Can we negotiate with the fourth industrial revolution?

Automation and Artificial Intelligence, terms that generate both controversy and wonder, have established themselves as critical elements of our future. Not everyone is pleased by this; the looming prospect of a sci-fi world has engendered fear and reluctance throughout the workforce.

Workers in countless industries worry machines will replace them. Conventional wisdom has long suggested that low-skill laborers will feel the most impact.  After all, it’s not hard to imagine machines performing operational jobs that require little critical thinking. More recently, however, skilled workers have also begun to feel concern. The rise of AI and Machine Learning suggests that they, too, are replaceable. If a self-driving car can replace a driver, mimicking alertness, situational awareness, and good judgement - all at high speeds, it seems likely that a machine could perform a job that requires complex thinking. In fact, companies are already proving this true. Several successful trials have seen AI tackle administrative workloads in addition to other, more complex tasks. Each success adds to the cumulative case for broad adoption.

Will AI and Automation Take Over Procurement?

The natural next question is whether we can expect AI and automation to take over the procurement world. Automation already helps us with spend analysis, strategic sourcing, and operational procurement. By the looks of it, there is no stopping the expansion of its role. Humans err, and it would be a great advantage to have AIs babysit our decisions, identify missed opportunities and risks, or at least accelerate the identification of key inputs. AI can also help us customize contracts with critical needs, incentives, and penalties, while avoiding contradictions for every supplier we work with. Presumably, AI could do all this in an instant. We could also leverage AI to identify weak points and warn us of information missing from our TCO calculations or other analyses. AI could even analyze our strategies’ probability of success. Basically, the possibilities are endless. But does this mean one person with an army of machines could run procurement?

If we settle down and look beyond the hype, we will see not all is grim. Just as today’s self-driving cars crash into firetrucks, current AI technologies run into trouble with human interactions. Extreme changes like this naturally produce friction, so I don’t see people happily interacting and negotiating rates or SLAs with an emotionless bot anytime soon.

The Retained Value of the Human Element

I believe this is one of the main reasons Amazon bought Whole Foods, entering the brick and mortar world. People still want to choose, touch, and smell their veggies and fruits. Similarly, people want to deal with other people at certain jobs; until we are ready as a society to completely embrace automation and AI, we will slowly transition on these particular positions. By the time this transition occurs, AI will have grown more advanced and we will have grown more used to it. That does not mean, however, that we will see a significant rise in unemployment. Presumably, the transition will give us time to address those concerns.

Today, numerous leaders agree that our biggest issue with AI and automation will be the uncontrolled rise of unemployment and the impact this will have on families and migration. They propose solutions like taxing machines, providing moral wages to the affected, or simply protecting workers by blocking the progression and adoption of technology. If we are realistic, unemployment is an unfortunate price we have to pay as a society, one we have paid during past technological revolutions and that we measure every year as part of our economy. We will always look at ways of minimizing the impact of unemployment, but we need to have a long term vision. It is easy to overlook the benefits that accompany advances in technology. Better technology has been a major disruptor in all industries. It has upped the game worldwide. The complexity of what we are able to accomplish or produce has risen, and quality, value, and consistency have risen with it. Think of the history of mathematical operations. In the beginning, our basic tool for calculating was our fingers; we could only perform a limited number of operations. You can imagine how disruptive the first abacus, the first slide rule, or the first graphing calculator must have been. By the way, NASA used slide rules to put a man on the moon.

Embracing the Need to Evolve

Humans are creatures of habit, and I do not agree that free moral wages will solve the problem of AI. The way to help people affected by new technologies is not handing out money or shielding them from this technology, but by giving them opportunities to evolve. With time, the unemployed will find other jobs or re-educate themselves in order to survive. More education eventually leads to more social appeasement, evolved mindset, and new technological breakthroughs. Let us not forget that technology jumps also create millions of jobs. For example, before the smartphone we did not have app developers. Today, you can study the field online.

Procurement is not immune to these changes. At some point, AI will eliminate parts of many jobs, but as procurement professionals we will evolve. We will be enabled by technology to find ways of optimizing spend and saving in a more consistent manner. We will find alternatives that were previously beyond our reach and focus our efforts on efficiency and achievement. We must embrace these changes with an open and creative mind. These are tools, and we have to make them work for us, literally.

We are living in very interesting times. Technology is rapidly becoming our closest ally (if sometimes our enemy), and it is normal to fear the unknown. It is natural to think that everything is finite, but as history has proven time after time, we are resilient. We will adapt and rise: life will continue, priorities will change, we will become smarter and create better and more innovative solutions to our problems. We survived the invention of electricity, the car, and the Internet. In the same way we have to evolve and use AI and automation in creative, beneficial, and responsible ways.