Walmart uses artificial intelligence to negotiate better prices with suppliers

Walmart uses artificial intelligence to negotiate better prices with suppliers

Walmart uses artificial intelligence to negotiate better prices with suppliers

Illustration photo – Logo of the American retail chain Walmart.

Bentonville (USA) – American retail chain Walmart uses artificial intelligence to save. Instead of the purchasing team, a chatbot negotiates prices with suppliers for him. The Bloomberg agency informs about it today.

Advertisement'; }

While the public is testing how artificial intelligence (AI) can handle Hollywood screenwriting or fantasy baseball or art theory, Walmart has decided to use it for a much more pragmatic purpose – dealing with suppliers. It uses a chatbot developed by Pactum AI, a California-based company whose software helps large companies with business negotiations. Walmart informs the software of the budget and its requirements, and the artificial intelligence then closes the deals with human sellers instead of the buying team.

“We put in the requests and she tells us the result at the end,” says vice president of international operations Darren Carithers. Pactum's software has cut the negotiation time for each supplier agreement from weeks or months to days, he says.

Walmart says it has successfully closed deals with about 68 percent of the suppliers it approached. On average, since the introduction of the program at the end of 2021, thanks to the robotic processing of contracts, he has saved three percent.

Walmart was Pactum's first customer and one of the few large retailers in the U.S. to deploy artificial intelligence in negotiations with vendors, Bloomberg writes. According to former Amazon employee Martin Heubel, this company is also trying to automate negotiations with suppliers. Rival chain Target says it doesn't use artificial intelligence to negotiate with suppliers.

“The huge potential is that any business could soon use artificial intelligence to tackle a problem that would normally require an entire buyer team,” says Tim Baarslag, lead researcher at the National Research Institute for Mathematics and Informatics in the Netherlands. Negotiation used to be a human-only skill, but now artificial intelligence is just as capable, he adds.

Artificial intelligence is not a threat to humans Walmart's negotiators, at least not yet, Bloomberg reports. Instead, the company uses the tool to save on contracts that may not be large enough to warrant a larger or smaller amount of time for a purchasing manager. Pactum's software can negotiate a wide range of problems, including discounts, payment terms and prices of individual products.