How AI Is Falling Short in Contracting and Supply Chain Management

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Contract managers, sourcing leaders, contract attorneys, and supplier relationship management practitioners are looking to AI as a solution for many of their commercial challenges. However, there are a few aspects where AI is falling short.

This session will identify six areas where humans are still the preferred option in attaining contracting and supply chain management excellence.

  • Integrating Your Sourcing and Category Strategies with the Enterprise’s Larger Objectives
  • Attaining Supplier Relationship Management Excellence through Superior Engagement
  • Integrating Your Internal Stakeholders to Ensure Agile Alignment to Evolving Requirements
  • And three other areas!

Join us for this one-hour session to gain insights and share your thoughts.

Your Benefits For Attending:
  • Discover six critical areas where human expertise surpasses AI in contracting and supply chain management
  • Learn strategies to better align sourcing and category management with enterprise-wide objectives
  • Gain techniques for improving supplier relationship management through enhanced engagement
  • Understand how to effectively collaborate with internal stakeholders for more agile and adaptive operations
  1. Introduction
  2. Welcome 00:01:47
  3. Commercial Project Yield Rates 00:03:51
  4. Delivery, Strategy, Negotiate, and Tener 00:10:34
  5. Is There a New DNA for Commercial Practice? 00:18:12
  6. Area 1: Integrate Sourcing and Category Strategies with the Enterprise’s Broader Objectives 00:27:09
  7. Mandate from CEO: We Must Increase Our OROA by 20% for Three Consecutive Years 00:27:31
  8. How Can My Contracts Help Me Build My Company’s OROA? 00:30:33
  9. Human Solution 00:32:09
  10. Area 2. Attain SRM Excellence Through Robust Supplier Engagement 00:39:32
  11. What Should I Do With A Bottleneck Supplier? 00:41:17
  12. Identifying A Bottleneck Supplier Moving Away From The Quadrant 00:44:42
  13. Identifying A Bottleneck Supplier Moving Away From The Quadrant Cont’d 00:49:10
  14. Area 3. Engage Stakeholders To Ensure Agile Alignment To Evolving Requirements 00:50:26, 01:01:39
  15. Area 4: Mitigate Risks and Breaches Through Empathy and Intuition 01:06:13
  16. Announcing Cost Reduction Plans 01:14:51
  17. Area 5: Build Trust, Collaboration, and Innovation 01:19:17
  18. McKinsey Quote 01:20:53
  19. It Starts with Trust 01:22:45
  20. Trust 01:23:26
  21. Collaboration 01:23:37
  22. Innovation 01:24:14
  23. Customer Collaborative Activities 01:28:03
  24. AI Robots Trusting Each Other 01:30:53
  25. Area 6: Deliver Impactful Communications and Change Management 01:32:20
  26. Per PROSCI: Change Management Experts (5+ Years) Use AI in Their Practice More Than Novices 01:32:42
  27. Are You a Change Management Expert or Novice? 01:33:42
  28. Skills Across Supply Chain Management Are Developing 01:35:54
  29. AI Is Lagging Because Change Management Skills Are Lagging 01:37:22
  30. Human-Based Communications Are More Effective with PERCS 01:38:08
  31. Perception: Sensory Stimuli From Environment 01:38:28
  32. Area’s 1 - 6 Recap 01:40:24
  33. Any Questions? 01:40:44
  34. Presentation Closing 01:42:19

  • Jim Bergman

    Jim Bergman

    Jim is an experienced contracts attorney and procurement professional with international management consulting experience in the procurement field in the USA, UK, Europe, China, India, SE Asia, the Middle East, Africa and Australia. He has experience working in both the public and private sector on [...]

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ATAPU Credit

Aurora Training Advantage is offering continuing education points designed to recognize dedication to training and excellence in purchasing.

ISM Credit

Institute of Supply Management

This program may be used for Continuing Education Hours (CEH) toward recertification for programs offered by the Institute for Supply Management®, including the Certified Professional in Supply Management® and Certified Professional in Supplier Diversity®.

QPANJ Credit

Qualified Purchasing Agent - New Jersey

  • Artificial Intelligence (AI) 00:00:07, 00:02:01, 00:08:58, 00:15:03, 00:30:32, 00:39:09, 00:47:50, 01:06:36, 01:14:48, 01:25:14, 01:29:00, 01:34:37, 01:39:39
  • Asset 00:04:19, 00:06:06, 00:31:06, 00:35:07
  • ChatGPT 00:30:51
  • Contract 00:04:21, 00:20:28, 01:08:01
  • Contract Management 00:39:33
  • Cost 00:02:49, 01:08:05
  • Inventory 00:38:50
  • OROA - Operating Return on Assets 00:30:52, 00:36:12, 00:44:15
  • Procurement 01:02:43
  • Risk Management 00:48:00
  • Risk Mitigation 00:40:06, 01:06:18
  • Risk Register 01:06:20
  • Stakeholders 00:05:46, 00:24:59, 01:00:44
  • Supplier 00:04:27, 00:13:00, 00:33:47, 00:39:58, 00:45:04, 01:03:02, 01:07:55, 01:15:55
  • Supplier Relationship Management (SRM) 00:39:35
  • Supply Chain 00:44:28, 01:36:01
  • Supply Chain Management 00:00:10, 00:03:59, 00:21:44, 00:39:57
  • Vendor 00:04:28

Artificial Intelligence (AI): Artificial intelligence is intelligence demonstrated by machines, as opposed to the natural intelligence displayed by humans or animals.

Asset: Property owned by a person or company, regarded as having value and available to meet debts, commitments or legacies.

Capitalize: To capitalize is to record a cost/expense on the balance sheet for the purposes of delaying full recognition of the expense. In general, capitalizing expenses is beneficial as companies acquiring new assets with long-term lifespans can amortize the costs. (www.investopedia.com)

ChatGPT: ChatGPT, which stands for Chat Generative Pre-trained Transformer, is a large language model-based chatbot developed by OpenAI and launched on November 30, 2022, notable for enabling users to refine and steer a conversation towards a desired length, format, style, level of detail, and language used.

Contract: A written or spoken agreement, especially one concerning employment, sales, or tenancy, that is intended to be enforceable by law.

Contract Management: The process of managing contracts that are made as a part of legal documentation of forging work relationships with customers, vendors, or even partners.

Cost: The sum of the applicable expenditures and charges directly or indirectly incurred in bringing an article to its existing condition and location

Inventory: A company's inventory typically involves goods in three stages of production: raw goods, in-progress goods, and finished goods that are ready for sale. Inventory or stock refers to the goods and materials that a business holds for the ultimate goal of resale, production or utilization.

OROA - Operating Return on Assets: OROA stands for Operating Return on Assets, which is a financial ratio that measures a company's efficiency and profitability. It is a variation of the traditional Return on Assets (ROA) ratio.

Procurement: Procurement is the process of finding and agreeing to terms, and acquiring goods, services, or works from an external source, often via a tendering or competitive bidding process. Procurement is used to ensure the buyer receives goods, services, or works at the best possible price when aspects such as quality, quantity, time, and location are compared.

Risk Management: is the process of identifying, understanding, and grading risks so they can be better managed and mitigated.

Risk Mitigation: Risk mitigation involves taking action to reduce an organization's exposure to potential risks and reduce the likelihood that those risks will happen again.

Risk Register: A risk register is a document used as a risk management tool and to fulfill regulatory compliance acting as a repository for all risks identified and includes additional information about each risk, e.g. nature of the risk, reference and owner, mitigation measures. It can be displayed as a scatterplot or as a table.

Stakeholders: A stakeholder is a party that has an interest in a company and can either affect or be affected by the business. The primary stakeholders in a typical corporation are its investors, employees, customers and suppliers.

Supplier: A supplier is an entity that supplies goods and services to another organization. A supplier is usually a manufacturer or a distributor. A distributor buys goods from multiple manufacturers and sells them to its customers. Similar Terms. A supplier is also known as a vendor.

Supplier Relationship Management (SRM) : Supplier relationship management is the discipline of strategically planning for, and managing, all interactions with third-party organizations that supply goods and/or services to an organization The objective of SRM is to maximize the value of those interactions.

Supply Chain: A supply chain is a network between a company and its suppliers to produce and distribute a specific product to the final buyer. The supply chain also represents the steps it takes to get the product or service from its original state to the customer.

Supply Chain Management: In commerce, supply chain management, the management of the flow of goods and services, involves the movement and storage of raw materials, of work-in-process inventory, and of finished goods as well as end to end order fulfillment from point of origin to point of consumption.

Vendor: A vendor is a person or business that supplies goods or services to a company. Another term for the vendor is the supplier. In many situations, a company presents the vendor with a purchase order stating the goods or services needed, the price, delivery date, and other terms.

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Frequently Asked Questions

While AI has made significant inroads in automating data-heavy procurement tasks, there are six critical areas where human expertise continues to outperform it. These include integrating sourcing and category strategies with enterprise-wide objectives like improving Operating Return on Assets (OROA), achieving supplier relationship management excellence through robust personal engagement, ensuring agile stakeholder alignment as organizational requirements evolve, mitigating contract risks through empathy and situational intuition, building the trust, collaboration, and innovation that underpin high-value supplier partnerships, and delivering impactful communications and change management across the supply chain. In each of these domains, the nuanced judgment, relational intelligence, and adaptive communication that human professionals bring remain difficult for current AI systems to replicate—making human-AI collaboration, rather than pure AI replacement, the more effective model for supply chain excellence.
Integrating sourcing and category strategy with an organization's broader enterprise objectives—such as achieving a multi-year OROA (Operating Return on Assets) target mandated by the CEO—requires a level of contextual reasoning, organizational navigation, and strategic creativity that current AI tools cannot provide end-to-end. While AI can surface data and model scenarios, translating a financial mandate into category-specific sourcing decisions that account for supplier relationships, internal stakeholder dynamics, risk tolerance, and long-term partnership development requires human judgment. Contract managers and sourcing leaders must understand how their work connects to balance sheet outcomes, engage cross-functional leaders, and make trade-offs that involve intangible factors like trust and organizational culture. These high-stakes integration activities remain firmly within the human domain, even as AI supports the analytical underpinnings of the process.
Supplier relationship management (SRM) excellence depends heavily on the quality of human engagement—the ability to understand a supplier's motivations, navigate tensions diplomatically, build mutual trust, and create collaborative environments where innovation can emerge. AI can track performance metrics, flag risk signals, and segment suppliers into quadrant models, but it cannot replicate the relational depth required to manage a bottleneck supplier who is pivoting away from your business, or to inspire a strategic partner to invest in co-development. The shift from a transactional to a partnership model in supply chain management depends on interpersonal skills, cultural intelligence, and empathetic communication—none of which AI can fully operationalize. Organizations that invest in human SRM capabilities alongside AI-enabled analytics consistently achieve stronger supplier outcomes than those relying on automation alone.
Research from PROSCI—leading change management experts—indicates that experienced change management practitioners (those with five or more years of expertise) use AI in their practice more frequently than novices, suggesting that AI amplifies rather than replaces change management skill. Human-based communications remain superior in supply chain contexts because effective change management requires perception, empathy, relationship awareness, and contextual sensitivity—what some experts frame through a PERCS model focusing on sensory stimuli from the environment and tailored messaging. When announcing cost reduction plans, managing supplier transitions, or realigning internal stakeholders around new procurement strategies, the ability to read a room, adjust tone, and respond to emotional undercurrents in real time is something AI systems cannot match. As supply chain management skills evolve, change management competence is becoming a core differentiator for procurement leaders.
The most effective procurement organizations treat AI as a force multiplier for human expertise rather than a replacement for it. AI excels at processing large datasets, automating routine tasks like contract clause extraction and spend categorization, identifying anomalies in supplier performance data, and generating scenario models for sourcing decisions. These capabilities free human professionals to focus on the high-judgment activities where they add the most value: strategic relationship development, enterprise alignment, risk intuition, and change leadership. Organizations should audit their procurement workflows to identify which tasks are genuinely suitable for AI automation versus which require human cognition, and invest in training their teams to work effectively alongside AI tools. Professionals who combine strong relational and strategic skills with AI literacy will be the most competitive in the evolving procurement landscape—making continuous skill development alongside technology adoption essential.