This week on the podcast, Brent sits down with two Walton College colleagues, Dr. Mary Lacity, David D. Glass Chair and Distinguished Professor of Information Systems and Dr. Remko Van Hoek, Professor of Practice in Supply Chain Management to discuss their co-authored recent work on research that is working in real-time with industry partners. During the episode they discuss their collaborative research exploring emerging technologies like artificial intelligence and blockchain, much of which is conducted in partnership with industry. In particular, Mary and Remko highlight a recent study that was done in partnership with Walmart analyzing AI applications in supply chain management. Their paper on the topic was also featured in the Harvard Business Review. They also share how they integrate learnings from collaborations directly into the classroom by bringing in industry partners to share experiences.
Podcast Episode
Episode Transcript
Remko Van Hoek 0:00
A phrase that Michael Lewis from Walmart taught me is, what's different about the
1990s versus now is that the future is here, the future is not the future it we're
in it. We're living it today.
Brent Williams 0:12
Welcome to the be epic podcast, brought to you by the Sam Walton, the College of Business
at the University of Arkansas. I'm your host, Brett Williams. Together, we'll explore
the dynamic landscape of business, and uncover the strategies, insights and stories
that drive business today. Today, I have two colleagues with me, I have Dr. Remko
Van Hoek, from the Department of Supply Chain Management. And I have Dr. Mary Lacity
from the Department of Information Systems. Mary, Remko, thank you for joining me
today.
Remko Van Hoek 0:49
Thanks so much for having us.
Mary Lacity 0:50
Yes, we're delighted to be here.
Brent Williams 0:51
Well, one reason why I asked you to be on the podcast was about some of the really
interesting research that you two have been doing together. So I want to spend most
of our time there. But before we do that, I'd love for everyone in our audience to
get to know you a little bit. And you both have really interesting backgrounds, and
how we're making really large contributions to the Walton College and maybe Remko,
could I start with you, just if you'd introduce yourself, love to hear about your
background? Because it's an interesting one of this mix of academics and industry.
Remko Van Hoek 1:28
That's correct. Yeah, I started teaching and researching in Europe, and then stayed
involved with the Cranfield School of Management as a visiting professor. Over the
years while I went into industry to practice blockchain in procurement held a number
of roles in a number of industries and was grateful for the opportunity that the Walton
College provided to come back to academia on a more full time basis to help develop
leaders of the future while staying involved in industry as an advisor and as an educator.
Brent Williams 1:59
Yeah, primarily the, your, your teaching procurements, probably a little more broad
than that. But that's really kind of the primary expertise that you're bringing to
that department and curriculum.
Remko Van Hoek 2:09
Yep, that's correct. across all levels undergrad, graduate. We're teaching our masters
in supply chain this semester, great program, and executive ed as well.
Brent Williams 2:19
Yeah. And Executive MBA. Right?
Remko Van Hoek 2:21
Correct. Yeah.
Brent Williams 2:23
So yeah across all of those. Well and Mary how about you?
Mary Lacity 2:28
Well I have been in with the Walton College now for five and a half years, I can't
believe how fast it goes. And I was initially brought here to be the Director of the
Blockchain Center of Excellence. And in as an information system scholar, I've studied
for a very long time how enterprises adopt emerging technologies, blockchain, just
being one of them, have also studied artificial intelligence for about the last 10
years looking at organizational adoption. And so then I was really excited to meet
Remko, because he was studying blockchain when I first got here and supply chains.
And then he brought me in on this project of how enterprises are using artificial
intelligence.
Brent Williams 3:05
Well, the you all in your own right, are fantastic researchers. And then I've just
seen this synergy that you two have created. That's made you even more productive.
I think, Mary, you told me nine papers that you either have published together, I
believe. And what's really interesting about those, some of those where your publishing,
three in the Harvard Business Review, two in the Sloan Management Review, and those
are read and consumed not only by academics, but also an industry audience. So why
the you two are clearly attracted to that industry and academic audience? What makes
that? I don't know such a fit for you, too.
Remko Van Hoek 3:54
I think so first of all, procurement and supply chain is a very applied field, one
of the many things I love about our field is you can turn things really, really concrete
in a business setting. If you think of desire to become a more sustainable business.
Well, if you turn to procurement, you can make it very very concrete quickly. That's
number one. And then number two, it's a young field, you know, there's so much in
so much potential so much to innovate. And what's been really, really exciting about
engaging with the companies that have partnered with us in our research is to travel
to very much the frontier of knowledge and practice, to try and learn from those,
but learn from those in a way that others can benefit from it as well, so that you
can make modest contributions towards progressing both the thinking to science as
well as to practice.
Brent Williams 4:44
Yeah,
Remko Van Hoek 4:44
of supply chains.
Brent Williams 4:45
Yeah. Well, you know, Mary, I remember I don't know if it was five years ago, it's
probably close to that. Maybe one of the first conversations you and I had about the
blockchain center was, you said Brent, technology is moving fast and If we're successful,
we're gonna move through this technology fast, and then we're gonna move to the next
one. And that's sort of that's really played out in a fairly short period of time.
Mary Lacity 5:10
Oh, yes, absolutely. So I I've now I'm researching and teaching metaverse, right.
And in addition to AI, so that's, I think one of the reasons why I love being a scholar
and a teacher, and doing this practice based research because I get to learn along
with everybody else. And I'm never bored, something's always new. And the other thing,
just to piggyback on what Remko was saying, because we study early adopters who are
successful, I think our research has a lot of impact, because the first question everybody
asks about new technology is, who else is doing it?
Brent Williams 5:41
Yeah,
Mary Lacity 5:42
What kind of business benefits are they getting? And so we come up with what we call
action principles on how you can leverage these technologies to get business value.
Brent Williams 5:51
And in one of these articles, and Remko, you were the lead author on this. It's one
thing that stuck out to me it was it was the article, how Walmart automated supplier
negotiations in the Harvard Business Review. And the piece of it that really stuck
in my mind. I mean, there's a great story there. But you had, I don't remember if
it was four or five points that like, you know, if you're thinking about this, do
these things. And it just took the research and the story and made it very actionable.
So we're talking about this research, and I'm gonna get you all and Remko might start
with you. As I look across it, it's this intersection of AI automation, a procurement
focus that broadens the supply chain and certain of the papers that you've written.
Am I anywhere close to describing it correctly?
Remko Van Hoek 6:44
I think you're spot on. I think it's a really, really fast moving field building on
Mary's point from a few years ago, there's so much interest in in in AI. And there's
so many questions being asked by researchers about what is the potential in supply
chain? And what is it going to do? What's it going to do for the future of work? What
is it going to mean for our students that are going into this field in terms of what
their day to day will will look like? And, you know, it's it's a very, very bright
future. It's, it's really, really incredible what potential it can bring for procurement
specifically to grow its business contributions and to grow the coverage of spend
the impact on supplier relations on business resilience, there's a ton of potential
there. And what's really, really cool is that we've been privileged to be able to
work with a few innovators that are really pushing the thinking into practice, who
have generously shared with us to let us learn from them and let us together with
them. Because that piece, your reference is co authored with Walmart executives, in
fact, to share that, to advance the thinking and help others as well.
Brent Williams 7:51
Yeah, that piece co authored by the two of you, but Michael DeWitt, he's a co author
from Walmart and Travis Johnson.
Remko Van Hoek 7:58
Correct
Brent Williams 7:59
It is a is a co author. Tell us a little bit about that study, if you don't mind,
because I, you know, I'm a supply chain professor so I found it pretty interesting.
Remko Van Hoek 8:07
So it the technology in there is it's an AI chatbot that will over chat, negotiate
terms and conditions with existing suppliers of Walmart. And that's very counterintuitive,
right? Because when people think of a procurement professional, you think of something
that somebody that can do a lot and probably is really good at negotiating. Well,
here's an example of don't let the buyer do that. Let the bot do it. And you can get
incremental savings and business value. That was the counterintuitive element to that,
if you dig into the story, part of why this is augmentation of procurement rather
than replacement of buyers, is that the bot is able to target suppliers that buyers
don't necessarily have sufficient time to properly negotiate with. So the truth of
the matter is that when you look at a procurement organization, typically you have
1000s of suppliers, and quite a large number of those falling with so called tail
spend. So they are relatively small when you look when you look at the amount of money
you spend with them the number of transactions you have with them. And so they're
not necessarily an area where professional buyers can spend a lot of time developing
relationships and negotiating terms and conditions. What this technology does is let
the bots take care of it Yeah, let the bot take care of it so that you can negotiate
with those that you normally don't have time to negotiate with.
Brent Williams 9:33
Allowing the buyer to spend more time on the things that are most important to that
business
Remko Van Hoek 9:38
Exactly. There's two elements to what does it mean for the buyer, number one, you
can focus on more on strategy and you can focus more on critical, most critical relationships
number one, but number two, the bot doesn't it's controlled AI. So the bot doesn't
just come up with what am I going to negotiate with whom, the buyer has a key role
into selecting the suppliers to target, providing data on who to approach in what
way and developing the negotiation scenarios, as well. So the bot can then execute.
So it is true, a perfect example of procurement augmentation to make the buyer more
impactful, and to help procurement grow to value at generating in key relationships
as well as in the business.
Brent Williams 10:25
You know, one thing that interested me in the article was, I don't know if you use
the term adoption rate from the suppliers. But that term I'm using, and it was really
high the number of suppliers in the in the pilot
Remko Van Hoek 10:39
Yep,
Brent Williams 10:39
that that adopted. So clearly, they're seeing benefit, What benefit do you think the
supplier is getting from this?
Remko Van Hoek 10:47
So there's a couple of benefits. First of all, they are in a negotiation with Walmart.
So rather than just having to accept the terms and conditions that Walmart normally
applies, there's an opportunity to discuss those, and there's an opportunity to make
decisions which they previously might not have had. So that's one benefit. Number
two, the technology which is pactem, that they use allows the supplier to think to
go back into so there's lots of flexibility in the hands of the supplier to put control
over the negotiation in their hands. And that's that's a real, a real benefit. The
other thing that it has to do with how Walmart approaches negotiations, if you have
a deal with Walmart, you have to deal with Walmart. So the follow through on those
agreements, is very high as well, which is a real benefit to suppliers, like a pitfall
in procurement is I negotiated with you yesterday. But today, I want to talk to you
a little bit further. And that's highly frustrating and can be borderline, you know,
unethical in terms of how you approach suppliers. There's none of that in this. There's
none of that is that negotiation ends with an agreement with a commitment, a contract,
crystal clear, super transparent, I'll let you add on those are just some of the points.
Mary Lacity 12:06
Well, they're they're, they're pretty much all of them.
Brent Williams 12:10
Well, you know, you you all have focused in procurement. But then the about a year
later, you published a paper about the use of AI to prevent supply chain disruptions.
And what a what a timely topic, you know, and it's been timely for probably forever,
right? We've experienced supply chain disruptions forever. But we all were hyper aware
of the disruptions in COVID. But, you know, as we as we sit now, you know, we're seeing
severe disruptions in shipping lanes across the world, and, you know, driving costs.
So while AI doesn't solve that, exactly. Tell us a little bit about, you know, just
kind of where this research.
Mary Lacity 12:57
Let me tell you, can I just share where we were this research actually started?
Brent Williams 13:00
Yeah,
Mary Lacity 13:00
and where it ended up. So Remko has incredible context, also with the Harvard Business
Review, and after we've had a couple of successes now he's getting asked to, you know,
basically commission articles. And so he was asked to what is the role of small to
mid size suppliers in helping derisk supply chains? So he called me so do you want
to partner on this? And I said, yes, so we spent the summer focusing on the role of
small to midsize enterprises. And it was almost like trying to fit a square peg in
a round hole. Because the interesting stories that kept coming up, were related to
these new tools of artificial intelligence. And so we decided, let's just write the
article we want to write. And the editor was very pleased with it. So that's the background
story on that one. And this one, I thought was really interesting, because we also
look at other adopters of pactum. So Remko, just explained how Walmart is using it.
But we also have a smaller company that has used it and also Maersk. So we have that
story in there. And then we have two other tools that are doing different things.
So maybe you want to talk about one of the some of the other things that we're looking
at
Remko Van Hoek 14:08
Yeah, absolutely. So Scout Visa technology that's featured in there. And you're right,
by the way on Pactum. I'm helping several companies explore how can I potentially
use it, which is just great in terms of how research leads to research and opportunity?
Brent Williams 14:21
Would you tell us a little bit about Pactum?
Remko Van Hoek 14:23
Yeah, so it's a it's a really cool young tech company, that the article that you referenced
features one of the several use cases that they have and journey of adoption has progressed
including in Walmart into other into other use cases and they're squarely focused
on using AI to drive supplier interaction so that the buyer doesn't have to do it
so and but there is applications in logistics, different industries, different markets.
I'm helping several companies kind of think through how could that work for me. And
so there's a lot more innovation to have there. It's really kind of cool. The other
one you mentioned was Scout B. Scout B is service that can help you identify supply
options faster using AI, then a buyer might if they didn't use the technology, and
that has real premium value if you think of supply chain disruptions, right, because
what happens when a supply chain disrupts? Well, you're not the only company suffering
from it. Your competitors are probably facing very similar issues. And what happens,
we start scrambling for is there any spare inventory? Is there any spare capacity,
can I call on somebody else? Everybody goes through that scramble. But you're, you're
all after a tiny bit of incremental capacity that may be left. And so the value of
using AI is dead, it can put intelligence in the hands of buyers faster, you'll know
about those options faster than your competitor. And that gives you an edge when you're
all rushing to the last little bit of capacity that's left in the market.
Mary Lacity 16:09
And for and for now. Because what this is why you have to constantly innovate, right?
So the early adopters are going to have that strategic advantage. And then it's going
to become a level playing field when everybody starts adopting it. And they'll have
to go to another innovation.
Brent Williams 16:22
Yeah, but but also it could, I'm thinking out loud here. But while it could give you
that competitive advantage and getting the capacity, there is an advantage in alright,
maybe you found out you didn't get it, you know, but you found it out faster, right
and increased your efficiency of what's the next solution?
Remko Van Hoek 16:40
Correct, correct. There's two added points, if I may. The first one is, we also feature
an example of Unilever, who actually uses that technology to support its efforts to
grow supplier diversity and inclusion. So what Supplier Diversity and Inclusion teams
in a procurement organization typically do, and I had a team like this, when I ran
procurement at Disney, they help buyers find options that are with diverse suppliers
that they could consider in their sourcing efforts. And so Unilever has used is to
very rapidly grow the pool of supply options as inputs to buying decision. So it has
a use case that is more in the ESG space, as well. So AI can help you drive progress
in ESG, as well. And a second point, we also spoke to Arkestro, which is a predictive
procurement technology. And one of the things that they shared on was that sometimes
when they go through the existing supplier master data and all the transactions, you
think of the massive data lake that companies typically have, they very often can
uncover supply options within existing suppliers that have that are untapped. Right.
So I'm scrambling for product A, but I didn't realize that, you know, the supplier
of product B could also provide product A, I just never have asked him. And so that's
another area where you could improve resilience, if you put AI in and so buyers.
bThe other really cool thing about that tool is it scrapes details right down to I think the SKU level, it'll generate a request for proposal based on historical data, email it to the supplier, and the supplier says yes, bang they go or the if the supplier counteracts it iterates. So it's more than just here's a list of potential people to look at.
Brent Williams 18:38
Yeah. When when you all have worked with companies, as they implemented such technology.
Talk a little bit about the people side of it. Because you know, you're right, you
think about like,
Remko Van Hoek 18:50
Thanks for bringing it up
Brent Williams 18:51
data technology, process people. And people always a really big part of the change
management.
Remko Van Hoek 18:57
No, You know, Mary was the one that taught me a lot about blockchain. And the main
thing that she taught me that technology is the easy part. It's about considering
it wisely. And being able to approach potential adoption of mindfully as well. And
that very much applies to these like these technologies. Yes, buyers get savvy in
them, but they don't have to. They don't have the code. They don't have the development.
They've got very capable, you know, solutions providers for that. The MIT Sloan article,
actually features a very old technology that you'll remember from the 90s. It's called
E auctions.
Brent Williams 19:36
Yeah.
Remko Van Hoek 19:37
And it was actually it was Michael Lewis from Walmart international that brought this
up because he actually works for one of the original e auction companies in the 90s.
And brought that technology many many years later into Walmart when he when he started
running procurement internationally there. And so a lot of the article is not only
about on how to adopt new technologies, but also are there further opportunities to
benefit from proven tried and tested existing technologies. And that's all about people
and change and, and leadership?
Brent Williams 20:12
Well, if you're listening to this, we will put a link these articles in in the notes
so that you can find them. Because I think, I think after listening, you're going
to want to read these. Let me let me switch gears with you for just a moment. So you
know, one thing that is really interesting in listening to all of these stories, think
about the number of companies you all have just mentioned to me. So industry, you
are deeply engaged with all kinds of companies in your research. And when I think
about the Walton College out, you know, I will say, I think our single biggest competitive
advantage is our relationships and connectedness to industry. I think it is, it's
pervasive in the classroom, you know, in the events that we're doing, but it's also
pervasive, particularly in your research. So well, I guess, maybe, you know, talk
a little bit about how you develop those relationships. And companies need to get
value out of doing this. And clearly they are because they've been doing it with you
multiple times.
Remko Van Hoek 21:18
Yeah, I mean, I'm very grateful for all the the research that we're able to do with
with really cool companies, I think you've referenced a Walmart example, that's just
a really cool relationship that I'm very continue to be very grateful for, which is
larger than just the research. Because we actually do executive ed, for that organization.
We do some coaching and out of that has grown the opportunity to also learn with them
at the frontier of practice. What's cool about Walmart and the executives that are
working with in particular is that they're really motivated to innovate and to think
forward and do it collaboratively as well, which I think is very rare. Plus being
able to willing to share learnings so that together we can drive a little bit of progress.
Obviously, they're increasingly recognized for the innovator and a leader in the space
that they that they are, and they're asked to talk a lot about some of the things
that we research together in industry and good for them and good for the field.
Brent Williams 22:21
Absolutely. You know, Mary, you've been working with industry, I think your whole
career.
Mary Lacity 22:26
30 years. Yeah, yeah, people talk about a virtuous cycle between your research aligning
with your teacher, but I like to think of it as a cyclone, because it's that much
more impactful. Probably a recent example is, you know, when I was the director of
the Blockchain Center of Excellence for five years, we had 12 Executive Advisory Board
member firms, including including, Walmart, and JB Hunt, and Tyson. And we did research
in those companies as well as others. And then we had blockchain curriculum. And I
noticed we there is no such thing as a blockchain textbook. So I went and wrote it.
And it's mostly based on all of the case study work that we have done. And now that
textbook is used at 14 other universities around the world. And I do want to say I
get no royalties, because I didn't. I just like to say that I always waived my royalties,
because I don't want to make students let be lining my pockets. But I think that's
a good example. And now that I'm teaching this Metaverse, I don't have a book out
yet. But some of the early papers that we've done that those are readings in our classroom,
and we also bring those, we also bring those executives into the classroom. They love
to guest lecture. And our students want to know well, what kind of careers can I get
in metaverse? So we brought in Accenture and, and what their career paths look like.
So our cyclone, our virtuous cyclone.
Brent Williams 23:41
I mean, the teacher scholar model, you know, where, where you're it's synergy is really
happening amongst everything you're doing. And I particularly love how I think this
is I think I'm catching the phrase right that you said that you're learning with these
companies at the frontier of practice. And what's interesting Remko, Mary, as you
do that, let's say, you know, you're writing papers all week and working on this research.
Well, next Monday or next Tuesday. You can't help but talk about that in the classroom.
Right? It's just it's what's on your mind. And so students are actually seeing that
well, in some ways before it's published. It's because you're researching and teaching
at the same time.
Remko Van Hoek 24:27
That's correct. I know you do this I do. They say also bring, you know, my industry
partners into the classroom as guest lectures to tell what wasn't in the paper, but
they should also know one cool thing that we're going to do both in my master's in
supply chain as well as in my EMBA class this semester. We're going to actually have
the CEO and founder of Pactum come in for a session where he'll open up about to technology,
or we're going to have our master students negotiate against a bot in the classroom.
So we're going to really bring that technology to life and have them live it through.
And I can't wait for that session.
Mary Lacity 25:09
I hope you invite me.
Brent Williams 25:14
Well, you've mentioned Metaverse, but I just kind of mentioned I was thinking for
the two of you kind of what's next what, what's got you interested and the curiosity
of research questions that you're thinking about for the future.
Mary Lacity 25:29
I still think AI has a lot of legs. And I started studying this technology in 2014,
primarily with IBM's Watson, which at the time would cost an enterprise I mean, 10s
of millions of dollars. And the price point of these technologies combined with the
massive amount of computing power, I think we finally reached that tipping point of
AI adoption in enterprises. I mean, we've been saying this since the 1950s. You know,
AI is coming AI is coming, AI is here. So that's I think we'll we'll continue to do
research on that.
Remko Van Hoek 26:02
Yeah, I agree. I mean, there's a paper just published by some prominent European scholars
about AI and supply chain, and they kind of looked at the inventory. And they only
found one paper, you know, on AI and procurement. And it's the one you just brought
up. So clearly, we have a lot more to learn, we have a lot more to learn. And it's
moving really, really quickly. phrase that Michael Lewis from Walmart taught me is,
what's different about the 1990s versus now is that the future is here, the future
is not the future. It we are in it. We're living it today. And, and this is one of
the many things I love about working with Mary, like she's an incredibly accomplished
scholar. And despite being distinguished and endowed, she is still very curious. And
she's always interested in learning, learning more and, and great and engaging with
industry to do just that. And so what what I'm interested in doing more work with
the really cool companies we get to work with and hopefully doing more work with Mary.
Brent Williams 27:03
Well, when I think about you two, and I'm thinking about our vision as a college,
you know, I always just boil it down to we want to be thought leaders in business
and catalysts for transforming the lives of our students and, and clearly you're doing
both. So thank you for the amazing work you're doing pushing the boundaries of knowledge
working with companies and impacting students every single week in the Walton College.
I appreciate both of you. Thanks for joining me.
Mary Lacity 27:30
Thanks, Brent.
Brent Williams 27:32
On behalf of the Walton College thank you for joining us for this captivating conversation.
To stay connected and never miss an episode. Simply search for be epic on your preferred
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Notes:
Van Hoek, R., and Lacity, M. (2023). How Global Companies Use AI to Prevent Supply Chain Disruptions, Harvard Business Review.
Van Hoek, R., and Lacity, M. (2023). Procurement in the Age of Automation. Sloan Management Review, 65(3), Fall Issue.
Van Hoek, R., DeWitt, M., Lacity, M., and Johnson, T. (2022). How Walmart Automated Supplier Negotiations, Harvard Business Review.
Lacity, M., and Van Hoek, R. (2021). What We’ve Learned So Far About Blockchain for Business, Sloan Management Review, 63(3), pp. 48-54
Brent D. Williams is the Dean of the Sam M. Walton College of Business at the University of Arkansas.
With a deep commitment to fostering excellence in business education and thought leadership,
Dr. Williams brings a wealth of experience to his role, shaping the future of the
college and its impact on students and the business community.
