How AI Will Improve Procurement Decision Making

Hey Procurement Legend, this is a post where I hope you can leave a comment and share your thoughts about decision-making, AI, and Procurement.

For anyone on the free plan for World of Procurement, this is for our Paid Community Members. Membership is £60s, or you can break that down into monthly payments of £5.99 (price increase to £6.99 in January 2024).

Our Paid Articles and Discussions are deep dives into topics that can enable you to get knowledge to be in the 1% of all procurement pros.

These tips and insights can be used, applied to your role, into your decisions, and help you earn more.

Oh, and you can probably expense this as part of your education budget in your salaried role.

Check it out; you won’t regret it, my friends.

I’m always looking for ideas to share with you, and I got a whole bunch from Dustin Moskovitz, Co-Founder of Asana and Facebook, on the Tim Ferriss Podcast.

PS. He was Mark Zuckerberg’s roommate at Harvard…not Eduardo, who sued Mark for diluting his shares.

Anyway, Dustin had some incredible insights about the world of work and how AI can improve what we do.

As he was going over his views on this my mind was racing about the upcoming impacts of AI for Procurement Teams.

My simple truth is that I don’t think Procurement Tech companies are getting this right now. Their AI solutions are there to deceive largely, with only a few seriously contributing to the space.

And I believe we will see a new wave of AI-First Procurement Tech companies that look nothing like the existing procurement tech offerings. These will look nothing like the Procurement Tech offerings on show, but we’re a few years away from seeing the rise of a new wave of procurement tech like this.

This article started off differently. It was going to look at 6-7 ways AI could assist Procurement teams.

But I wanted to focus in on decision making.

Naval Ravikan states:

“Yes. Decision-making is everything. In fact, someone who makes decisions right 80 percent of the time instead of 70 percent of the time will be valued and compensated in the market hundreds of times more”.

Seriously, if you’ve not read The Almanack of Naval Ravikant, then do so - it’s a life-changing book.

As AI infiltrates more of our lives, we will increasingly be compensated in procurement, and every other role, for our ability to make better decisions. AI could significantly help here.

Here are the improvements you could expect and some of my thoughts that haven’t yet matured. Yet, the beauty of this substack is that I can share my fledgling thoughts with you. I hope you can share yours with me, even if they are embryonic or way beyond my own. It’s in the comments and in the conversations we have together that the real magic happens.

AI can help avoid the "paradox of choice" by making decisions even when uncertain.

Decision-making is exhausting.

I’ve done some extremes with this, such as simplifying my wardrobe to have similar/same t-shirts despite it meaning I’m wearing the same type of clothes daily. I like it, and it was something that used to stress me out.

This is why Essentialism could play out more in the next decade.

“Essentialism is not about how to get more things done; it’s about how to get the right things done. It doesn’t mean just doing less for the sake of less either. It is about making the wisest possible investment of your time and energy in order to operate at your highest point of contribution by doing only what is essential”. - Essentialism, Greg McKeown. (Another life-changing book).

When you start making decisions about everything, you use up some of your decision-making battery.

This idea reminded me of this passage from the book “Children of Dune”, all about the “Mentat”, which are humans programmed to be computers as there is a deep distrust of AI in the world of Dune, and it is prohibited. Actually, owning an AI device would mean instant death as a punishment…anyway, I don’t think we’re going down that route, but let’s avoid that rabbit hole in this piece.

Letting decisions linger can be energy-draining, and AI can assist in making quicker, more informed choices, ensuring that the perfect doesn't become the enemy of the good.

I’ve been in meeting after meeting for weeks with little progress because the same points kept circulating, with the senior people arguing over unimportant details. Or they were scared to make a mistake and chose not to make a decision.

AI will be able to analyse all data, such as:

And more, based on what it is seeing, decide for you.

I’m not saying this should replace your decision-making ability.

I’m not saying you should follow it unthinkingly.

But this will aid our ability to make decisions.

If you need to make the same kinds of decisions frequently, automating that can be good. Regardless of the value, the decision would make if the automation can make the same level of decision. However, we’re not quite there, but this is the state I think we’ll get to.

One where every high-volume decision will be automated, utilising AI based on the data that it receives from the list above. We could always call this a hybrid decision-making model because the information comes from us.

Low Volume Low-Value Decision-Making:

High Volume Low-Value Decision-Making (these are tasks that could be rule-based, based on policy, or can be quickly made based on market information):

Low Volume High-Value Decision-Making (I see this as those real big hitters):

High Volume High-Value Decision-Making:

I’m not 100% sure about the allocations here, but this is where my thoughts are at present.

Imagine if there was one solution out there that could help to automate all of this, even if it meant leaning on other solutions. That would be powerful.