Artificial Intelligence in Purchasing: Facilitating Mechanism Design-based Negotiations

Ines Schulze-Horn*, Sabrina Hueren, Paul Scheffler, Holger Schiele

*Corresponding author for this work

    Research output: Contribution to journalArticleAcademicpeer-review

    13 Citations (Scopus)
    89 Downloads (Pure)

    Abstract

    Negotiations are central to reach consensus between supply chain partners while, simultaneously, meeting internal cost and quality targets. Purchasing prices can be improved by inducing competition in the supply base. In this context, the application of mechanism design theory in negotiations gained enhanced attention. While such approaches can result in high cost reductions, mechanism design-based negotiations are very complex. The paper aims at answering the question whether artificial intelligence (AI) can facilitate the execution of mechanism design-based negotiations. To this end, a World Café has been conducted at an automotive original equipment manufacturer. A group of 20 experts from the fields of purchasing and AI discussed the potentials of AI for the purchasing function. The results indicate that the application of AI can indeed facilitate the execution of mechanism design-based negotiations and help overcoming bounded rationality problems. Even more, AI might be a game changer for the purchasing function.

    Original languageEnglish
    Pages (from-to)618-642
    Number of pages25
    JournalApplied artificial intelligence
    Volume34
    Issue number8
    Early online date14 Apr 2020
    DOIs
    Publication statusPublished - 2 Jul 2020

    Keywords

    • UT-Hybrid-D

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