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Walmart’s suppliers would rather negotiate with AI than a human

WHY THIS MATTERS IN BRIEF

Walmart has been using AI to negotiate some supplier contracts, and it’s saved money and suppliers love it. But will they love it when it becomes an expert, tough, negotiator?

 

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Never mind using Artificial Intelligence (AI) to write books or create content – Walmart is finding it helpful for landing a good bargain. The retailer tells Bloomberg that it’s using a chatbot from Pactum AI to automatically negotiate some supplier deals. The technology is not only saving an average of three percent on contracts, but preferable to the vendors. Three out of four suppliers prefer haggling with the AI over a human, Walmart says.

 

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Pactum’s system just asks Walmart to set its budget and requirements, such as discounts and payment terms. It compares a supplier’s demands with trends, commodity values and competitors’ costs. After that, the AI can strike a deal within a matter of days, rather than the weeks or months of conventional talks. Walmart first piloted the tool in Canada, but has since expanded its use to the US, Chile and South Africa.

The AI is currently negotiating only for shopping carts and other store essentials, rather than the products you find on the shelves. It’s also not completely replacing humans. At present, Pactum’s tech is mainly being used for savings in contracts that aren’t necessarily worth much time. The bot still has to negotiate with a real person, so completely automated discussions aren’t any option in the near future. This is more to lighten the load of busy procurement teams than to avoid hiring.

 

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That might not reassure people worried about their jobs. The reliance on AI comes right as many companies are conducting mass layoffs to endure a rough economy. Chatbots like this can help Walmart and others minimize the effects of job cuts and hiring freezes. Moreover, Walmart has spent years experimenting with robots that could reduce the need for staff. Humans aren’t going away any time soon, but the company isn’t depending on them as much as in the past and that’s going to create its own new worries and opportunities.

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