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How AI and HI are accelerating procurement intelligence together

Even the most advanced AI capabilities are no replacement for Human Intelligence. We explore how procurement teams can find the perfect balance of AI and HI.

Ever since the concept of Artificial Intelligence (AI) entered our collective consciousness, it’s carried connotations of replacing or surpassing Human Intelligence (HI). The broad narrative around it has been bittersweet – one that promises a faster, more proactive, better-informed future, at the cost of human jobs and decision-making.

Fortunately, the reality we’re seeing today is quite different. While AI capabilities have grown to perform certain tasks very well, in most contexts, the idea of the ‘fully autonomous machine’ that goes from data ingestion to decision-making without any human input hasn’t come to fruition.

Instead, in most business settings, AI has found its place as an augmenter of HI. It accelerates insight delivery, handles the processing of vast quantities of data, and gives human teams the time they need to focus on the tasks they do best. It’s a partnership, where both sides help get more from one another.

But, like any other partnership, the key to success when applying AI and HI in functions like procurement is striking the right balance between them. Different teams will benefit from different levels of augmentation, and there’s no ‘one size fits all’ approach to applying AI and empowering human teams.

Finding the right balance for you

AI and HI are two very different things, each bringing different qualities and capabilities to the table. While AI is far better at processing massive volumes of data and extracting raw insights from them than humans, humans are much better at contextualising those insights and asking the right questions of AI and digital tools.

It’s that mutual benefit that makes them so powerful when properly balanced and applied alongside each other. But, with so many variables to consider across procurement teams, it’s also what makes finding the right balance so tricky.

Invest too heavily into advanced AI capabilities, and you risk overwhelming human teams and creating so much noise that it becomes difficult to identify the insights that are worth acting on. Similarly, if you underinvest in those capabilities, they might not deliver the depth of insight or speed of delivery that human teams need.

When striking that balance, it’s important to consider the full spectrum of what AI really is. In practice, it’s not just the core data processing and analysis capabilities that turn raw information into insights. It’s all the digital capabilities that surround human teams and support the process of putting the right insights into the right hands at the right time.

As a result, when trying to find the right balance for your team, you must consider a broad range of factors, including:

  • How the team wants to consume insights – what are their preferred delivery methods and channels?
  • The level of comfort working with data and insights across the team – what’s your level of analysis expertise?
  • The size of your team and scope of their operations – would you benefit more from having additional expert human resources in your team, rather than just additional insights?
  • What you need to monitor and analyse – do you really need sophisticated AI capabilities to stay ahead of your key categories and commodity markets?

The Smart Cube’s AI+HI approach

At The Smart Cube, this AI+HI approach forms the foundation of our procurement solutions. Instead of dropping pre-built solutions on every client we work with, we work to understand the needs of their procurement team and build a solution that incorporates elements of AI and HI – some pre-built and some bespoke – based on what they’re likely to get the most value from.

That could include everything from category and commodity insights delivered through intuitive digital platforms, to TSC experts deployed onsite who work as an extension of the client’s procurement team – and everything in between. 

Often, it’s this blend of services and capabilities that yields the most significant results for our clients – results that couldn’t have been achieved with a solution focused on AI or HI alone. 

The perfect balance in action

In 2020, this AI+HI approach helped an American multinational pharmaceutical giant gain vital insights into its supplier base, assess risk levels across suppliers and their parent companies, and consolidate data from risk data vendors to create a view of risk across suppliers and categories.

In trying to evolve past the retrospective view of commodity risk that it had in place before the pandemic, the company sourced risk assessments from two data providers. That created an inconsistent view of risks across different suppliers and categories and made it impossible to assess aggregate risk.

To help, we created a created a solution that included:

  • Mapping thousands of suppliers with 500 parent companies for greater visibility into aggregated risk and spend
  • Regular monitoring of risk events for 4,000 suppliers
  • An intuitive dashboard for direct insight delivery to category managers
  • Human market expertise and category intelligence to improve understanding of the client’s risk landscape

With this bespoke balance of AI and HI in place, the company gained a reliable view of risk, at a time of unprecedented disruption, while also laying a foundation for a more robust supply risk management strategy.

Find your perfect balance to advance procurement today

Ultimately, the most valuable thing you can do when considering applying AI in your procurement team is to think critically about what it is they really need to achieve their goals and support the strategic goals of the business.

AI isn’t a magic wand that’s instantly going to evolve your team and transform how they work. It’s an enabler and accelerator of that work, and needs to be applied in ways that work for your team.

If your team isn’t particularly large, or if the commodity markets they’re tracking aren’t prone to volatility, perhaps you don’t need the most sophisticated capabilities. If you want to dive deeper into a limited number of markets or external variables, perhaps you’d be better off adding some dedicated human expertise instead.

Over-investment in AI is just as much of a threat as ignoring emerging capabilities altogether. And just like any other technology-related decision, the most important factor to consider when making AI or HI decisions should always be ‘what does my team really need?’

To find out more about how The Smart Cube’s solutions empower procurement teams to deliver greater value, visit our website.

  • Omer Abdullah

    Omer is a co-founder of The Smart Cube and leads the firm’s business across The Americas. He works with Procurement and Strategy leaders at global organisations, transforming their teams to become value-driven and insight-led. Omer has more than 30 years of management consulting, global corporate and industry experience across North America, Europe and Asia. His prior roles include A.T. Kearney (North America), Warner Lambert (USA) and The Perrier Group (Asia-Pacific). Omer has an MBA from the University of Michigan at Ann Arbor, USA, and a BBA from the University of East Asia.

  • Omer Abdullah

    Omer is a co-founder of The Smart Cube and leads the firm’s business across The Americas. He works with Procurement and Strategy leaders at global organisations, transforming their teams to become value-driven and insight-led. Omer has more than 30 years of management consulting, global corporate and industry experience across North America, Europe and Asia. His prior roles include A.T. Kearney (North America), Warner Lambert (USA) and The Perrier Group (Asia-Pacific). Omer has an MBA from the University of Michigan at Ann Arbor, USA, and a BBA from the University of East Asia.