performance data.

Sometimes the best solutions to problems and understanding the nub of the issue can come from side-stepping the data for a moment and engaging in open and constructive discussions. Maybe there is a reason your business is not the ‘customer of choice’ and isn’t currently benefiting from the laser-focused attention of your supplier.

Negotiations

If predictive analytics can help inform your understanding of a supplier’s pricing and margin, then great, understand it and use it in negotiation planning. As an advocate of detailed and time-consuming negotiation planning, I would happily take this additional insight and consider it in the overall approach.

However, even if the analysis is solid in foundation, negotiations are influenced by many more dynamic factors than pricing and margin alone. Intuition can be key in guiding the discussion and reading the various signals; knowing when to push forward and when to sit back and listen.

Be well-informed and well-versed for sure, but don’t ignore that intuition churning in your stomach which was generated from the new piece of information that just came to light, which may not have been easily computed in the predictive analytics.

Harnessing AI

So, time will ultimately tell, how and where AI will have a part to play in the procurement process. For many, other than the largest and most advanced organisations, it may only be a distant dot on the horizon anyway.

Perhaps AI will become complementary in nature; assisting in and speeding up the decision making process. Maybe even the data or signals it produces could become the leading indicator that validates what your sub-conscious intuition was already telling you.

If the advancements of AI are to be believed though, then there may come a time when machine learning develops at such a pace that the automated outputs are produced before our gut has even formed an opinion, and as a consequence our gut becomes biased by it…

Paul Male – Director

PROCured Solutions

www.procuredsolutions.co.uk