How Siemens Makes Use of AI in Procurement

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How Siemens Makes Use of AI in Procurement

Siemens and Scoutbee have been successfully collaborating for several years. The recent publication of the case study on scouting suppliers for the Siemens Smart Infrastructure procurement team underlines that. It highlights why Siemens AG and Siemens Energy AG choose Scoutbee to support them to speed up Siemen’s supply chain efforts to prepare for the future.

The bigger picture of the collaboration was explored in an in depth-talk about procurement and the benefits of superior supplier data at the 2021 CogX Festival. There, Michael Klinger, Corporate Supply Chain Manager at Siemens, and Gregor Stühler, Scoutbee CEO, covered the following areas:

  • How AI beats visibility challenges and inefficiencies that limit old style procurement
  • How information advantage can unlock value and help build diversified and competitive supply chains
  • How AI is helping to transform supplier discovery and insights
  • How digitalization and AI can unlock potential within procurement

AI in procurement for supplier search at Siemens

Michael Klinger described why Siemens decided to partner with Scoutbee: the company was tackling some of the most radical changes to its products and solutions in recent decades. This of course meant implications for their supply chains. Siemens’ procurement team set tight time limits for finding the best suppliers in many areas, and quickly reached the natural limits of traditional manual supplier scouting methods. After examining more than 20 solutions, Scoutbee was selected as the best match for Siemens’ requirements, culture and processes.

To date, three parts of the Siemens “family” (Industry & Mobility, Siemens Healthineers and Siemens Energy) have participated in the digital scouting program, resulting in a very broad search spectrum, from innovative semiconductors and energy storage, to mechanical components and raw products or services, across the whole value chain of Siemens. “Digital scouting is now an important part of our tech segmentation – it provides more efficiency in search, better visibility and insights”, says Michael, “the value of the insights uncovered by Scoutbee is broad, and it’s a positive contribution to our work.”

Since then, Scoutbee has been used in some really exciting categories across many divisions of Siemens.

Supplier search for innovation, value sourcing and localization

Originally, Michael planned to limit the use of Scoutbee to new technologies within the framework of the supplier innovation programme. But, day-to-day business quickly caught up with him, and Siemens now also uses Scoutbee for enhancing risk management and to identify alternative suppliers for cost reasons. 

“The usage of Scoutbee depends on the respective use case, and covers a broad spectrum: Innovation, Global Value Sourcing and Localization of Products”, Michael explains.

His colleagues at Siemens are particularly impressed by
a) the high hit rate and speed
b) the Scoutbee team’s high level of technical expertise
c) but above all, by the individual support and ease of use provided by the Scoutbee tool from kick-off to the final result. 

A big issue for Michael would have been having to train hundreds of managers before they could get started.

AI powered supplier search helps tackling key strategic issues

Gregor points towards the repositioning of procurement as a knowledge and innovation partner in organizations, showing for example, how challenges in product design, engineering and production can be solved by procurement and the use of new technology, and more dynamic and richer data points. Scoutbee’s information helps purchasing teams address key strategic issues, offer a structured scouting process to the internal organization and put procurement into the driver’s seat.

Scoutbee sees evidence that a proactive approach to procurement is taking off as a business trend across many industry sectors. Knowledge about supplier options, pricing, innovation, trends, competition, etc. enable procurement to be one step ahead and to perform as “the spider in the web”, Gregor believes.

Data can be used for preparing negotiations with suppliers

Michael appreciates the structured supplier discovery process and deep insights that Scoutbee delivers based upon worldwide supplier data, not limited to prior sign up or onboarding to any specific system or market place.

Supplier insights are not only interesting for scouting new suppliers, but also for preparing negotiations with an existing supplier. Michael Klinger, Siemens AG

In addition to the operational search that Siemens’ purchasing teams use today, Michael plans in the coming year to combine the high granularity of Scoutbee data with the company’s internal systems to create more transparency, faster processes and an overall picture which enables better informed decision making with regard to optimizing the supplier portfolio to easier and faster compare their existing range of suppliers with new findings.

Michael has further ideas for the future: “Seeing data from suppliers and customers in a relationship gives us the idea of analyzing our entire value chain and identifying supplier bottlenecks. I can also use the application of Scoutbee as a tool to further develop material strategies in terms of supply chain transparency.”

AI in procurement can never replace creativity

Gregor sees the use of AI in procurement today as a support but not the solution, as it is mostly used to predict the next disruption event.

The world is not predictable, and solutions that automate everything simply won’t happen.The only chance to be prepared for the next disaster event is to be proactive, to know about alternative sources around the world, so you already have options at hand.Gregor Stühler

Some fear that algorithms will become so smart that AI could perform processes like procurement better than humans. Gregor believes this fear is unfounded, “In procurement, there are many time intensive, repetitive tasks, such as contract management or payments which won’t require so much labor in the future. But anything that has more to do with creativity will never be replaced by AI, and areas such as supplier negotiation and collaboration, remain creative and highly strategic.”

“AI will not replace procurement teams, but procurement teams that use AI will replace those that don’t.” Gregor Stühler

Michael’s experience at Siemens reveals that AI-driven supplier scouting can comprise a valuable enabler – helping different teams across an organization to raise efficiency, achieve better visibility of their supplier landscapes, and deploy important learnings from supplier insights at scale.

“Information is the currency of companies in the future, and that’s exactly what Scoutbee delivers!” Michael Klinger, Siemens AG

Scoutbee regularly speaks with experts to learn and share the latest perspectives on how Smarter Supplier Discovery can best be applied to global industries.

In this video, Scoutbee CEO Gregor Stühler and Michael Klinger, Corporate Supply Chain Manager for Siemens AG, explore “Forget manual searches! Gain supplier discovery and insights at scale with AI” at the CogX Festival 2021.

To discuss your needs, reach out to sales@Scoutbee.com