In the previous issue of ChainMail, I reported on Pactum AI’s development of an automated negotiating tool — a supply chain chatbot that strikes purchasing agreements with human suppliers. Walmart has been an early user to negotiate purchases of things like carts and bakery equipment.
For the May 16 column, I interviewed Frank LaPlante, a Pactum consultant, and Adnan Dawood, Pactum’s head of marketing and communications. Here are more highlights from my interview:
MICHAEL: How close are we to broad usage of chatbots to negotiate with vendors?
FRANK LAPLANTE: I’m viewing this as a very specific use in the industrial space that solves a problem where there’s no current solution. It’s early in the process right now. Once you explain it to a COO or CEO, they get it. The risk is negligible. I mean I’ve not seen a risk to this because it’s a completely self-contained loop. No data is being shared.
MICHAEL: Walmart started using Pactum technology to negotiate for non-retail goods like shopping carts because, I assume, it was a little too risky to be messing around with things shoppers would purchase. Are we still in the experimental stage?
FRANK: If I’m making a recommendation, this would all be internal operations based. This is a way to very quickly optimize your supply chain and increase profitability and effectiveness. We did have a current client CEO, once they heard this, immediately jumped to “Hey, can we do this with customers?” I’m not saying you can’t at some point down the road.
MICHAEL: So eventually companies could use automation to buy customer-facing products, like McDonald’s purchasing hamburger buns?
FRANK: The sky is the limit. What I’m saying with my executive contacts is, “Just start here, prove this thing out, see if it works.” Get over the very conservative slow-moving mentality in B2B industrial distribution and manufacturing. Then based on that, what I’ve started to see is the executive clients say, “You know what? We could probably use this for all of our procurement for toilet paper and vending machines.” There’s no limit to the technology. The limit would be how far are people willing to take this from an automated negotiations perspective. And I’m not here to say what that is.
MICHAEL: This is sort of a dumb question but I can’t help myself. Can you get to a point where there’s a chatbot on both sides of a deal — robot to robot negotiations?
ADNAN DAWOOD: This is one of the most commonly asked press questions. Yes, there is a future sometime that’s going to happen. Maersk had a customer who was a trucking company. They came up with that question. The trucking company said, “This is great for bulk rate negotiations. Why should I wait to answer it? Can I just have a bot like Pactum on my side to just say yes or no based on the parameters I can enter?” So, why not? It’s something technically that’s possible. I don’t think companies are ready for it yet.
MICHAEL: Is there still a lot of skepticism about AI in supply chain circles? Are most of the concerns practical?
FRANK: Among C-levels who are running multi-billion-dollar companies, the overwhelming feedback is still skepticism. “I hear what you’re saying, philosophically and intellectually. I understand what you’re saying, I don’t believe you.” And then you do a small batch as a sample and it’s, “I’ll be darned.” The B2B market is usually pretty far behind the consumer space as far as technology. So it’s just more of a, “I’ll be darned, this thing is amazing.”
(Interview edited for space and clarity.)
Read the complete Issue 35 of ChainMail here.
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