Don’t Ignore the AI Bandwagon

May 01, 2024
By Sue Doerfler

In late January, UPS announced that after sales volumes declined in 2023, the company planned to cut 12,000 jobs, mostly at the management level. It also announced plans to invest in such technologies as artificial intelligence (AI) to boost productivity and efficiency. CEO Carol Tomé said she didn’t expect those jobs to be backfilled. 

UPS isn’t the only company indicating it will cut jobs and turn to AI. 

“A lot of jobs are going to go by the wayside. Not just the tech sector but others like retail, consumer packaged goods (CPG) and other sectors are now aggressively cutting jobs,” says Naseem Malik, CPSM, managing partner at MRA Global Sourcing. For functions like human resources and marketing, use of AI and other advanced technologies is becoming corporate ethos, he says. The technologies are making inroads on redundancies.

But in procurement and supply chains, the trend is lagging somewhat, Malik says. And the need for human talent isn’t going away.

By the Numbers

Data regarding corporate use and projected use of AI varies greatly in scope and findings. Only 3.7 percent of businesses overall, according to the U.S. Census Bureau, reported using AI to produce goods and services in September, with that figure growing to 5.4 percent in March; it’s expected to reach 6.6 percent in the fall. 

According to a McKinsey & Company report, by 2030 — 5½ years from now — 30 percent of the work activities performed now in the U.S. could be automated. That trend has been accelerated by generative AI, the report states. 

According to the CompTIA IT Industry Outlook 2024 report, one in five  (22 percent) companies “are aggressively pursuing the integration of AI across a wide variety of technology products and business workflows,” while a third are limiting implementation and the remainder are in the exploration phase. Research by Forbes Advisor — which surveyed companies that currently use AI or plan to use it in six months — found that two-thirds (64 percent) “anticipate AI will improve customer relationships and increase productivity, while 60 percent expect AI to drive sales growth.”

Don’t Wait for AI 

“Most people overestimate what they can do in one year and underestimate what they can do in 10 years.”  — Bill Gates

“That’s what we’re looking at here,” Malik says. AI’s contribution to business may be currently overestimated, but it will be greater than expected in the next 10 years.

Human skills will always be necessary because regulatory oversight must be managed and creative insights checked to find the best solution, among other reasons, he says. “With AI, a lot of contextual understanding is needed,” he says. “AI can have bias. There can be plagiarism and hallucinations. It makes up stuff or cites references that are not there.”

He continues: “In the procurement world, you’re going to have to use AI as your coworker. It’s not going to replace your jobs immediately. But what I think is going to happen sooner than we expected is that professionals who can use AI to supplement or complement their skills are the ones who are going to replace the procurement practitioners who are not using it at all.”

AI skills will not only set workers apart, but are also imperative for the future. 

There are a lot of AI-related jobs: Open AI, Google Gemini and other applications are looking for specialists, Malik says. Million-dollar compensation packages are no longer a myth in Silicon Valley for AI specialists. But AI-related job descriptions are still uncommon in procurement roles. It’s a matter of time. 

“I think, before this year is over, we are going to see jobs that require AI expertise, even in procurement,” he says. Such a role will become the new, sought-after position, replacing the data scientist role that seemed like a novel job just a few years ago. 

“It’s exciting,” Malik says. “Remember when the internet came out, how quickly it changed the world? And how the smartphone changed our reality?” AI is on pace to do the same, if not more and in probably a shorter time. 

More on AI

Many companies are making a push for workers to return to the office. However, from a hiring perspective, even though hiring has slowed down, Malik says, “Companies that are providing more workplace flexibility and have a hybrid solution are finding talent a lot faster than those that aren’t.” 

Here’s where it can dovetail into AI again, he says. As of April 1, a new law in California requires most fast-food restaurants to pay US$20 an hour. “But a lot of small businesses and franchises, say they can’t afford it and will have to cut employees,” he says. So, what will they do instead? “They’re going to embrace automation,” he says. “They’re going to find ways to use technology to offset those labor costs.”

The same could start happening with white collar jobs: The more people are resistant to returning to the office, the more companies will pivot to automating or eliminating positions. And the more they do that, the more they will see the potential of AI, and once they find solutions, it will have an even greater impact on jobs. Consider the UPS layoff announcement. “It’s all intermingled,” Malik says.

“It’s a matter of time. All boards of directors in corporate America now have AI on their agendas, and they’re asking the C-suites, ‘What are you doing about it? How are you leveraging it? How will we make this a force multiplier for our organization?’ ”

When CPOs and chief supply chain officers answer those questions, they will be looking at technology and in-house talent — and whether they have the talent they need, Malik says: “Mastering these skills quickly is crucial.” 

About the Author

Sue Doerfler

About the Author

As Senior Writer for Inside Supply Management® magazine, I cover topics, trends and issues relating to supply chain management.