Supply Chain
An exclusive sit-down with Dr. María Jesús Sáenz, Scoutbee’s newest Strategic Advisory Board member - Part 1

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An exclusive sit-down with Dr. María Jesús Sáenz, Scoutbee’s newest Strategic Advisory Board member - Part 1

In September 2022, Scoutbee officially announced the creation of its Strategic Advisory Board (SAB). Our comms team recently caught up with SAB’s newest member, Dr. María Jesús Sáenz, Executive Director of the Digital Supply Chain Transformation Lab at the MIT Center for Transportation and Logistics. 

With more than 20 years of academic and research experience in supply chain and logistics, she is currently examining collaborative paradigms that arise while implementing AI and new digital technologies in supply chains.

This two-part interview gets the inside scoop on how it’s going so far, what her typical day looks like, and why strategy is a topic so close to her heart. The interview also covers her motivation for joining the board and what digital twins, AI, and digital transformation can do for procurement and global supply chains.  

Scoutbee: Dr. María, thank you for taking the time to talk to us. We really appreciate it. First things first. You seem to wear many hats. Walk us through what a typical day looks like for you. 

 

Dr. María Jesús Sáenz: I lead the MIT Masters program in supply chain management and I also teach digital supply chain transformation topics, both in this Masters but also to students from Harvard and the MIT Sloan School of Management.

In addition, I teach executives alongside MIT and other think tanks that I collaborate with. So, on a typical day, I start at 8 a.m. – if not earlier – and finish around 6 p.m. When I have to teach students in China, for example, then I have to work late into the night. 

My time is split about 50-50 between education and research, so leading the teams, leading the postdoctoral researchers but also leading the staff in the Masters program. The educational and pure research sides are both related to my passion, which is digital supply chain transformation and this is why I’m working with Scoutbee. 

I really believe that technology is transforming supply chains – but my research claim is that the strategy should come first. This is what we have found in many cases in many industries and we have tested it empirically, quantitatively, and qualitatively. 

Scoutbee: Your primary research examines new collaborative paradigms that arise while implementing new digital technologies in supply chains. Can you tell us a little more about that? 

 

Dr. María Jesús Sáenz: I have two main claims in my research lab and they are that the strategy should come first before deciding which technology should be implemented. Technology should be the answer to the vision in the supply chain, not the other way round. 

The second claim is related to the holistic approach of digital supply chains, so collaboration can happen in a more efficient, more agile way. This is where procurement comes into play because these are the supplier-buyer relationships, which are also a kind of ecosystem if you want to take a broader approach. 

Digital transformation allows an organization to speak another kind of language, the language of data, so then we can implement collaboration in a better way.

Why? Because all this data, upstream and downstream, is then flowing and you can establish rules that can check new ways of collaborating with the partners in your ecosystem – this could be value chain, supply chain, or procurement. These new rules can be tested very quickly so up and down collaboration could become very dynamic. 

Scoutbee: So, essentially you’re saying that your research is centered around the claim that strategy should always come first and that digital transformation allows for better collaboration. Did we get this right? Could you elaborate on the latter, please?

 

Dr. María Jesús Sáenz: Yes, one of the main streams in our research is what we call multidimensional collaboration, which means that it’s not only based on classic buyer-supplier vertical collaboration but that new actors can also come into play (and leave) very quickly. 

Because of multidimensional collaboration, the way that procurement will develop in the next era is completely different because the relationships between buyers and suppliers are changing. You have this 360-degree approach that Scoutbee facilitates that changes the way you relate with your suppliers upstream. 

So, it’s not just a one-to-one transaction. The whole sourcing landscape can be changed due to this visibility and 360-degree assessment. So, buyers and suppliers need to change, and the people managing these relationships also need to change – their training, education, approach, their role to play, even their strategic vision, to be able to collect data coming directly from pure buyer-supplier transactions, in real time, but also from the world in general, in order to change the way that they relate to each other. 

It’s not only based on contracts that you set every year; it’s that you can micro-manage the way you create the contracts so, for example, performance outcomes can be embedded. AI can help you decide: OK, this supplier is very efficient in terms of A.

Then you can change the conditions in the contract in order to incentivize A. Whereas this other supplier supplies the same kind of parts but is better in terms of lead times or cost, so maybe you can change the incentives to reflect that. The contracts should be managed dynamically based on this 360-degree approach. 

Hence, multidimensional collaboration – because all of them impact each other, and the members of the company that manage supplier relationships need to be ready for this new language of data and this 360-degree lens, whether that’s through using Scoutbee or other methods. 

Scoutbee: That’s very interesting and definitely makes a lot of sense looking at the way we work with our customers here at Scoutbee. Having said that, the tech itself is an important part of a company’s digital transformation. What sorts of supply chain capabilities have had to re-invent themselves due to the availability of tech and data?

 

Dr. María Jesús Sáenz: It’s important to stress that the vision of the supply chain needs to be aligned with the capabilities you want to develop, for example, responsiveness. If you want to develop responsiveness in your supply chain, you need to develop contracts upstream with your suppliers that focus on this capability. 

Therefore, you need to specify, monitor, and agree on responsiveness. So, a supplier says they’re going to deliver parts next week – you need to monitor how they’re progressing towards this commitment. This is what we call dynamic capabilities. 

Developing the right digital capabilities becomes critical. For example, the implementation of AI in supply chain management. Fruitful implementation of AI requires collaboration between the human being, who’s the expert that knows the insights, for example, a deviation in responsiveness, how to interpret the data, how the AI is going to evolve, and how it should be trained – mainly machine learning and algorithms.

Both of them are learning from each other but both of them can get biased very easily. In our lab, we’re quantifying empirically how biased they are in terms of lower or higher demand uncertainty. 

Depending on the context – for example, new product launches or more established products – the collaboration between human experts and AI needs to be deployed in a different way. Automation is not always the solution and we have also tested this empirically. On top of this, we’re working on natural language processing in the supply chain and on human / AI collaboration. 

Scoutbee: Since we’re on the topic… Can you please tell us about the benefits of AI-powered technology and what value you think it adds? 

 

Dr. María Jesús Sáenz: I’m a firm believer in AI because it can really help when the anchor points of performance are clear. So, if you want to achieve a particular supply chain vision, the strategy will tell you: OK, I want to focus on responsiveness and efficiency.

Then you start understanding the trade-offs between these two – you start monitoring what’s happening with responsiveness, how your suppliers are contributing to that responsiveness with your customer downstream, what the sources of efficiency are, and then you start incentivizing the suppliers’ responsiveness. 

Following that, you can try to test some kind of tech or AI cognitive contract with your supplier because it’s focused on responsiveness – that is your goal, your vision. Having the anchor point as the outcome of the capability you want to develop, you can deploy data and tech in order to polish and build the relationship with that supplier – but you need to have this anchor point to leverage future developments with this supplier.

This is where AI can help. If you have a clear strategy, you can start monitoring and then expanding the representation of the data in your supply chain. 

The most beautiful feature of AI is that it’s always learning – but this is also the most dangerous aspect. It’s a bit like a baby – you need time to help it grow and learn, but you need to work with it in order to make sure it learns in the direction that you expect.

So, you need to put a direction in place and this direction will come from the supply chain vision, for example, responsiveness. If there’s no strategy in place, it’s not going to work as efficiently as you would like. 

It’s not about translating your process within an algorithm; it’s having the vision first and then seeing how data and technology can help polish the analytics – because you have an anchor point. AI can help here because it’s dynamic but you need a lot of guidelines in order to make it progress in the way you want. 

That’s all we’ve got time for today. Next week, you can check out part two of the interview, which will get the lowdown on the importance of strategy in delivering effective digital transformation and what role digital twins can play. Stay tuned!