AI negotiations in procurement: where should you start?

If you have at least 100 suppliers and are answering yes to the following questions, AI negotiation can help improve your efficiency, capture procurement savings and build stronger relationships with your suppliers:

• Do you wish you had better control of your tail spend?  
• Are you offering fixed discounts to smaller suppliers to ease the admin or have you ceased to negotiate with them at all? 
• Do your negotiations focus on 1-3 key terms like price or discount, payment terms and volumes? 
• Are your relationships with smaller suppliers suffering from neglect because your team use the 80:20 rule to prioritise their face-to-face time? 

This guide breaks down AI negotiation for procurement and will tell you if it’s right for you and how quickly you could set up a test. 

Let’s get started...

Why would I offer automated negotiations? 

Many of our clients say they are struggling to control their tail spend. They deal with many contracts each year that are too small to negotiate one by one. These accounts – often small, regional suppliers or privately owned businesses - don’t meet you every year and the relationship suffers, as well as the opportunity to secure savings. AI negotiation is the solution to taking control of this tail spend, finding win-win outcomes and – believe it or not - building better supplier relationships.  

Nibble holds the world’s largest dataset of automated negotiations – with a bespoke algorithm trained on over 1 million negotiations to date. Our AI conversations deploy techniques rooted in behavioural psychology, negotiation science, and AI conversational design principles. Fundamentally, we believe in mutual negotiation to build trust and long-term relationships whether via AI or humans. 

Moreover, people LIKE negotiating with Nibble. We negotiate 100,000 times every month and half of all of those agree a deal. Although most surveys indicate only half of us like negotiating in real life, 85% prefer to negotiate with Nibble’s chatbot.  

What do I need to make use of AI negotiation? 

If you can say ‘yes’ to having these three things, AI negotiation is a perfect fit for you: 

• Sufficient Volume. To make automation worth your while, we recommend you are having at least 100 negotiations per year, covering the same basic terms – for example, price or contract length. These negotiations don’t have to be all the same, but they do need to consistently negotiate on similar properties and may be from a specific vertical like indirect or services. 

• Less than 10 negotiable terms. For a simple, fast proof of concept for automated negotiations, we recommend starting with a simple set of 2-3 negotiable terms, such as payment days and discount. 

• An underserved cohort of your suppliers. AI negotiation is not designed to replace much-loved human relationships in business – think of it as a tool you can offer to free up human agents to focus on the conversations that really matter. AI negotiation is designed to give users a voice and instant access to bespoke negotiations without the need for multiple long phone calls, back-and-forth emails or waiting in long queues. Many existing Nibble clients use AI negotiation as a 24/7 solution for suppliers who can’t deal with their account executives in office hours. 

How fast can I set up a simple test? 

In our experience, you can test automated negotiations in a proof-of-concept within a few weeks. We’ve already done the hard part, training our system on over one million negotiations and making sure it is user-friendly.  

Let’s look at a procurement use-case for an example flow you would use: 

1. You require an indirect supplier quote. Determine your negotiable terms (e.g. product name, quantity, price and payment terms) and enter these in a form in the Nibble admin portal. 
2. Nibble generates a unique link for each quote requested. You send this link to your supplier by email to request a quote. 
3. Your supplier clicks on the link to Nibble’s Negotiation Portal, where they can review your proposed contract. Nibble will use a bespoke pricing function to achieve your goal (e.g. 1% cost savings year on year) 
4. At the end of the negotiation, both you and your supplier receive confirmation of the agreement by email. 

Since the negotiation is handled in Nibble’s own portal, it’s technologically straight forward – you’re simply sending a link to your supplier. This flow reduces conversations that could take 6 or more emails back-and-forth into an easy chat that takes less than five minutes. 

After a successful test is completed, a deeper integration with your email software and procurement tech stack is easily achieved. 

What does an automated negotiation look like? 

Automated negotiations are simple and intuitive – Nibble uses a chat window alongside a simple summary tab that reflects the current terms, both those agreed and those under discussion. For an overview of what an AI negotiation for a single order in procurement looks like, check out the video below:  

This is just one possible use case we are currently building for our clients in procurement and beyond. AI negotiation can agree annual supply arrangements, agree terms with 100’s of GIG economy skilled contractors or agree B2B sales of software and services.  

Will my suppliers engage with AI Negotiation? 

Nibble has been designed to be intuitive and user-friendly – and data shows users love it. Across our 1 million+ negotiations, 50% of negotiations reach an agreement. Even when dealing with users who are not digital natives, Nibble conversations are simple and engaging, created to provide that simple feeling of human-human conversations, with instant and friendly responses.  

Did you know? Gartner analysts say almost half of millennials want to avoid dealing with account executives where they can help it. Their research shows 33% of all buyers desire a seller-free sales experience – a preference climbing to 44% for millennials. For Gen Z, it is surely even higher. Some of Nibble’s existing clients have even reported loyal customers intentionally wait until the sales team goes home, just so that they can talk with Nibble instead of a human!   

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