Proceed with caution: CPOs and AI tools

Proceed with caution: CPOs and AI tools

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Gen AI. ChatGPT. Just AI. Machine Learning. Data…

Buzzwords that have become a critical part of procurement vocabulary, in just the last six months.

The rapid use of generative AI tools like ChatGPT has changed the game for organisations, big and small. In fact, it seems no one is exempt from this shift, as the thousands of laid-off employees at tech giants experienced earlier this year.

But, is this more than a momentary fad? Do procurement industries need to adopt these technologies? And, if so, how can they balance the risk of the unfamiliar, with that of being left behind?

Bob Booth, Finance & Supply Chain Transformation Lead at IBM UK&I, writing in CPOstrategy, discusses the should, the how and the why of CPOs and their teams using AI tools.

Why should CPOs use AI tools?
“Procurement’s digitalisation has been led by bold CPOs; Generative AI will act as a catalyst, democratising creativity, innovation and learning in procurement. This is a pivotal moment for procurement to capitalise on Generative AI, unleashing data and talent.” Lance Younger, Founder & CEO, ProcureTech

AI is designed to help make life easier for its users, saving them time to focus on more strategic initiatives by automating the mundane. Already, as it learns from itself, new models of Gen AI are being released, such as GPT-4, Google’s Bard and Microsoft’s integration with OpenAI.

Such tools enable instant information sharing, which may otherwise have taken the user hours to compile. Moreover, AI can help democratise supply market information, speed up analysis, and facilitate/control interactions between the company, its employees and suppliers.

Gen AI creates something, through the interaction, that didn’t previously exist. This can be used at scale, with the tool continuously learning and improving. In fact, integration with AI tools is already happening within small organisations in every sector, from personal assistants to educational tools.

Keep your enemies close

Although it may be in the name, it’s important to stress that AI is becoming very intelligent – and maybe too quickly. It provides a permanent anxiety amongst humans, with tech experts calling for its innovation to be slowed down as, not only does AI risk surpassing our intelligence, but it is increasingly crossing the line of information sharing: who then has access to your data?

In headline news, even the ‘Godfather’ of AI quit Google, after seeing the dangerous impact AI could have, as the line between biological and digital systems blurs.

Limitations of AI tools in procurement

One of the critical issues that Booth addresses is that of safeguarding your data. Although they’re learning quickly, AI tools are still young, and are not yet client or process-specific enough. Users need to be wary of the data and information they use, with the risk that its confidentiality may be compromised.

There is also a risk of bias when using AI: it only learns from the types of users that use them. For example, even though ChatGPT has 100mn monthly users, it does not represent the entirety of the working population.

Key Takeaways – what should CPOs be doing about AI?
  • Identify the right AI tools – where do you want to apply it in your organisation, and where is it not applicable?
  • Be wary of where you submit your data – review and negotiate T&Cs with AI companies to ensure it isn’t shared and remains confidential to you
  • Update policies for how and when such tools should be used
  • Review terms with your customers, employers, suppliers or regulators using gen AI tools, to ensure such data can be included in your AI systems
  • Know when to encourage and discourage the use of these tools

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