ChatGPT in Procurement — Revolutionizing the Norm
📖 Table of content
Use cases for ChatGPT in Procurement
- 1. Sourcing Suppliers
- 2. Contract Management
- 3. Supplier Performance
- 4. Market Analysis
- 5. Creating quotes
- 6. Answering Procurement-Related Questions
- 7. Predictive Analysis Tool for Procurement Planning
- 8. As a Tool For Communication
- 9. Risk Management
- 10. Simulate Negotiation
ChatGPT is getting popular not just in procurement but also in various industries as it assists professionals in their everyday work. However, what is it?
This article will help you know what ChatGPT is. Additionally, we will show you how ChatGPT can help automate procurement professionals in their work.
Once you are done reading this article, you will be able to know the impact of ChatGPT in changing procurement. Additionally, you will be able to use it effectively in your profession.
Whatis ChatGPT?
OpenAI, an AI research and deployment company, introduced the AI called ChatGPT on November 30, 2022, that answers conversationally complex questions. ChatGPT has been regarded as revolutionary as it is trained to learn what humans mean when they are asking questions.
Many users are amazed at how ChatGPT can provide human-quality responses when they are asking questions. Thus, inspiring the feeling that it may change how humans interact with computers in the future.
An additional layer has been added called Reinforcement Learning with Human Feedback (RLHF) to assist the AI in learning the ability to follow directions and generate human-like responses.
According to an analysis by UBS Switzerland, ChatGPT is the fastest-growing app of all time. In January, only two months after it had been launched publicly, it had already amassed 100 million active users. For you to have an idea of how fast this is for an application, TikTok took nine months to reach 100 million.
Use cases for ChatGPT inProcurement
ChatGPT is changing the game for each professional in various industries. It revolutionizes the way procurement professionals work. The AI helps assist and support procurement professionals by answering questions regarding the procurement process.
Here are some ways ChatGPT can help procurement professionals:
1. Sourcing suppliers
ChatGPT can help procurement professionals to identify potential suppliers by analyzing supplier data. Additionally, it can identify potential suppliers based on their industry, location, or product/service offerings.
2. Contract management
ChatGPT can provide assistance to procurement professionals by assisting them in managing their contracts by providing information on the contract terms and conditions.
It can also assist you in handling disputes with suppliers and answer your questions about contract renewals.
3. Supplier performance
ChatGPT helps professionals to gauge the performance of their suppliers by analyzing supplier data and providing real-time alerts on any issues. For example, you can ask ChatGPT to provide information about the delivery performance of a specific supplier.
4. Market analysis
It can assist professionals by analyzing market trends and identifying potential opportunities or risks which can help them create a market analysis.
Additionally, ChatGPT can help provide information about the pricing and potential risks associated with a specific supplier or product.
5. Creating quotes
ChatGPT can assist procurement professionals by providing them templates for quotations when they need to procure some products or services with their suppliers.
Additionally, procurement professionals can ask ChatGPT to create a quote to acquire materials or services. Thus, helping you to speed up your process.
6. Answering procurement-related questions
ChatGPT can answer a wide range of procurement-related questions including the definition of terms, regulations, and best practices in procurement.
Additionally, it can help procurement professionals by answering questions such as “what is a purchase request” and “what are the processes involved in the procurement”.
7. Predictive analysis tool for procurement planning
ChatGPT can analyze huge amounts of historical data to assess the trends and patterns that will allow procurement teams to make data-driven decisions.
By using its capability to predict demand, businesses can manage their inventory levels and streamline their supply chain more efficiently.
8. As a tool for communication
AI tools like ChatGPT can help you fix communication gaps between your team and suppliers. ChatGPT can be used to draft emails, clarify requirements, and simplify negotiations that can help you build a strong relationship with the supplier.
Also, it can be used to help you construct what you want to say with your suppliers professionally if you are having a hard time communicating what’s on your mind and your expectations.
9. Risk management
Using AI can help you manage risks better. By utilizing AI tools to evaluate supplier performance, and check the stability of finances, and compliance of suppliers, you can determine the potential risks and take actions to mitigate them.
10. Simulate negotiation
Using AI like ChatGPT can help you simulate negotiation. You can do this by asking chatGPT for a prompt about simulating a negotiation. Then, once you have asked it that you wanted to simulate a negotiation, it will respond that you must give it further details about what you wanted to negotiate about.
By doing this, you can be guided on what needs improvement in your negotiation, especially when you are preparing to negotiate with a supplier. ChatGPT can also give insights on what needs to be changed and how you can gain more once you are at the negotiation table.
ChatGPT Promptsin Procurement
When using ChatGPT, you will inevitably encounter the word “prompt”. However, what is a prompt? Simply put, prompts are statements or questions that are designed to generate a specific response or action. By crafting a well-defined prompt, you can direct the AI to produce specific, relevant, and coherent outputs. This leads us to the next question, how can you make a good prompt?
Don’t worry, we got you! We will show you an example of a good and bad prompt:
Poor Prompt: “Can you tell me how you can help me negotiate better?”
Good Prompt: [Describe the negotiation situation, your interests, your goals, the company you’re negotiating with, their interests, their goals, and what you want to get out of the negotiation] “Can you describe 3 possible negotiation strategies my negotiation counterpart will likely use? And for each one, describe how I should counter it.”
In this example, the poor prompt is too vague and does not provide specific guidance on what type of assistance is being sought. The good prompt, on the other hand, is specific and contains specific details on the context of your question.
Do you want to learn more about writing a good prompt? Then check out our ChatGPT & AI in Procurement Course here.
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Limitationsof ChatGPT
1. Answers are not always correct
ChatGPT is trained to answer your questions that feel right to you. Thus, it can trick you that the output it made is correct. Many users discovered that ChatGPT can provide incorrect answers. Thus, you should always remember that it cannot always be depended upon to provide accurate findings.
2. It is not completely trained
ChatGPT is still undergoing its development. The creator of ChatGPT, OpenAI, suggests that all contents that the AI generates should be consulted and examined by professionals or existing facts available on the internet.
3. ChatGPT lacks insights
An article by The Insider quoted an academic that says that academic essays generated by ChatGPT lack insights about the topic. Although it may exhibit high grammar qualities and sophisticated ideas, it lacks insights.
Best ChatGPTPlugins
Before we list down the best plugins for ChatGPT, let’s first define what are plugins. Plugins are additional modules or extensions that can be added to a software or platform to enhance its functionality and provide users with extra features.
To simplify, these are extra tools you can add to a program to make it better and do more things. In the context of chatGPT, plugins are special add-ons that give the language model extra abilities, making it even more versatile and capable of handling different tasks and topics.
Now that you know what are plugins, here are some of the following plugins for ChatGPT:
1. Link Reader
Link Reader allows you to retrieve information from a specific webpage. However, its functionality extends beyond just specific pages.
For instance, if you have a broader query like “I need to get updated on the latest trends in procurement, can you provide a list of relevant articles? LINK: https://www.procurementmag.com,” it will gather procurement-related articles not only from ProcurementMag but also from other relevant sources.
Additionally, Link Reader proves valuable in locating recent procurement case studies, the latest updates on supply chain management, and much more. It can also sift through various document formats like PDFs, PPTs, images, Word files, and others to find the relevant information you seek.
Furthermore, it seamlessly integrates with other plugins, enhancing its usefulness and allowing for a more comprehensive procurement information-gathering experience.
2. Prompt Perfect
Just start with “perfect” before your question and the plugin will rework the prompt behind the scenes, making it detailed and precise for ChatGPT. This ensures the AI chatbot gives you well-informed and specific answers based on your prompt.
3. Speak
Speak can be an invaluable ChatGPT plugin for procurement professionals who work with other countries. As the name suggests, Speak allows you to learn how to say anything in different languages, making it an excellent tool for negotiating with people from other countries.
Apart from translation, the plugin offers assistance with verbs, conjugations, nuanced grammar, and more. Just type your language query, and ChatGPT will provide a prompt response, making it a powerful tool to enhance communication and understanding in international dealings.
Is ChatGPTFree to Use?
ChatGPT is completely free. This is due to its “research preview” time to provide feedback on the responses of the AI to improve it better.
The subscription plan for ChatGPT, ChatGPT Plus, is now available for a monthly fee of $20.
By subscribing to this paid plan, users enjoy uninterrupted access to the service even during peak usage times when the free version may be at maximum capacity. Additionally, ChatGPT Plus offers quicker response times compared to the free version.
Subscribers of the Plus plan receive priority access to new features and enhancements that OpenAI introduces, including early access to the latest updates like GPT-4. Furthermore, Plus users will have priority access when ChatGPT plugins are launched in the future.
HowDoes it Work?
ChatGPT is a language model which is an improvement over its predecessor GPT-3. It is capable of generating text in a wide range of styles, but with remarkable detail, precision, and coherence compared to its predecessor.
The most basic training of language models involves the prediction of the sequencing of words. Commonly, it is observed as either next-token-prediction or masked-language modeling.
OpenAI used a combination of both supervised learning and reinforcement learning to improve ChatGPT. However, it is the RLHF that makes it unique which uses human feedback in the training loop to reduce harmful, false, or biased outputs.
ChatGPT is a highly capable tool that comprehends and produces human-like replies to natural language input. In essence, it acts as a virtual or personal assistant, streamlining communication and information processing tasks for procurement. By automating these processes, it significantly enhances speed, efficiency, and accuracy in procurement tasks.
For example, when a supplier sends an email inquiring about their order status, instead of crafting a response manually, you can feed the email into ChatGPT, which will generate a suitable reply on your behalf. This not only saves valuable time but also ensures consistency and precision in the response.
Conclusion
With the continuous growth of AI, ChatGPT and other AI tools will continue to be integrated into many business activities like the procurement process to help streamline the procurement and supply chain operation.
ChatGPT and other AI tools are still in their early stages. Yet, it has greatly changed the business landscape and how we work nowadays. We cannot deny how helpful AI can be in our work.
However, we must take note that because it is in its early stages, it still has a lot to improve. Thus, you still need to fact-check whenever you are going to use ChatGPT and other AI tools as a source.
Moreover, AI is continuously being developed, and soon, all businesses will adopt it and all of us should too. We just need to keep in mind to use it carefully, ethically, and solely for growing the company and enhancing your skills in procurement.
Frequentlyasked questions
+ What is ChatGPT?
ChatGPT is a large language model that can generate answers to your questions with human-like responses or text.
+ How does ChatGPT differ from other chatbots?
Unlike other chatbots, ChatGPT can answer follow-up questions, challenge incorrect premises, admit its mistakes, and reject inappropriate requests.
+How can it help procurement professionals?
ChatGPT can help procurement professionals by answering procurement-related questions, providing them with necessary data for their procurement, and creating quotes to send to their suppliers.
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