Pactum’s AI software optimizes the outcome of the negotiation for both parties.

It’s called the Pareto efficiency: there is no alternative outcome state that would make some people better off without making anyone worse off. Pactum helps its customers unlock value by automatically negotiating contracts on a massive scale. Think Walmart (NYSE: WMT).

It’s the largest retailer in the world. It has many thousands of agreements that should be optimally negotiated for multiple parameters. Pactum’s AI system understands different contract terms and their value. It performs high quality and considerate negotiations that conclude as a win-win for both parties. (Forbes)

Retail a fertile hunting ground for AI

Forbes contributor Richard Kestenbaum makes the point that the retail industry is ideal for testing out AI concepts and systems given the massive number of its locations, 42 million jobs, and its revenue in the US of more than $ 5 trillion.

AI needs data, lots of it. And the retail industry generates huge volumes that can be crunched and analyzed by AI and machine learning algorithms.

Because the industry is so ruthlessly competitive, any AI software provider with a demonstrable edge will find a ready market for its solutions.

Pactum’s engagement with Walmart, if successful, could lead to many more lucrative customers.

What Pactum is doing at Walmart

Pactum’s software is suitable for customers floating numerous contracts for comparatively smaller amounts. At renewal, it would be expensive to retain professionals for renegotiating the contracts.

Because of these limitations, as well as time considerations, the AI startup believes that such contracts, on average, could be renegotiated for an additional value of $ 5,000 each.

“Inefficient contracting may cause firms to lose between 17% to 40% of the value on a given deal, depending on circumstances, according to research by KPMG,” Pactum said in March at the time of its tie-up with Walmart. “Increasing the efficiency of millions of longtail supplier contracts represents a $200-500 billion opportunity for Fortune Global 500 companies jointly, according to Pactum’s calculations.”

“The underlying principle of efficient negotiations is that it’s not a zero-sum game,” says Martin Rand, Pactum CEO. “The fact that one party wins with Pactum means the other party will win as well. Pactum removes the inefficiencies from low value, high volume deals.”

Pactum’s team of analysts begins each project by mapping the “value function” in a given set of negotiations. This combines with Pactum’s negotiation chatbot which is capable of autonomously conducting best practice negotiations prepared by Pactum’s negotiation scientists. Once a negotiation is complete, the system updates all information automatically in relevant systems such as ERP and CRM.

It gets smarter

Kestenbaum points out that the AI software goes on learning. At some point, it would garner the ability to conduct even the most high-level negotiations more efficiently than human beings.

“Pactum is a good example of the huge impact that AI is having in retail now and what is coming,” he says. “Its functionality can’t be done by humans, increases efficiency and profitability, and enables Walmart and other retailers to be more effective.”

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Image credit: Pactum co-founders Martin Rand on the left and Kristjan Korjus on the right