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Your Weekly Walkaway - Are robot negotiators coming for your job?
The Weekly Walkway highlights negotiation in its ‘good’, ‘bad’ and sometimes ‘downright ugly’ forms. Newsletter Issue No. 10 (18th November 2022)
What to expect?
Quote of the Week - “I need your clothes, your boots, and your motorcycle.”
Tactic of the Week - Higher Authority
Thought of the Week - Are robot negotiators coming for your job?
Remember: You are a negotiator!
You are always managing some form of conflict, a difference in opinion or interest.
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QUOTES OF THE WEEK
“I need your clothes, your boots, and your motorcycle.”
— The Terminator, also known as a Cyberdyne Systems Model 101 or the T-80
TACTIC OF THE WEEK
Everyone has a boss, even the Terminator. And they will have higher authority limits. After making a proposal they say they will have to check with their manager. Sometimes this is true. Sometimes they are playing for time. If this happens regularly ask to speak with the decision maker so you can influence more effectively.
THOUGHT OF THE WEEK
Are robot negotiators coming for your job?
This week we read in the news: Understanding Walmart’s Automated Supplier Negotiations…
What is the story about?
It depends on how you look at it. It's either a natural extension of the process of negotiation in the 21st century or a science fiction horror show from the future taking place right now.
Buyers, especially FMCG buyers, often have too many suppliers to spend time negotiating within their category base. Their focus, rightly so, tends to be on large suppliers responsible for big brands and high sales volumes. The smaller, more niche suppliers miss out on the negotiations and the attention leading to missed opportunities on both sides.
Walmart has been trialling the use of chatbots powered by machine learning (otherwise known as Artificial Intelligence (AI)) to negotiate with the smaller, lower volume/lower value end of their supplier base, often referred to as ‘the tail end.’ The pilot originated with pre-approved suppliers of goods, not for resale, such as fleet car providers. This allowed for a boilerplate approach to be applied to the negotiations.
To cut a long story short, the pilot in Canada was successful, and further pilots are to be rolled out to different geographies, such as the US, Africa & Mexico and in different categories. Suppliers had to meet two key criteria. They had to be open to automated negotiation, and they had to be doing enough business with Walmart to merit a negotiation.
Why should we care?
How can we not care about such innovation?
In 2011, Marc Andreessen famously wrote a prescient claim that “software is eating the world.” and here we are now.
Chatbots and the promise of ‘AI’ have been thrust upon us in many different aspects of life, and traditional industries are increasingly being disrupted by technology. This is simply a natural progression along those same lines, and we ignore it at our peril.
Admittedly some AI is better than others, but at its worst, it's an incredibly frustrating system that is trying to carry out actions and processes that are well beyond its (current) capabilities, and at its best, it can fill in the gap between human interaction.
But as a supplier selling to the likes of Walmart, the automation of the negotiation process might be a blessing in disguise for you. It might actually alleviate some of the pressures and the pains that you have been dealing with the likes of Walmart or your larger customers, or it may well just become another process that is a pain that you have to deal with, things don't quite work as they should, and you find yourself on a helpdesk tech line trying to resolve an issue.
What has been promised as an incredible, efficient way of interacting with your customer is now just another process, another system that needs to be managed; does this sound familiar?
If the continued pilot rollouts are successful, you can bet your bottom dollar that they are coming to a negotiation near you soon, and it will mean something to your own development as a negotiator…
What are the benefits?
We often hear this mantra from our Wiley tech team…
‘What can be repeated can be automated.’
Walmart implicitly knows this. Having pre-agreed variables that can be negotiated and pre-agreed moves that can take place, the AI can apply a boilerplate or cookie-cutter approach to the negotiations. This, in turn, means that businesses can engage with their whole supply base. The always-there issue of cost vs value, of spending human buyer time and resources on smaller, less profitable negotiations, is now removed from the equation with all roads leading to increased profitability from most of the supply base. For example, the original Walmart pilot saw an increase in profitability of 1.5% and payment terms extended to an average of 35 days.
The benefits for the customers are being able to reach the dark, dimly lit corners of their supply base. Dealing with suppliers who often feel overlooked or indeed neglected. Rather than focusing on the top 40% of their supplier base, They can also focus on the tail-end suppliers.
What are the limitations?
The article goes on to say;
“According to the company, automated procurement requires precisely defining the boundaries of what the buyer is willing to concede in exchange for what it wants. For example, The AI Chabot needs to know the specific trade-offs the buyer is willing to give.”
As anyone who has ever had to clean up a CRM system can tell you, the old adage goes, “Crap in, crap out," is always true. It essentially means the machine is only as good as the team that programmes it. One can only assume that the AI they refer to is automatically learning and adapting with every interaction, which will only improve over time.
Although more efficient, the boilerplate, automated approach removes the human face-to-face contact that most humans prefer. The focus on a supply base of hundreds, even thousands, will always be segmented in a way that favours the larger, more profitable suppliers.
However, will this mean that with AI and automation, good conversations and questions that could lead to answers that often lead to creativity and innovation will no longer occur? This, in turn, leads to missed opportunities for both the customer and the supplier. If collaboration and, therefore, creativity cannot be achieved, will AI only be able to deal with short-term, low-volume, competitive negotiations? The size of a supplier does not dictate the level of creativity that can be achieved.
Tech cascades downwards as it becomes more affordable and more accessible. There is a time not so far in the future when suppliers (of all sizes) will be deploying bots to negotiate on their behalf. Will we be faced with truly automated negotiations? Removing human interaction and with it all the possibilities that could unfold? No one doubts the efficiencies that could be gained, but is the trade-off worth it?
What are the long-term implications?
Although still in the pilot rollout phase at Walmart, the long-term implications are clear.
More industries will embrace AI tech to carry out negotiations. Conversations with smaller suppliers are going to become automated. The benefits of increased efficiencies, savings and profit are there to be had. But at what cost?
As a human, would you prefer to deal with a customer who spoke to you (no matter how infrequently) rather than being handed over to an AI chatbot? I know the answer when it comes to dealing with a customer service bot with my bank, and there's nowhere near as much at stake.
It may lead to smaller tail-end suppliers not having face-to-face access to their customers, opportunities and growth stunted to take their business elsewhere.
And finally, as a negotiator, in a world where chatbots are negotiating for you, you should be considering how and where you sharpen your own toolbox. And the Future of Jobs Report from the world economic forum agrees.
“50% of all employees will need reskilling by 2025, as adoption of technology increases, according to the World Economic Forum's Future of Jobs Report.
Critical thinking and problem-solving top the list of skills employers believe will grow in prominence in the next five years.”
What do you think? Are you all for AI in negotiations, or is this a sci-fi horror show from the future?
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