Opportunities for an Ethical Procurement Model: An AI Perspective
Ask ChatGPT about the benefits of AI, it immediately responds: “Artificial Intelligence (AI) offers a wide range of benefits across various industries, improving efficiency, decision-making, and innovation”. Whilst this represents the common consensus and motivation for businesses seeking to leverage the now widespread power of AI, the ethical benefits can be overlooked.
We are extremely fortunate to work with some fantastic companies who deliver immeasurable impact within their respective industries. See our case study with Suppeco for an example of this, We’ve pulled together three areas where AI can positively impact supply chain and procurement.
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Supplier Relationship Management
Our team have just partnered with Suppeco (a SaaS provider of their supplier relationship management platform) to develop an AI concept as part of their R&D program: link here. We applied AI in combination with the Suppeco platform to draw out insights and on-demand answers to queries around the strength of a company’s relationships with its suppliers.
AI in this context moves supplier relationship management from being contract and number orientated to being partner-led; fostering balanced collaboration and a joint approach to problem-solving.
Suppeco’s platform focuses on the health of the relationship with a supplier; and the AI tool we developed together, can be leveraged to give even greater transparency into this key metric. An ethical relationship is a happy by-product of that by promoting a collaborative partnership rather than adversarial supplier/client dynamic
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Environmental Impact Reduction
Efficiency is at the core of any conversation about the benefits of AI. And that same improvement in efficiency can be leveraged in the context of supply chain and procurement to have a significant environmental impact.
One notable company in this space is Unilever whose “AI-powered customer connectivity model for collaborative planning, forecasting and replenishment is capable of running more than 13 billion computations per day”: link. This greater ability to plan, forecast and replenish stocks just-in-time reduces wasted fuel consumption and cuts carbon emissions.
Furthermore, AI can be applied in the context of route planning to have significant environmental impacts. UPS has developed an AI powered system called ORION which is estimated to have saved them over 10 million gallons of fuel per year and over 100 million miles: link.
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Sustainability and Ethical Sourcing
AI can also play a role in the initial and ongoing assessment of suppliers and sourcing. IBM do this via their Supply Chain Intelligence Suite (their case study can be found here), along with Blockchain and IOT technologies to ensure full traceability and transparency starting from the foundation of ethical sourcing.
Since AI can be applied to collate and summarise large and disparate sources of data, supplier adherence to a company’s sustainability practices can also be assessed using AI tools and drawing on data such as financial reports, news articles, customer review sites and so on. AI can be used to supplement accreditations such as B Corp by comparing a company’s persona with the actual raw evidence of their actions; helping procurement and supply chain leaders to collaborate with suppliers whose actions back up their words.
What comes next?
All of the above examples have the same thing in common which is so important for the successful use of AI: a focused and clear use case. Too often AI is spoken about in general terms, but the most impactful benefits come from a clearly articulated scope and objective from the start.
We look forward to more projects such as the one with Suppeco where we get to combine our passion for using technology to affect positive impact with our desire to innovate. AI technologies are a fantastic enabler of those two aims, and the examples above make ChatGPT’s omission, in its answer to our question, of the potential ethical impact of AI, appear overly humble.
