The Massachusetts Institute of Technology (MIT) in Cambridge / MA, one of the top academic institutions in the world, has always played a key role in the development of modern technology and science. As part of the MIT SCALE Speakers series, Scoutbee’s CEO, Gregor Stühler, was invited to hold a lecture in front of 240 students from the MIT Global SCALE Network, an international alliance of leading research and education centers dedicated to supply chain and logistics excellence through innovation.
The MIT Supply Chain Management master’s program has been ranked the #1 SCM Master’s in the world for the second consecutive year. As part of the SCALE program, one aim is to understand how entrepreneurship can shape supply chains.
MIT couldn’t have chosen a better speaker on this topic than Gregor. A lively exchange developed on that day in mid-January, and the students were able to learn more about how Scoutbee and digital procurement works.
Additionally Dr. Maria Jesus Saenz, Director of the MIT Digital Supply Chain Transformation Lab and Executive Director of MIT SCM Master Programs, was so kind to sit down with Gregor for an insightful interview:
What is Scoutbee’s contribution to supply chain management (SCM)?
Our objective is to provide a global information brokerage platform based on a singular supplier record, to super charge decision making, and put procurement in the driver’s seat to create more innovative and more sustainable solutions while increasing the resilience of our customers’ supply base.
But Scoutbee is more than a collaboration platform, right?
Absolutely. In fact, collaboration just happens naturally in our system. The real value of our solution lies in our data superpowers being able to enrich any relevant data point for a business partner, alerting purchasers to potential supply base weaknesses, and almost instantly recommending alternative suppliers across the globe based on the user’s previous behavior.
Could you describe what Scoutbee’s vision is?
Our Vision: Take the lead in accelerating the world’s transition to data-driven, sustainable, efficient and resilient procurement. We believe in: “Better Data, Better Decisions, Better World.”
How do customers use your platform?
There are two different tools: our data graph platform, creates the data foundation for all data connections within a company. Our supplier recommendation / scouting product finds the supplier that’s the best fit anywhere in the world – the needle in the haystack, so to speak.
Combining the two creates a powerful system that’s constantly learning, helping you to continuously benchmark your existing supply base and constantly raise the bar with every new supplier that enters your network. No matter what goals you are trying to achieve – sustainability, price, resilience, or innovation… everything boils down to these two main points: access to the right data and the right supplier.
How do you value the importance of learning behind AI?
I think it’s absolutely crucial. However, learning always has an inherent “time component”. In B2B procurement, your decision making has low frequency but extreme impact. With the flip of a switch, you deploy 100m worth of spending in Latin America or India but those decisions happen only once a year. To make this decision, however, you need to consider dozens of different dimensions, from commodity prices to ESG regulation to tariffs to climate change. In this regard, AI needs to be trained mostly based on historic data and previous decision making.
Which AI-driven methods do you use at Scoutbee?
AI at Scoutbee is fully focused on improving decision making within the procurement function. We have two main applications:
- Entity recognition, resolution and linking in our graph: We have a web scale downloader, and access to billions of singular records. The challenge here is to match the right data to the right supplier, while we have a big labeling studio in the background that helps train the algos.
- A recommendation engine that helps you make smarter decisions based on the data represented in our graphs. Those decisions can be about recognizing an innovative new supplier in a specific field or the recommendation to review a certain supply base setup that might be too risky or not innovative enough.
What happens if the company you are working with doesn’t have reliable data, enough granularity, or the data has not been harmonized between the different levels of the supply chain?
That’s exactly the problem we are trying to solve. However, AI is not magic. We can only improve decision making by adding more data, improving data quality, and connecting data across systems. This does not mean that it’s impossible to make wrong decisions for purchasers in the future. However, we are improving decision making tremendously because all the issues behind reliable data, such as missing granularity, etc., exist today in everyday business. Currently, we have highly paid people sitting there trying to connect data from dozens of systems once a quarter to get a complete picture of their supply base. This job can be done by a machine on a daily basis.
Have you observed better capabilities for AI-driven procurement among your e-comm customers compared with traditional brick-and-mortar players?
Not along those lines. There are however – across all the different industries – companies that push forward and constantly question the status quo. Unilever is an excellent example for that. They take investment in data and software in procurement and SCM as an absolute given and try to use it as a differentiator. But that’s not the norm. SCM and procurement still live in the shadows at many companies, where their main KPIs are human resources being phased out and product savings being achieved. It’s still not a strategic department; Covid has changed that for many companies.
How do you measure the success of the implementation of AI in the procurement function of your supply chains / customers?
First, you have to manage the hype. Customers hear the term AI and expect a “cure for everything” so you need to set expectations early.
We often start basic use cases by simply letting the customer upload historic suppliers and product definitions that they would like to source. Our recommendation system then recommends the right supplier.
The system will also learn based on your behavior during the supplier search process but this is impossible to prove or showcase so, ideally, you have a fast return on investment at the beginning of the project to gain trust. Success should be defined early on and it should not only be “time saved” but rather “decision making improved”, which is tricky to measure but has to be part of the KPI.
Scoutbee nurtures a culture of data-driven supply chains. But how does this affect the other dimensions of organizational culture in your experience: customers, people, agility, operational excellence, and owner mindset…
In our experience, data and AI are building bridges as they create insights across departments and help to align the company. We see procurement as the “spider in the web” that can actually supercharge decision making across departments by providing data and insight to the vast majority of an organization.
How has Scoutbee contributed to dealing with uncertainty in the supplier base? How has Scoutbee benefited from this?
First of all, we were seriously affected as a business because procurement was at a standstill. Then we used our free capacity to build the world’s biggest database of trustworthy personal protective equipment providers.
As industrial B2B was struggling, we pivoted to FMCG and retail and had major success by helping companies like Unilever keep production going and keep shelves stocked. For us and the whole procurement tech market, Covid is a massive catalyst that is driving decision making and budgets but, first and foremost, helped procurement to step out of the shadows.
Any advice to our students who will be jumping into the job market in spring 2022?
Choose your first job based on the leader you will be working with and the challenges that will help you grow, not on the company brand.
Scoutbee is in constant exchange with procurement experts from all over the world. Stay tuned for more supply chain expertise in the coming weeks!