Written by Marijn Overvest | Reviewed by Sjoerd Goedhart | Fact Checked by Ruud Emonds | Our editorial policy
ChatGPT Supplier Communications: Navigating The Challenges
Key takeaways
- ChatGPT improves supplier communications through vendor portal solutions and contract management.
- It uses prompt engineering allowing it to be trained and equipped to respond to inquiries and offer procurement customer support.
- Ambiguity handling, security threats, industry customization, system integration, and context retention are difficulties with ChatGPT supplier communications.
With the preeminent rise of ChatGPT supplier communications, it has become increasingly clear that generative AI will become a standard tool in optimizing procurement. In the context of supplier relationship management, ChatGPT can be equipped to assist various processes.
In this article, we explore ChatGPT’s uses within procurement. We answer the most common questions people have when it comes to the use of AI within the supply chain. Can ChatGPT automate responses effectively? Can it accurately provide updates on delivery status? Can it operate responsibly and ethically?
After reading this article, we’re positive that you will better understand ChatGPT’s role and capabilities in supplier communications.
I have created a free-to-download editable supplier relationship management scorecard template. It’s a PowerPoint file that can help you assess your supplier’s performance effectively. I even created a video where I’ll explain how you can use this template.
ChatGPT in Supplier Communications
Supplier communications are a crucial aspect of any procurement process, and the process of interacting with suppliers requires proficient management and communication skills. AI chatbots like ChatGPT can be incorporated into various supplier communications, such as contract management, vendor portal solutions, purchase orders, and more.
Launched by OpenAI in 2022, ChatGPT is an AI chatbot that uses prompt engineering, which is a method of structuring text and commands that can be understood by an AI model. In the context of procurement and supplier communications, ChatGPT can be trained and equipped to handle queries, answer questions, and settle concerns.
Embracing the use of ChatGPT in procurement not only enables efficiency and faster processes but also assists procurement teams and provides customer support.
Importance of ChatGPT in Supplier Communications
So why should you integrate ChatGPT into your procurement functions? AI chatbots like ChatGPT have multiple capabilities; when it comes to managing functions within procurement, they can even optimize supplier communications.
Ultimately, ChatGPT can make a positive impact on supplier relationship management (SRM) and supply chain management (SCM). By automating responses and addressing inquiries, procurement teams can leverage the capabilities of generative AI to optimize their procurement processes.
ChatGPT-Powered Supplier Communications: Challenges and Solutions
ChatGPT as a tool for supplier communications can deliver several benefits, but it comes with its challenges too. ChatGPT requires concise, specific prompts in order to generate accurate text and content, among others. Below, we listed some of the key challenges associated with ChatGPT in the scope of supplier communications.
1. Ambiguity Handling
One of the main challenges associated with ChatGPT in supplier communications is the question of its ability to handle ambiguous queries. A vague input could, in turn, prompt a vague output or inaccurate answer.
For instance, a customer has a concern regarding the pricing structure of a product, but their input lacks specific details and other necessary information. This prompt would be considered ambiguous and incomprehensive, such as, “How much is this product?”
ChatGPT requires detailed and specific prompts to provide information accurately, and without this, the chatbot could simply respond with “This product costs $200.”
Solution: Make sure all inputs entered into ChatGPT are highly specific and comprehensive. For example, a comprehensive query would be something like:
“I need a detailed breakdown of the pricing structure of this product. Can you provide information on unit costs, volume discounts, and any additional charges such as shipping fees? Please include any applicable taxes.”
2. Security Risks
ChatGPT lacks contextual understanding, it might inadvertently share sensitive information or confidential conversations. This poses security risks and data privacy concerns for users and even raises legal concerns related to data protection regulations.
Solution: AI chatbots like ChatGPT can be trained to only output information when given permission. Furthermore, implement robust encryption measures and include data protection protocols in your ChatGPT policy to ensure that users can use the platform safely while preventing sensitive data disclosure.
3. Industry Tailoring
Different industries typically have unique terminologies, nuances, and specific standards, which may make it difficult for ChatGPT to understand and respond accurately.
ChatGPT might not have the capability to comprehend the nuances of industry-specific language and context-dependent demands.
Solution: ChatGPT, like other language models, can be customized to handle unique contexts of industry-specific datasets. Procurement teams can train the model to understand the intricacies of diverse sectors and contextual language patterns, ultimately fine-tuning its understanding.
Furthermore, regularly update and refine the model based on industry developments to enhance ChatGPT’s effectiveness within diverse industrial contexts.
4. System Integration
Integrating ChatGPT into existing supplier communication models can be challenging. For one, procurement teams need IT teams that understand how to train and seamlessly integrate ChatGPT into existing systems to enhance overall performance.
Without proper integration, procurement teams may struggle to utilize ChatGPT in supplier queries and support, resulting in dissatisfaction and inefficiency in the procurement process.
Solution: Develop robust Application Programming Interfaces (APIs), which will allow IT teams to effectively and seamlessly integrate ChatGPT into existing supplier communications systems.
Additionally, close collaboration with IT teams guarantees that ChatGPT can be applied across diverse platforms and used in supplier communications. This not only ensures efficiency in the procurement process but also allows for tailoring to specific infrastructures.
5. Multilingual Communication
ChatGPT can understand and generate text in over 50 languages. However, because ChatGPT is a fairly new model, it might make it challenging for the chatbot to process and respond to multilingual queries.
Moreover, languages are highly intricate, with different dialects depending on contextual understandings. ChatGPT might misunderstand multilingual terms or even give unclear responses when generating text in different dialects.
Solution: Train ChatGPT to understand nuance and context-dependent aspects of language. Moreover, consider adding plugins or extensions to ChatGPT to help the AI model better understand the intricacies of different languages.
6. Context Retention
ChatGPT can maintain context over multiple interactions, but it may struggle to retain context over extended conversations, which can lead to inconsistent responses.
While ChatGPT was developed with context retention and understanding in mind, it is unclear whether the AI bot can do this consistently. Customers may struggle to make queries if the chatbot cannot retain information over extended conversations.
Solution: Implement context retention and resolution systems, such as session management and context-aware responses. By doing so, ChatGPT will respond with an awareness of previous interactions and maintain coherent and accurate communication.
7. User Onboarding
Implementing ChatGPT for supplier communications requires the ability to equip its users, including suppliers and procurement teams, with the necessary knowledge and skills to effectively use the AI model.
Furthermore, some individuals may demonstrate resistance to embracing newer technological developments, effectively inhibiting the onboarding process.
Solution: Develop and implement a strategy that will assist user training and onboarding. This can include user-friendly interfaces that simplify interactions with ChatGPT.
Users can also be given in-depth training or briefing to inform them of the system’s uses and functionalities. Workshops and training sessions can help provide hands-on support, address concerns, and resolve potential issues.
My Experience in Supplier Communications
For this article, I answered some common questions that can help you in your supplier communications.
1. Why is it important to communicate with your suppliers?
Deals are between companies and business relationships are centered around driving value for both companies, but it will always be people and persons that will be closing the deals. From a procurement perspective, it is important to work on building great relationships with your sales managers and your suppliers. The significance of that lies in having the feeling of mutual trust and respect in business, which makes it easier to provide and share resources and negotiate the best deals by the end of the year.2. Can you share a personal tip based on how you communicated with suppliers in the past?
When I started my career in procurement, I had many different roles and responsibilities. I would call my suppliers in the first meeting and ask them what their preferred way of communicating was. So what I did for some of the younger people I did business with was come to an agreement to contact each other via WhatsApp. With others, we only had contact via email, Microsoft team calls, in-person meetings, and so on. It helps to understand how different suppliers like to communicate. Not only does it save time but it also makes you a more effective communicator.3. Do you think ChatGPT is an effective tool in supplier communications?
Yes and no. From a personal perspective, I truly believe that ChatGPT can help provide inspiration on how to answer emails, how to create proposals, and more. However, I do not believe that ChatGPT and AI bots will replace humans. ChatGPT can be used to assist communications and inspire writing prompts, but it cannot replace human interactions.Conclusion
AI models like ChatGPT can create significantly positive impacts on how we navigate supplier communications, supply chain management, and procurement as a whole. It can optimize procurement processes by automating interactions and offering 24/7 assistance.
While several challenges come with applying ChatGPT to assist supplier communications, procurement teams can harness practical solutions to address risks and setbacks. With careful planning and consistent improvement, ChatGPT can play a pivotal role in enhancing efficiency and effectiveness in supplier communications within the procurement landscape.
Frequentlyasked questions
Can ChatGPT handle ambiguous queries effectively?
ChatGPT requires specific and comprehensive prompts in order to output accurate information. Ambiguous queries may lead to vague or inaccurate responses.
How can security risks associated with ChatGPT be mitigated?
Security concerns can be managed by Implementing robust encryption measures, data protection protocols, and AI model training to avoid the output of sensitive data.
What challenges might arise in integrating ChatGPT into existing systems for supplier communications?
System integration challenges can be addressed by developing robust APIs, ensuring collaboration with IT teams, and ensuring compatibility with diverse platforms.
About the author
My name is Marijn Overvest, I’m the founder of Procurement Tactics. I have a deep passion for procurement, and I’ve upskilled over 200 procurement teams from all over the world. When I’m not working, I love running and cycling.
