As companies look for potential uses for artificial intelligence (AI), Walmart has found one possible new use—handling supplier negotiations.
Key Details
- Walmart is using an AI chatbot developed by California company Patcum AI to negotiate vendor contracts.
- Executives at Walmart give the chatbot information such as budget and priority needs, and the AI deals with human sellers to find an agreement, Bloomberg reports.
- So far, the retailer is only using the software to negotiate prices on equipment such as shopping cars, but the company says the AI has significantly reduced negotiating time.
- Not only is the system faster, but it has successfully secured deals with 68% of suppliers and saved the company around 3% on its contracts since Walmart started using the program in 2021.
Why it’s news
Even if companies only use AI to handle some negotiations, the software still represents a significant time saver. Negotiations between vendors typically require an entire team of people, but with AI, those employees can focus on more urgent or nuanced negotiations.
Walmart was one of Patcum’s first customers and is one of the few retailers to adopt AI negotiations. Amazon uses AI to negotiate certain vendor discussions, and one of Walmart’s biggest rivals, Target, does not use AI software for negotiations at all.
Walmart has not shied away from adopting AI technology. In 2018, the company announced a partnership with Microsoft to develop AI and other technologies. In December, Walmart announced that its website would use an OpenAI chatbot to have conversational messages in its text-to-shop tool. Over 50 million customers now use the chatbot to check the status of orders or returns, Bloomberg reports.
For now, Walmart still relies on human negotiators to handle the minute details of vendor relations. Patcum’s systems can help the company save money on contracts that would otherwise be considered too small to take up much of a procurement manager’s time.
The AI can discuss discounts, payment terms, and individual product prices. It can analyze historical data, competitor prices, and commodity price changes to determine if an offer is fair. Human negotiators can adjust prices as needed.
So far, the bot is not intended to replace human negotiators, but Patcum is working on that. The company is working on bot-to-bot negotiations, where both the retailer and vendor use AI to negotiate. However, that technology still has a ways to go.
