11 April 2024, Tokyo: A new field of AI is being rolled out among leading Japanese companies with the potential to significantly improve efficiency and raise the country’s GDP.
Autonomous negotiations, known as 自律型交渉 (jiritsugata kōshō) in Japanese, enable companies to conduct thousands of contract negotiations with suppliers simultaneously using an AI that aims to find better deals for both sides.
(You can read this news in Japanese here.)
The technology is already being used globally by some of the world’s largest Fortune 500 companies, such as Walmart and Maersk. The feedback from their suppliers negotiating with the AI is overwhelmingly positive due to the AI’s user-friendly chatbot interface and ability to offer better deals on contracts that would previously only be given standardized, cookie-cutter terms.
Pactum AI, which has pioneered and developed the technology over the past half decade, has now partnered with Nice Eze in Japan to provide autonomous negotiations to Japanese companies.
The AI was initially trained on Harvard principles of negotiation, but Pactum has since developed the world’s largest database of negotiation behavioral learnings with every negotiation serving as an A/B test to further improve outcomes on future negotiations. It aims to achieve Pareto efficiency, the mathematical term when no value is left on the table for either side.
The AI can, for example, offer and instantly recalculate a variety of multiple equivalent simultaneous offers. In negotiation theory, this is an effective way to scope out a better deal for the other side without giving more away.
In a first of its kind national roll out, Nice Eze is able to offer autonomous negotiations and local support for it in Japanese, while ensuring the AI is adapting to Japanese business culture. One major Japanese company has already completed a successful trial and is moving towards full implementation.
Pactum AI is a Silicon Valley-based company with development based in Estonia. In 2022, Pactum received investment from one of the largest Japanese-backed VC funds in Europe, NordicNinja VC.
Generative AI performs a supporting role for autonomous negotiations, while the discussion with suppliers through a chatbot interface is guided by rules-based AI. This ensures the AI can be trusted to conclude a deal within defined parameters and therefore no human involvement is required, enabling thousands of negotiations to be conducted simultaneously.
Autonomous negotiations have so far mostly been used by large enterprises for negotiating contracts in the tail spend where, without AI, suppliers are rarely given the opportunity to discuss better terms for both sides because it is not economical for human negotiators. By scaling up negotiations, the AI is able to unlock value across the supply chain in ways never before possible. Due to their widely successful implementation, consistently demonstrating the ability to generate both savings and enhanced supplier relations, companies are expanding their use, including into strategic spend too.
Martin Rand, CEO at Pactum AI, says: “While there’s currently a huge wave of interest in AI, autonomous negotiation is a field of AI that has been developed over the past half decade and is driven by longer term technology trends towards using automation and autonomy for improved efficiency. Japan is already the leader in this so we’re excited to bring autonomous negotiations to benefit Japanese companies and the Japanese economy.
“With autonomous negotiations, the role of humans in procurement is enhanced because they can unlock more value for their businesses by managing more contracts and focusing more on higher level and strategic deals. The partnership between Pactum and Nice Eze to roll out autonomous negotiations across Japan is a great deal for the whole economy.”
Manabu Matsuura, CEO at Nice Eze, says: “Japan’s working population will continue to shrink and age. We see not a crisis, but rather a great opportunity to redefine human roles and spark a productivity revolution through the extensive use of cutting-edge technologies like AI. At the heart of this transformation lies the strategic approach to focus and specialization on the essence of the business—called “Warikiri” in Japanese. Pactum’s autonomous negotiations will enable Japanese companies to focus on strategic deals, leaving other tasks to AI. We believe that it will greatly contribute to improving the productivity of both suppliers and buyers. In partnership with forward-thinking Japanese companies, we are committed to promoting Pactum’s innovative concept and contributing to Japan’s economic advancement.”
Tomosaku Sohara, Co-Founder & Managing Partner at NordicNinja VC, says: “Automation is vital for Japan’s future. Autonomous negotiation is a new concept, but its impact is clearly measurable and already far beyond expectations so we believe it has the potential to make Japanese companies significantly more competitive and raise Japan’s GDP. We invested in Pactum because we understood from our own Japanese network that there was clear demand for this to work. That’s now beyond doubt. We are incredibly excited that Pactum is bringing the benefits of autonomous negotiations to Japan where there are both enormous potential and clear interest locally.”
Contact
English media enquires: Adam Chapman-Ballard, Global Director of Marketing (adam.chapmanballard@pactum.com)
For Japanese language media enquiries at Pactum AI, please contact:
（日本語でのお問い合わせにつきましては、下記担当者までご連絡お願いします。）
Jaimeson Bilodeau, Enterprise Engagement Director at Pactum AI: jaimeson.bilodeau@pactum.com
Max Kwon, Senior Implementation Manager (APAC/Americas) at Pactum AI: max.kwon@pactum.com