November 27, 2021 | Procurement Software
For many companies across the world, the pandemic and growing business uncertainties have acted as a catalyst for rapid digital transformation of procurement and supply chain.
As companies look to deploy AI-powered technologies, their objectives are clear: automate time-consuming manual processes, use real-time data and insights and, perhaps most importantly, mitigate risk.
What then happens to the long-term goals of supply chain sustainability and ethical procurement? Will they now take a back seat? Or can technology be adjusted, and algorithms modified to help a business meet its sustainability goals?
In the absence of any clear guidelines, the indiscriminate use of artificial intelligence may cause more harm than good.
For example, while choosing a supplier, AI may simply look at the prices and go with a supplier that offers the lowest prices. It will not consider the larger environmental and sustainability issues, such as waste and carbon emissions, which are equally vital today.
Needless to say, a supplier that offers the lowest prices may not score high on environmental and social practices.
Industry experts believe there is a need to humanize technology.
“We need to build compassion into the algorithms companies use in procurement to source from suppliers and run the world’s supply chains,” says Subhash Makhija, chief executive officer and co-founder of GEP.
Companies should not use AI without paying heed to the larger issues of sustainability and environment.
There is no doubt about the immediate need to leverage AI in procurement. By automating routine tasks, improving decision-making, decoding complex datasets and providing actionable insights, AI can completely transform procurement operations.
But, before its implementation, a business must act responsibly and first have clear understanding of AI’s implications. For this purpose, there must be a set of guidelines to holistically evaluate the suitability of technology.
Such guidance is vital, given many companies may not be sensitive to use the technology to achieve their long-term sustainability goals.
GEP is spearheading the World Economic Forum’s AI task force to establish clear guidelines for the responsible and ethical use of AI in procurement. In this collaboration, GEP will leverage the World Economic Forum’s leadership in the public sector to describe the ethical use of AI in private sector procurement.
The guidance will help businesses evaluate and implement AI solutions to source materials and effectively carry out procurement functions.
In addition, businesses can use the same guidelines to identify — and shortlist — suppliers that follow ethical practices. This will further drive sustainability across the entire supply chain.
Talking about the objective of partnering with GEP, Kay Firth-Butterfield, head of AI and machine learning at the World Economic Forum, said, “We are seeing growing numbers of major businesses buying and integrating AI solutions built by third-party vendors. The goal of this exciting new collaboration is to support companies in ensuring that they do so not just effectively, but also responsibly.”
Clearly, sustainability and social responsibility must remain the key focus areas for supply chain and procurement even as companies deploy technology to streamline operations and effectively deal with disruption.