As a professional buyer, staying informed about competing products is essential to making informed purchasing decisions. In recent years, AI-powered tools like ChatGPT have dramatically evolved, offering procurement professionals new ways to streamline their processes, discover alternatives, and improve efficiency. 6 steps how you can leverage ChatGPT and increase your productivity.

This post will show you how to leverage ChatGPT and it’s capabilities to improve your procurement strategies, using the iPhone as a product example.

How Professional Buyers Can Use ChatGPT in 2024

Step 1: Identify Key Features and Needs

Start by clearly defining the key features or specifications you are seeking in a product. For example, using the iPhone 12, these features might include:

• A powerful processor (like the A14 Bionic chip)
• 5G support
• High-quality display (e.g., Super Retina XDR)
• Advanced camera system
• Wireless charging capability

Beyond product features, you may also want to consider additional business needs like sustainability, pricing, and supply chain factors.

Step 2: Ask More Sophisticated Questions

ChatGPT has become even more adept at handling complex queries. You can now engage it in more detailed conversations, guiding it to provide comprehensive comparisons. Instead of focusing solely on product features, broaden your questions to cover topics like supplier reliability, pricing models, or availability across different regions. For example:

• “Which smartphones with A14-level processors are available with sustainable supply chain practices?”
• “What 5G smartphones in 2024 have pricing comparable to the iPhone 12, with similar display quality and camera systems?”
• “Can you recommend smartphones that compete with the iPhone 12 in terms of battery life and wireless charging speed?”
• “Which suppliers have reliable 5G smartphones with strong global distribution networks?”

By expanding your queries, ChatGPT can provide richer, more context-sensitive information that helps you assess not only products but also the broader factors that influence procurement decisions.

Step 3: Use ChatGPT for Market Research and Trends

Beyond product comparisons, ChatGPT is now more capable of providing market trends, supplier reviews, and even forecasting potential price changes. You can ask:

• “What are the latest trends in smartphone technology that might impact procurement in 2024?”
• “Which manufacturers are currently leading in sustainable practices for smartphone production?”
• “What smartphone brands are most commonly chosen by enterprise buyers in 2024?”

This ability to gather competitive intelligence and insights into industry trends makes ChatGPT a valuable research assistant, empowering procurement professionals to stay ahead of the curve.

Step 4: Create Data-Driven Procurement Strategies

Once you’ve gathered your initial research, use ChatGPT’s advanced capabilities to help you structure this information into actionable plans. You can ask ChatGPT to assist with drafting procurement reports, RFQ templates, or even negotiating strategies. For example you can leverage ChatGPT by:

• “Can you help create a report comparing smartphone alternatives to the iPhone 12, including supplier information and pricing models?”
• “Draft an RFQ template for suppliers of 5G smartphones that emphasizes sustainability, cost-efficiency, and delivery times.”
• “Provide negotiation strategies for securing better pricing and terms from smartphone suppliers.”

ChatGPT can help streamline the documentation and communication processes, making your procurement efforts more efficient and strategic.

Step 5: Verify, Validate, and Stay Updated

Even though ChatGPT’s knowledge is regularly updated, it’s essential to cross-reference the information provided. Use ChatGPT as an initial research tool, but always verify the results through updated manufacturer websites, supplier directories, or expert reviews. ChatGPT can also help you stay current with real-time updates or provide guidance on where to look for the latest data:

• “Provide sources or recommendations for verifying the latest smartphone pricing trends.”
• “Which websites or databases should I check for real-time supplier reviews and feedback?”

Step 6: Unlock New Productivity Gains

Beyond product comparisons, ChatGPT offers powerful productivity boosts for procurement professionals in areas like:

• Supplier discovery and evaluation: ChatGPT can help you find and assess new suppliers, including smaller or niche vendors you might overlook.
• Automated report generation: By feeding procurement data into ChatGPT, you can automate the generation of reports or summaries, reducing administrative overhead.
• Contract review: ChatGPT can assist in summarizing or even reviewing contract terms to ensure alignment with your procurement goals.
• Continuous learning: ChatGPT can serve as an ongoing learning assistant, keeping you updated with the latest procurement best practices, regulatory changes, and industry shifts.

When using ChatGPT or similar AI tools, especially for business applications like procurement, there are important risks associated with handling confidential or sensitive data. Here are key concerns and best practices for mitigating these risks:

Dangers of Using Confidential Data with ChatGPT

1. Data Exposure Risk:
   AI models like ChatGPT process data by sending it to servers for computation, which poses a potential risk of sensitive information being exposed during this process. This can include proprietary product data, supplier contracts, or financial details that could be accessed by unauthorized parties.
2. Third-Party Data Handling:
   OpenAI (and similar organizations) may log or store interactions with the model, depending on the specific terms of service. If you’re inputting sensitive data (e.g., supplier negotiations, pricing models), that information could be stored in logs, increasing the risk of a data breach.
3. Lack of Encryption:
   ChatGPT sessions may not always employ encryption standards comparable to secure systems designed for handling confidential information. Even though the connection might be encrypted, the data is still processed by external servers, increasing the risk of interception or misuse.
4. Inadvertent Data Sharing:
   AI tools can create responses based on previous conversations with other users, which means there is a risk of cross-user data leaks. While AI providers work to prevent this, it is possible that sensitive information might inadvertently be used in training or model improvements if shared without the proper safeguards.

Best Practices to Avoid Risks

1. Avoid Inputting Confidential Data:
   Do not input sensitive data such as supplier names, pricing, contract terms, personal information, or trade secrets directly into ChatGPT. Stick to generic queries or scenarios when using AI for procurement purposes.
2. Use Anonymized Data:
   If you need to use ChatGPT to simulate a scenario or draft reports, anonymize or abstract any sensitive information. For example, instead of using real product names or prices, replace them with placeholders or general terms. Example: Instead of inputting “negotiating a 5% discount with Supplier X for $1M order,” use “negotiating a percentage discount with Supplier Y for a large bulk order.”
3. Follow Company Policies:
   Many organizations have specific guidelines regarding the use of external AI tools to handle sensitive data. Always adhere to your company’s data security and compliance policies when using tools like ChatGPT.
4. Use Private or On-Premise Models:
   If your organization relies on AI to handle sensitive information, consider using an on-premise version of the model or a secure, enterprise-level version of ChatGPT. These versions offer more control over data privacy and storage, ensuring confidential information remains within your company’s secure infrastructure.
5. Consult Legal and Compliance Teams:
   In regulated industries (e.g., finance, healthcare, or defense), inputting confidential data into third-party AI systems may violate privacy regulations such as GDPR, CCPA, or industry-specific laws. Always consult your legal or compliance team before using AI for tasks involving sensitive information.
6. Understand Terms of Use:
   Review the terms of use of the AI tool you’re working with, ensuring you are fully aware of how your data will be processed, stored, and handled. Some AI providers may offer guarantees or assurances about data privacy, while others may not.

By maintaining awareness of these risks and adopting safe practices, you can leverage the benefits of AI tools like ChatGPT without compromising confidentiality or security in procurement processes.

Conclusion: Leverage ChatGPT and increase your productivity.

ChatGPT has evolved into a powerful tool that procurement professionals can rely on for everything from product research to supplier discovery and contract management. By embracing its capabilities, you can streamline operations, make more informed decisions, and stay agile in a rapidly evolving marketplace.

If you find competing products, you’ll also find competing manufacturers and suppliers that can be recipients of your RFQ. Learn more about the sourcing process in our Sourcing Engine courses.

Procurement and web crawlers – introduction

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Note: Illustration to the blogpost “How Professional Buyers Can Leverage ChatGPT for Procurement Efficiency in 2024” was created on September 14, 2024.