Category Archives: 101 Damnations

AI: Applied Indirection, Artificial Idiocy, & Automated Incompetence … The April Fools Joke Vendors are Playing on You Year Round!

So on the one day of the year when they should be making the joke, I’m going to reveal it.

The vast majority of vendors who claim “AI”, where they want you to think “AI” stands for Artificial Intelligence, have no “AI” in that context, and many don’t even have anything close. A few may have “Assisted Intelligence” (Level 1) and even fewer still may have “Augmented Intelligence” (Level 2), but “Analytical (Cognitive) Intelligence” (Level 3)? Forget it! And as for, Level 4, “Autonomous Intelligence”, which is the baseline that must be met before you could even consider a system true “AI”, doesn’t exist (at least as far as we know). (ChatGPT would be a 3 on this scale, 3.5 if you’re dumb enough to use it to power a semi-autonomous application.) (For more details on the levels of “AI”, see the detailed Pro piece the doctor wrote over on Spend Matters on how Artificial intelligence levels show AI is not created equal. Do you know what the vendor is selling?.)

However, thanks to ChatGPT/OpenAI and other offerings, every vendor all of a sudden feels that their solution has to have “AI” to compete, and is now claiming they have AI when, at best, they’ve implemented some third party “library” into their analytics module, which itself may or may not be AI, or, at worst, they just have classical rule-based automation and statistical-based predictive analytics (i.e. trend analysis) but have called it “AI” because, just like a classic decision-tree expert system from three decades ago, it can make a “recommendation”. Woo hoo.

Not that this is nothing new, three years ago a study by London Venture Capital Firm MMC found that 40% of European startups that are classified as “AI” don’t actually use AI in a way that is “material” to their business. MMC studied 2,830 “AI” startups across 13 EU countries, and in 40% of cases, [they] could find no mention of evidence of AI. (See the great summary in The Verge.) And even that statistic is a bit misleading, because I’m willing to bet that the “evidence” they did find was technology that didn’t necessarily mandate “AI” and could be implemented with “classical” techniques because, as a longtime blogger, analyst, due diligence professional and, most importantly, a PhD in theoretical computer science (read: advanced applied mathematics), I have found that most claims of “AI” weren’t really AI — in most cases they were just using a combination of automation and/or configurable rules and/or advanced statistics and/or machine learning and just had some of the foundations, but no real “AI”.

In our space, real “AI”, and by that I mean strong Level 2 / weak Level 3 (which is the best you can get) is quite rate and specific use cases are few and far between, and most AI is simply semi-unsupervised machine learning for transaction/categorical classification (spend analysis) or clause identification (contract analytics).

The problem is that, when no one really understands what “AI” is, and given that less than 1/10 Americans have the mathematical competency to even begin the university studies to try and garner an understanding [Level 4 on the PIAAC], it’s really easy form them to try and pull a fast one on you. This is especially true when the solution is able to automate certain tasks or recommend best practices in the majority of situations faster and more consistently than the average buyer (who, let’s face it, is under-educated — thanks to limited supply chain / operations management programs and almost no real Procurement training in Colleges and Universities, under experienced, and not an expert in modern technology), and the solution can be made to look “smart” (but, in reality, is dumber than a doorknob and definitely dumber than Maxwell Smart). But it’s not smart. Not at all.  And don’t be fooled.

The good news is the marketing manager using Applied Indirection to push a false AI solution at you probably doesn’t have a clue what they have anyway, and a few smart questions asked by someone who understands what AI is, and isn’t, can probably get pretty close to the truth pretty fast. For example:

1) “We have advanced AI data auto-class. It’s the most intelligent, and accurate, classification in the space.”

‘How does it work?’

“It uses a multi-level neural net that has been trained on tens of millions of records across over a hundred clients in the indirect space.”

‘Great, so basically it categorizes transactions based on similarity to other transactions in a slowly evolving manner, and I’m guessing for a new client in the indirect space, out of the box, you’re around 85% to 90% accuracy out of the box and you approach 95% with semi-supervised retraining over time — and that’s the upper bound and it will never be perfect.’

“Uhm, … well, … more or less … “

‘Got it!’ At this point you know it’s “AI” level for classification is augmented (as it learns and evolves over time), and barely, but it’s not “the best” mapping in the space as platforms that use AI to suggest rules (upon implementation and then for unmapped transactions) and do mapping and categorization based on the user selected and verified rules can produce 100% accurate mappings, always outperforming an “AI” solution that uses neural nets that are good (but not perfect).

‘Do you use AI anywhere else?’

“Uhm, what, why? It’s great where, and as, it is.

And now you know that there is no real AI in the analytics part of the platform, and there’s no reason to choose it over any other.

2) “We use AI for OTD prediction and risk in delivery prediction.”

‘Cool. What algorithm do you use?’

“Huh, what do you mean?”

‘How does the application compute the OTD and/or risk associated with the delivery.’

>Wait for the hand off to their “data scientist” …< “We use a blended least-squares method to produce a prediction function where, if there is enough data for the product, carrier, and lane, we’ll primarily use that data for the function, but if there’s not enough, we’ll use the most similar (using a mathematical distance function) product, carrier, and/or lane data … “

Is that AI, well, if there’s some sort of learning involved in the selection of “similar data” or recommendations as to parameter tuning IF parameters can be tuned, maybe, but this is just classical statistical trend analysis and not really any different than classical ARIMA based forecasting from the 70s, and did they have ANY AI then?!? (The answer is “NO”!)

3) “We use AI for our supplier recommendation process?’

‘Sounds promising … please explain!’

“We compute a relevance score taking into account a large number of factors including product base, geographic location, diversity, risk, etc.”

‘OK … how … ‘

>Cue the Eventual Hand Off to “Data Science” Team<

“Product Base is computed as a percentage of the category they can likely cover, geographic location as an average distance function, diversity as an estimate of diversity employment if there is no diversity ownership data (in which case it’s just 50%), the risk score from our risk model, etc. “

‘So, in other words, it’s just a formula … ‘

“A very sophisticated multi-level formula with conditionals and nesting that computes … “

‘Got it thanks!’ NO AI! Not even a hint there of as it’s just a functional risk score that could be built in ANY application with a formula builder.

This isn’t to say that a solution without AI isn’t right for you! (In fact, it probably is!) It’s all about solving your business problem, and many problems have been solved in our space just fine for the last decade or so with rules-based workflow and automation, optimization, and statistical modelling and trend projection. When guidance is needed, decision trees/matrices tied to expert curated best-practices (the modern equivalent of a classic “expert system”) often work better than one could imagine. In other words, it’s not AI, it’s not the hype, it’s what solves your problem, reliably and predictably time-after-time.

So don’t fall for the false hype and be the April fool.

The 101st Damnation!

And now, the damnation you’ve all been waiting for. The one that even tops damnation 100, bloggers, like the doctor.

Have you figured it out yet?

It’s obvious, isn’t it?

The last damnation is … is …


You chose a career in Procurement (or at least accepted it when you were forced into it).

You stuck with it.

You believe you can make a difference.

You continue to stick with it, day in and day out, while everyone else tries their best to discourage you, circumvent you, and utterly make your life more of a living hell than it already is.

You continue to fight the underdog fight when the entire C-Suite is in the other corner.

In other words, while we didn’t start the fire, as it was always burning since the world’s been turning (as the world’s second, or is it third, oldest profession), our continued effort to fight the fire feeds the flame of damnation.

In our continued attempt to make the business world a better place, we clash with all of the departments, feel pressure from all of the authorities and influencers, and feel the constant consumer wrath as we struggle with infrastructure, regulations, and society as a whole. We get caught up in the geopolitical environment, get crushed under the weight of the economy, get reigned in by the environment, get boxed in by our providers, and, finally are constantly hindered by the technological limitations we are forced to live with.

Damnation is not self-perpetuating, but it gets reinforced every time we acknowledge it and fight against it.

But all is not lost. We might still be losing the battle, but if we are strategic in all of our actions, someday, we might just win the war.

100 Procurement Damnations Down!

Just as 2015 came to a close, our last post chronicled our 100th Procurement Damnation that you, as a Procurement professional, have to deal with on a regular, if not daily, basis. That’s an almost unimaginable number of damnations that torment you as you attempt to do your job and why only the best of the best can be Procurement Professionals!

Since there are so many damnations (that it took us an entire year to chronicle them all) we thought it would be a good idea to summarize the complete list in one post so that you could go back and review any posts in the series that you might have missed during your hectic conference and vacation seasons as this was SI’s biggest and most aggressive series to date, much longer than both the 15-part “Future” of Procurement series and the 33-part “Future” Trends Expose series (that followed) combined and double the length of the maverick‘s 50 Shades of Pay series (assuming it gets completed) which, to date, only has 20 parts up and available for your reading pleasure.

There’s more that could be said, but as we’ve already said so much, without further ado, here are the links to all 100 Procurement Damnations for your reading pleasure.

Introductory Posts

Economic Damnations

Infrastructure Damnations

Environmental Damnations

Geopolitical Damnations

Regulatory Damnations

Societal Damnations

Organizational Damnations

Authoritative Damnations

Provider Damnations

Consumer Damnations

Technological Damnations

Influential Damnations

Bonus Posts!

Geopolitical Damnation 30: The TPP Poison Pill

Sourcing Innovation first brought this up back in late 2013 when it pointed out this great post by Nathan Lee that provided a simple guide to the Trans-Pacific Partnership Trade Agreement “benefits” which is an agreement being negotiated in secret that is lopsided towards the corporation and essentially gives them more rights then individuals, communities, and in some cases, entire governments. Proposals even include giving corporations the right to sue governments if laws put citizens or the environment above corporate rights. The piracy laws are so draconian that you can be criminally charged if copyrighted material ends up on your computer without your knowledge or consent. (For example, if you visit a website that was hacked and malware on that site uses your computer as part of a bittorrent network without your consent and stores part of a copyrighted file, the owner, with the backing of the RIAA or MPA, can have you charged criminally even if you didn’t ever access the file — not the hacker that created the malware and forced copyrighted content onto your computer without your knowledge or consent).

For those of you who do not yet know what this is, it’s a proposed regional and investment treaty between twelve countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam that is being conducted almost entirely in secret despite the far reaching implications that are being discussed and the considerable impact it could have on every citizen of every country participating as it covers a broad range of issues including, but not limited to, agriculture, industrial goods, intellectual property, investments, labour, services, and telecommunications.

As a result, everyone, and every supply chain, has a reason to dread, if not fear, this act. The Electronic Frontier Foundation (EFF) has a good summary of the issues corresponding to intellectual property on their What Is TPP page as the act would rewrite global rules on intellectual property enforcement. The IATP does a good job of overviewing some of the agricultural issues in its article Whose Century is it? where it notes that nearly every country involved has food safety regulations on the chopping block as the TPP proponents are arguing that free-trade and cheap food is the best thing for a country, regardless of economic or health consequences. Every year there is a new salmonella, e-Coli, mad-cow, or similar outbreak of a deadly food-borne infection — do we really want to weaken safety standards? With respect to labour, while some US negotiators are apparently demanding meaningful and enforceable worker protections, many of the other countries are not and, more importantly, most of the developed countries are claiming that increased worker mobility will encourage a disruptive inflow of low-skill workers from developing countries and pushing for less worker mobility in our globally connected world (while the less developed countries want to level the playing field).

Regardless of what gets agreed to, the sheer fact that this trade agreement will override existing law presents every Procurement organization with a minefield just waiting to be activated. Will your supplier still be able to afford its current pricing? Will it even be able to supply you? Will you be able to expect the same quality and safety standards? Will new sources suddenly become available? How will they change the supply-demand balance? Will new tariffs materialize? Will you be forced to abandon your “Buy American” policy? Will you be forced to consider suppliers you don’t want to? All of these questions and dozens of others become valid the minute this act, negotiated in secret where it is pumped full of poison pills, gets signed into law.

If the (wiki)leaks are even remotely reflective of what’s in the act, it might make the controversial, scary Orwellian provisions of the Patriot Act look like a cuddly bunny in comparison!