AiThority Interview with Gregor Stühler, Co-Founder and CEO at Scoutbee

Hi, Gregor. Welcome to our Interview Series. Please tell us a little bit about your journey and what inspired you to create Scoutbee.

I was a project engineer for a multinational medical device company when the Tōhoku earthquake and tsunami hit Japan in March 2011. We were working on developing a new MRI device design that would improve kids’ patient and clinician experience during pediatric MRI procedures. These scans can be very challenging for patients who are anxious or claustrophobic. Our new design would have made the scan very fast so the image would be more accurate, and we could alleviate children’s anxiety during the process. The tsunami caused catastrophic supply chain disruption that wiped out my team’s work on the project. Like many teams, we were unprepared for events like this. Frustrated, I knew something needed to change.

So, I went back to school to earn my MBA. After graduation, I founded Scoutbee in 2015 with a mission to help organisations build true supply chain resilience.

My team and I are dedicated to developing solutions that enable procurement teams to be proactive, see where there are gaps and exposures in their supply base, and find the best suppliers to fulfill their needs before disruption hits. Our technology helps organisations to architect a supply base that is truly resilient and pivots fast in the face of risk events, and also addresses other strategic priorities such as sustainability, diversity, innovation, and more.

The need for Scoutbee’s solutions was clear 12 years ago when the tsunami hit and has continued to grow ever since.

Tell us about the enterprise-level supply chain ecosystem that you are currently focusing on and how it changed in the last 3 years? How did the pandemic change the landscape?

The last three years have underscored how complex, interdependent, and fragile our global supply chains are and how susceptible they are to disruptive events. Procurement teams have long relied on unactionable and fragmented data, and that fundamental issue was brought to light and exacerbated by COVID’s supply chain impacts and the series of disruptions that followed. Companies that had unreliable data were forced to conduct ‘post mortems’ after each event happened, instead of solving the issue in the moment. Most procurement teams were stuck in a reactive cycle. Today, there’s a much greater understanding of the value of actionable supplier intelligence and ability to make proactive, fast, and confident decisions that drive resilience.

We support global procurement and supply chain teams across many industries, including automotive, CPG, and industrial manufacturing. We’re seeing companies increasingly reshore, near-shore, and “friend-shore” manufacturing operations to mitigate the product, material, and component shortages that crippled global commerce throughout the pandemic. Companies are also placing greater value on diversifying their supply base and focusing on sourcing from suppliers that carry low financial and operational risk. And they’re prioritizing suppliers that are reliable and can demonstrate commitment to environmental sustainability, human rights, social justice, and more.

ESG was a ‘nice-to-have’ a few years ago, but stakeholders are increasingly putting pressure on organisations to use their purchasing power to make a difference on the planet and society. The latest UN Intergovernmental Panel on Climate Change report indicates the global community will likely fail to limit global warming to 1.5 degrees Celsius, which will likely cause catastrophic and irreversible climate change. And an International Labour Organisation report states there are ten million more victims of modern slavery than there were pre-pandemic. Organisations are increasingly making ESG factors a core part of their daily procurement decisions to make a positive impact. There’s still a lot of opportunities to drive progress around ESG, and Scoutbee is committed to helping procurement teams find suppliers that will drive forward their businesses’ ESG priorities and profitability simultaneously.

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What are your core offerings? How do you incorporate various advanced technologies to create your products for large and mid-sized companies?

We strive to provide our customers with as much actionable information – intelligence – as possible so they can perfect their supply base and advance strategic initiatives, whether that’s ESG, risk management, innovation profitability, or something else. To that end, we’ve developed a SaaS suite – the Scoutbee Intelligence Platform (SIP) – that includes two solutions – Scoutbee Clarity and Scoutbee Discovery.

Procurement teams can use Scoutbee’s intelligence platform to get a holistic overview of their existing supply base, based on accurate, dynamic, and enriched supplier data. The solution sits on top of organisations’ procurement solutions and integrates, aggregates, enriches, normalizes, and visualizes the multiple data streams into one dashboard. Procurement teams get radical transparency into what their supplier base looks like today and where there’s room for improvement in terms of risk reduction, diversity, sustainability, supplier financial health, and more.

Once they see which steps, they need to take to strategically redistribute suppliers, they can use the platform’s advanced supplier discovery features to identify and onboard the best new and alternative suppliers for their needs in weeks instead of the typical months-long processes using traditional methods.

One of the biggest problems in procurement today is that the data teams rely on is fragmented. Procurement functions have invested in many solutions – ERP, ESG, procure-to-pay, risk monitoring and other tools – and there’s no harmonization of the exploding data from the systems.

Our data foundation – which is based on advanced knowledge graph technology – lies beneath both products, which enables teams to connect to and bring in any data point – internal, supplier, customer, third-party, Scoutbee data, and more – they need to make strategic and proactive sourcing decisions. Scoutbee connects the data to the knowledge graphs and then runs an algorithm on top to analyze the relationships between data points and ultimately help procurement draw the right conclusions so they can take the right actions and drive the best outcomes for the business.

What is the opportunity for organisations when it comes to utilizing AI and Machine learning in their operations?

AI is fairly pervasive in downstream supply chain operations in terms of inventory optimization and other use cases, but the main benefit is that it makes operational costs cheaper. That cost reduction is important, but there’s more strategic value and differentiation awaiting companies that leverage AI in upstream supply chain operations. This is where the opportunity is.

Artificial intelligence gives procurement teams the efficiencies and visibility they need to find the best suppliers, evaluate them, and make data-driven sourcing and procurement decisions at scale. AI can be a force multiplier for understaffed procurement teams that have to perform at the same level (or higher) with the same (or fewer) resources. Without AI-integrated solutions, it’s incredibly difficult for procurement teams to fulfill their mandates.

Procurement defines the competitiveness of the organisation – the profit it makes, the innovations it develops, and the resilience of the company. The more stable the supply chain is, the more competitive the company is. There’s tremendous opportunity in equipping your procurement team with AI and better data capabilities to help them find, evaluate and bring in the best suppliers faster. These supply partners drive efficiency, cost savings and strategic value for the organisation and play a direct role in the success of the broader enterprise.

AI is an invaluable tool, but we’re always going to need humans in the loop to validate AI and its outputs, and to take the insights that AI provides and use it for strategic planning, relationship building, and more. AI is an excellent sidekick on procurement’s journey.

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ChatGPT and Google’s Bard have taken the tech industry by storm. Could you let us know how generative AIs could transform intelligent automation?

The hype around large language models, such as ChatGPT, is very real and warranted. What makes these models so powerful is that they are proven to not just predict the next word or the completion of the sentence, but they can also grasp context quite well.

Generative AI has shown its full potential in general use cases. It answers general questions through the system very well. I expect that over the next few months, domain-specific expertise will be used to train algorithms and other large language models to get specific results for sub-domains. Generative AI models, for example, have already aced the Harvard medical exam with 99.99% accuracy. We’ll start to see very specific use cases for generative AI arise based on the success we’ve seen so far.

The reason the release of such a technology gains so much interest is the fact that organisations of various sizes can now use the large language models created by these organisations and fine-tune them for their specific domain at a fraction of the cost as opposed to retraining the large language model from scratch. This opens up possibilities for innovation and industry transformation.

Scoutbee has been working on large language models for the past two years now. With the advancements in large language models for generative AI, Scoutbee is researching how to use these models along with knowledge graphs to build the future of user experience for data products. Given the nature of the data and generative AI, we are running our version of the open-source models in our infrastructure to keep customer data safe and maintain our commitment to preserving data privacy and security.

What are your views on the future of supply chain optimization with ChatGPT and other AI techniques?

Typical supply chain optimization tools will remain. Optimization challenges are more statistical challenges, not language challenges. ChatGPT and generative AI will have the biggest impact in terms of helping teams connect the dots between certain market movements or market forecasts to supply chain operations. From that standpoint, generative AI and ChatGPT offer a lot of value. Large language models can help teams grasp the bigger picture.

Large language models, including Chat GPT and other generative AIs, can also add value to procurement teams by connecting the dots among extremely diverse and disconnected data across systems, thereby making it accessible in a meaningful way.

There are a ton of exciting use cases for large language models outside of procurement and supply chain that will get prioritized by other tech companies. It will be the responsibility of specialized companies, like Scoutbee, to bring this technology to our customers in the easiest way possible.

Do you foresee any challenges brands will deal with as a result of AI-based optimization and automation?

Data is the lifeblood of procurement: it must be centralized, refined and distilled into actionable intelligence in order to be valuable. Doing this in-house and without technology is incredibly difficult. And these kinds of data transformation projects can take years. Are business leaders willing to risk their companies’ futures on bad data or long-lead transformation projects?

Companies need AI-driven solutions to automatically and intelligently aggregate data from disparate sources – internal and external – and then categorize, cleanse, enrich, and convert it into intelligence. The technology then needs to connect the dots among the data points to draw conclusions and avoid potential risk scenarios. Only then can companies drive AI-based optimization that has a tangible and positive impact on the enterprise.

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Thank you, Gregor ! That was fun and we hope to see you back on AiThority.com soon.

[To share your insights with us, please write to sghosh@martechseries.com]