AI-Powered Discussions: Unraveling Capabilities for Users
Artificial Intelligence in Negotiations: Talking Bots and More
In today's fast-paced world, AI-driven tools, like ChatGPT, are becoming commonplace, even lending a hand in our negotiations. From making reservations to writing essays, these virtual companions are not afraid to take on new roles, including negotiations. Let's delve into the recent applications of AI in negotiating, with a focus on chatbot negotiations and negotiation advisers.
AI in Procurement Negotiations
Time-strapped procurement officers frequently lack the opportunity to negotiate individually with every eligible supplier. As highlighted by University of Arkansas professor Remko Van Hoek and his colleagues in the Harvard Business Review, this can lead to missed opportunities for both parties.
Take, for example, Walmart's challenge of managing agreements with over 100,000 suppliers. About 20% of these deals are boilerplate agreements, leaving untapped value on the table due to the high cost of hiring more human negotiators. Enter chatbot negotiations. In early 2021, Walmart (International) conducted a pilot program in Canada, partnering with Pactum to roll out a chatbot in discussions with 89 suppliers. The aim was to improve payment schedules with concessions on Walmart's standard right-to-terminate clause. Additionally, the chatbot was authorized to offer growth opportunities to suppliers in exchange for price discounts.
In this pilot, the chatbot successfully closed deals with 64% of the suppliers within an average of 11 days for an average cost savings of 1.5% to Walmart. Impressed by the results, Walmart expanded chatbot negotiations to the United States, Chile, and South Africa. As of late 2022, the bot had closed deals with 68% of suppliers with an average savings of 3%. Most suppliers spoke favorably about the chatbot negotiations, cherishing the chance to negotiate at their own pace.
For organizations considering chatbot negotiations in procurement, it's essential to focus on both technical aspects and business objectives, as Walmart did. Concerns over AI replacing human negotiators are relatively unfounded, as Marten Rand, Pactum's CEO, notes: "Instead of replacing human employees, we are eliminating the mundane, low-input aspects of a procurement executive's job, freeing up time for strategic negotiations." However, it's important to be aware that chatbot negotiations can create harm if the algorithm is fed inaccurate information and might engage in questionable or even illegal behavior.
Chatbots as Negotiation Coaches
Beyond negotiating on our behalf, chatbots can also serve as negotiation advisers, as demonstrated by Haas School of Business senior lecturer Holly Schroth in California Management Review. Chatbot platforms, such as ChatGPT, can provide useful advice for salary negotiations, focusing on best practices like research, preparation, professionalism, and clear communication.
The chatbot offered actionable advice when asked specific, individual questions, regardless of whether expert or layperson terms were used. However, when it came to providing advice on specific salary ranges for jobs in particular fields, the information was limited and generally wide-ranging.
If you choose to use chatbots as negotiation advisers, Schroth suggests asking clear, specific questions and seeking clarifications when given general responses.
Your thoughts on chatbot negotiations?
When it comes to AI and negotiation, the possibilities are vast, from chatbot negotiations to advice on salary requests. As these technologies continue to evolve, it's essential to remain vigilant regarding ethical considerations such as transparency, bias, privacy, and accountability.
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Ethical Considerations:
When implementing AI in negotiations, it's crucial to prioritize transparency, ensure that systems are free from bias, protect sensitive data, and establish clear accountability structures. Failure to address these concerns could lead to trust issues, potential discrimination, and privacy breaches.
- As increasingly sophisticated chatbots like ChatGPT take on negotiation roles, it's pivotal for businesses to prioritize both technical aspects and strategic objectives when implementing AI in procurement negotiations.
- In the realm of personal negotiations, AI-powered chatbots can also serve as negotiation coaches, providing useful advice on best practices, research, and professional communication for salary negotiations.
- As AI continues to transform the landscape of negotiations, it's essential to address ethical concerns such as transparency, bias, privacy, and accountability to prevent trust issues, discrimination, and potential privacy breaches.
