April 1, 2026 • 36 mins
Your supply chain decisions can feel like you’re parked in the middle of a busy intersection with traffic coming from every direction: operational pressure, ethical expectations, AI disruption, and the constant demand for profitability. We sit down with Burkhard Schemmel, senior sales leader at Maersk and founder of the Research Institute of Alterocentric Business Ethics, to make that chaos workable and to turn “ethics” into something you can actually use.
We talk about what business ethics really means beyond ESG and compliance, including why his team built a practical framework with 120 criteria that can be applied across industries and geographies. You’ll hear why ethics has global common ground but also local nuance, especially in sales behavior, negotiations, and pricing. Burkhard shares how different operating models, from large standardized enterprises to long-horizon family-owned businesses, can change the way ethical decisions show up in the real world.
Then we get specific about the messiest moments: tariffs, capacity shortages, and unpredictable trade conditions. Burkhard makes the case for transparency and open-book pricing as a trust builder with customers and third-party partners, and we explore how de-risking strategies like local sourcing and multi-sourcing are reshaping supply chain resilience. Finally, we look at AI agents and what they could automate in procurement and logistics, plus what stays human when software starts making recommendations at scale.
If you want a clearer way to prioritize ethics, resilience, AI, and profit without treating them as enemies, this conversation will help. Subscribe, share the show with a supply chain leader you respect, and leave a review so more people can find Supply Chain - Unfiltered.
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SPEAKER_00 (00:04):
For real stories on how global business gets done,
this is Supply Chain Unfiltered,presented by the Institute for
Supply Management.
SPEAKER_01 (00:16):
You know, I do love that show intro.
I just had to say it.
I'm Melanie for ISM, and yes,Supply Chain Unfiltered.
We are ready to go today.
I'm going to start things off bykind of giving you, I'll say a
supposition.
So imagine, you know, wherewherever you're working, whether
(00:38):
it's you're working for someoneelse or it's your own your own
entity.
Imagine you are literallysitting at the middle of an
intersection, and and it's abusy intersection, okay?
And you've got obviously fourdifferent directions.
One of them is your business,how you operate, another one is
(01:00):
AI, the other one is yourethical practices, and the other
one is profitability.
And you've got to navigate allof them.
Today, with us to help us diveinto that, we have Burkhard
Schemmel.
He's president, member of theBoard of Trustees, Research
(01:21):
Institute of AlterocentricBusiness Ethics, and Senior
Director, Head of Sales NorthEurope, AP Muller Maersk.
Hi, Burkard.
We have been uh waiting to dothis for quite some time, right?
SPEAKER_02 (01:35):
Yeah, and it's a pleasure to be here, Melanie.
Really excited.
SPEAKER_01 (01:38):
Me too.
I have a real pleasure to haveyou.
Um, so uh first off, you know,just share a little bit about
yourself and some of thebusinesses you've been involved
in.
I I understand you've coveredAsia, the US, European markets.
So uh give us some tidbits ofinformation.
SPEAKER_02 (01:57):
Yeah, happy to do that.
And my life really brought meinto various different places
globally for work, besidesobviously all my personal
travels as well.
But you know, I when I studied,I founded my my own company, and
then uh once I sold that twoyears later after my studies, I
went into consulting, and thatbrought me to working in the US
(02:17):
for some time, a couple ofyears, uh, but also in uh in
Japan and in China, andespecially in Japan.
I mean, that was superinteresting at that time.
That was in 2008, at a timewhere Japan was already opening
up, but you really had a lot oftraditional culture.
And I remember I was sent thereto introduce an SAP rollout that
(02:39):
we had configured back inEurope, actually in Germany,
with a with a German largecorporation, and we wanted to
roll it out to the Japaneselegal entity there.
And you know, I had I hadn'tbeen to Japan before, I traveled
a bit to other Asian countries,and you know, I heard about all
these things that it would bevery hard for foreigners to do
business there and the languagebear and everything.
(03:01):
And to be honest, it was mucheasier than I thought, because
the rules of how businessoperates there had been very
strict.
And if you read them and if youfollow them, it's actually
relatively easy to get along.
And the people are and and stillthey are, have been there just
last year recently for apersonal wedding of a friend of
mine.
(03:21):
Uh, but the rules, if you followthem, the people are so friendly
and helpful, and we actuallyfinished the rollout ahead of
time with fewer changes andadditions to the standard
solution that we have configuredback in Germany.
So that was a good experienceand and really taught me a lot
about that.
You should not only think aboutor or listen to what others say,
(03:43):
but you really need to, youknow, get your arms around
yourself and then understandwhat's happening and and then
and then judge yourself.
And then later, after this timein consulting, I spent a few
years at Amazon, and that wasreally where business ethics
kicked off as an as a concept inmy head, because um at that
time, and that was 2017 whenwhen I joined Amazon, um, it was
(04:06):
basically all about customerobsession.
And uh and Amazon was obviouslyalready very big in Europe,
Germany was the biggest marketoutside the US at that time, and
they had just launched a newservice called Amazon Business,
which is basically a B2B saleschannel.
So if you think you are if youare a customer or a company like
(04:27):
ISM or any other uh or aninstitution, then you can buy
your products on Amazon Businessas opposed to Amazon, and that
gives you additional selection,better prices, and so on.
So we rolled that out in Europe,and I was employee number five
or six in Europe to do that.
And and and you know, it waslike there was a great hype of
everybody was interested inworking with Amazon.
(04:50):
And you know, after a few years,then we had great trajectories
and great success stories, butafter a few years we came to a
bit of a plateau, and then Ilooked into that, and then I
realized that there was a bigamount of customers, especially
public entities here in Europeand any countries in Europe that
we were present, like Germany,France, Italy, Spain, and so on.
(05:12):
And they were there was a lot ofreluctance, and mostly because
these public entities, theythought like Amazon might be not
as ethical as as we like it tobe.
And then you know, I starteddigging into it and starting to
to understand what does businessethics actually mean, and how
can you how can you uh elevateor not elevate, how can you how
(05:35):
can you measure whether acompany is ethical or not?
And then actually was startingright there.
And I had in my head alreadythat I want to build a system so
that we can understand howethical companies are, and uh
and and that really kicked offat that time.
And then um nowadays I'm at atuh Mersk, which is a global
logistics company, where weagain have every single week
(05:58):
ethical discussions in myleadership team around how we
treat certain customers, if youhave global congestions in uh in
traffic, if you have lesscapacity, which customers do we
prioritize?
And I mean these decisions, andyou said that very well in your
introduction, it feels likethese decisions are an
intersection with fourdirections.
(06:20):
But actually, what we cameacross, and I think we'll talk
about in this interview a littlebit, is what we came across is
that it's not mutuallyexclusive.
And and there are actually somethings that by ethical behaviors
you might even benefit from afinancial point of view.
And and I find that superexciting, and that actually
brought me to uh to launching myown think tank, which is a
(06:42):
non-profit association calledResearch Institute of
Ultracentric Business Ethics,where we do exactly this.
Like we work with academia, butalso with uh with customers from
from all sizes of industry, allsizes and all industries, and
really work on projects and helpthese customers to navigate in
today's world.
And that includes obviouslybusiness ethics, but a lot of
(07:03):
other discussions.
And you mentioned a bit of AIand technology, uh, we have a
big transformation ahead of usin in not only in Europe but
also in the US at the moment.
And and we are really at theforefront of all these
discussions with customers, andthat's super exciting.
SPEAKER_01 (07:17):
So I I'm I mean I'm curious about a lot of things,
but first off, first off.
So, with all your experiencesand the challenges that you've
dealt with and the triumphs thatyou've enjoyed, what do you
think is the most perplexingaspect when you're looking to
integrate ethics into yourbusiness practices and and at
(07:39):
the same time, does itcompromise profitability?
And I know it's not an absoluteanswer, but can you just give us
some insights into how to how tolook look at that?
SPEAKER_02 (07:52):
Yeah, happy to do that.
And first of all, it's probablyI I probably started this a bit
like when you are listening tome now, where you think about
hey, this guy is talking aboutbusiness ethics, but what does
this actually mean?
Is that ESG?
Is it sustainability?
Is that compliance with localregulations?
Like what is this ethics?
And uh and and that shouldanswer a bit the the challenge
(08:17):
that we are facing here becausebefore we has have actually
scientifically and with withactual customer projects defined
what business ethics is, therewas no unified definition
around.
There was a lot of literaturearound that was very academic
and very theoretical, and thenthere was a lot of practical
projects that were not reallyfundamentally successful,
(08:40):
besides maybe certifying certaincustomers or institutions on
ethical behavior, but not somuch really impacting their
business.
So we started working on that,and what really struck me was
that it's it's much wider thanyou think.
So we have built a framework, anetwork, a framework of 120
(09:00):
single criteria that we lookacross the whole operations of a
company.
And now you asked me what wasmost interesting about this
research and about the projectswe are doing, and that is
basically that these 120criteria, they are they are the
same across the globe.
Like whether we talk aboutcompanies in the US, uh in Asia,
(09:22):
in China, in Japan, in Singaporeand other countries, they are
across Europe, everywhere.
These 120 criteria really seemto be uh a good set of what a
company should consider whenthey talk about ethics.
Now, as we always say, the devilis in the detail.
Um, how do you how do you definethe thresholds and the bars of
(09:45):
each and every of thesecriterion?
This has local nuances.
And I give you a very goodexample that probably many of us
uh here who listen in canresonate with.
Um when when I worked inconsulting many years ago, uh we
had a few core principles of howthis consultancy would operate,
and that was Accenture at thattime.
(10:06):
And we were always wondering whyis honesty not a core principle?
Like you would think about ifyou are a consultant, then you
you you have an and you comefresh from uh your own business
or university.
You think about, hey, honestyshould be something that people
should strive for.
But then what we found out ishonesty is actually very
difficult to measure.
Like everybody understandssomething something differently
(10:28):
about it.
And when you make that a bitmore concrete of price
negotiations, like there's acomplete different world of how
if you walk into a let's say afurniture store in New Jersey,
and and it's not like a storewhere the prices are fixed, it's
more like a store where they docustom-made things for you and
then they build it in and so on.
(10:50):
Then the way how a salespersonwould work with you is very
different as if you would walkin a similar furniture store,
let's say, in um in northernEurope, like in Denmark or or um
or in Sweden or in Finland.
And it would also be verydifferent if it was Italy, and
it would even be more differentif it was China.
(11:11):
And and that has to do withmostly with the way how sales
works and how what we would callhonesty is interpreted
differently.
Um and and one good example inthat sense is really that the
starting point of where youstart a price and how much
you're willing to discount isvery different.
So when you think about ethicsnowadays and and how do you
(11:34):
bring this now to life, is thatacross this 120 criteria,
there's one dimension that'scalled sales, and within there
is a sub-dimension that's calledpricing, and then you have a few
factors around.
And now when we work withcustomers, the interesting thing
is that we really work on thenuances of the sub-factors in
every element and define whatdoes ethical mean in a very
(11:57):
specific market.
And I find that as just onesimple example super exciting,
that that this that there are somany nuances globally.
SPEAKER_01 (12:05):
But so this is this is what I'm this is what I'm
wondering here, and I I I'mamazed that there's 120
different criteria.
But uh, so if you take thecriteria and then you throw in
the fact that uh we all may havea different perception of
exactly what ethical behavioris, right?
(12:26):
Ethical practices.
And so is it simply based on theI'll say the business funnel
where there may be a difference,or the country of origin where
the business is taking place, oris it a a cultural thing?
Um is it a depending on aperson's you know personality or
(12:46):
character, I mean, aren't thereother areas that affect uh how
we look at ethics?
SPEAKER_02 (12:55):
Yeah, I think it's a very good question.
And and I I feel like althoughwe're doing this for quite a few
years now, we are still at thebeginning of all this research.
Um what I can tell you, besidesthe country focus, there is a
lot of difference between thesize of the organizations and
larger organizations globallytend to have a different
(13:17):
understanding because they havemore standards and they have
less individual contributions,less individual nuances that
people bring in.
So there's more standards, andtherefore you could argue that
in our world, and that's reallyin our very personal opinion,
the business might be moreethical because it's more
standardized, and there is thereis less, let's say, unethical
(13:38):
cases potentially happeningbecause there's less variations
in how salespeople, for example,or anyone in the company treat
customers.
So that's one thing.
The other big uh element that wehave seen, and this is also true
globally, is that businessesthat are family owned, and that
can be again all sizes ofbusinesses, but think about even
in in Europe, we have a fewhidden champions that have five
(14:01):
or ten thousand employees andthey are fully family-owned, not
a single uh euro taken from thecapital markets 100%
self-financed.
So there's actually an owner orfamily on top who make the
decision.
And those businesses have adifferent view on on some of the
elements that that we wouldrelate to um, how should I
(14:24):
describe that that we wouldrelate to to the to the to the
long-term impact a businessshould make.
In contrast to in otherbusinesses, you usually have
leaders that are incentivized byquarterly numbers and quarterly
outputs or even monthly numbers.
And in family businesses,usually there is a longer, a
(14:46):
longer cycle, and there is thewillingness to sacrifice profits
for some time for a greatergood.
And I give you a practicalexample at Mersk, where I'm
currently working, we have uh weactually to a large extent
family-owned.
And and we have a very peculiarway of how we treat customers
and how and how we how webelieve we want to ensure a
(15:10):
long-term customer success and along-term customer almost
happiness by by not jumping thecurve on every single global
change in logistics, capacitychange, and so on, but really
adhering more to contracts andto long-term agreements.
And that is something that Ihave seen across our research
with many family businesses orfamily-owned businesses.
SPEAKER_01 (15:34):
Okay, so I want to pivot a little bit.
I want to let's let's go back tothat intersection that we
started from.
And imagine we've got a trafficlight, and that traffic light is
tariffs.
So, how do we negotiate with ourpartners in the face of sitting
(15:57):
at this intersection and nowlooking at that tariff traffic
light?
And when it comes to ethics andtrust and our strategic
partners, do you think all ofthis increases, allows us to
increase our trust in ourthird-party relationships, or
does it make us second-guessthem a little bit more?
SPEAKER_02 (16:22):
I think it's it's again a very good question, and
it's also highly related to whatis happening in the world
globally, where we see not onlytariffs, but generally we see a
higher unpredictability of thefuture.
And that I think is critical onall aspects because usually
everybody in business wantspredictability.
Think about supply chains, theyare all originally built for
(16:45):
obviously efficiency, but alsopredictability.
And with tariffs, I think itgoes back to one of the
questions that I think I haven'tanswered earlier when you when
you started talking aboutwhether ethics have an impact on
financial performance.
So let me let me start with thata little bit because then I I
can I can explain the tariffsituation better.
(17:06):
So, what we have found out inall our research, and that is
true for big and small customersglobally, is that if you
perceive or if you pursue along-term relationship with your
customers and if you have alonger-term view than one
quarter, then any ethical changethat you make has a positive
(17:26):
impact on your financialperformance.
And it goes, this goes forrevenue, but also for
profitability.
Now, when you and we can talkabout this a bit later, but uh
when you when you think aboutthe situation with tariffs now,
then I think one key criterionthat that we have in any
customer discussions thatcompanies should pursue is a
(17:48):
certain degree of uprightnessand a certain degree of
transparency about how or whichelements drive a price.
And tariffs is usually somethingthat is totally out of control
of as an individual company.
This is something that is uhimposed by governments and it's
it's it's subject to to globalnegotiations, and a single
(18:12):
company can usually not impactthat on the short term.
So, what what we found out isthat in in similar cases, that
the transparency about theimpact, and we can call that
open book policy, is somethingthat is perceived very well.
And I see that every day indifferent situations where we
have a shortage of capacity, andwhen we are upright with
(18:34):
customers about the shortage ofcapacity and that we somehow
need to solve it, then theacceptance is usually higher.
Customers might still not likeit to pay more, but they
understand it, and then thelevel of trust is higher, and
then the future business ishigher.
And that's the link that Imentioned between ethical
behavior and financialperformance.
(18:54):
Uh now I think ethics or tariffsalso have a second element, and
that is a long-term function ofhow to direct business or how to
direct supply chains.
And I think what we globally seealready since a few years, and
it actually started before thetariff discussion with a few
other discussions aboutdecoupling from certain markets
(19:16):
or de-risking from certainmarkets, is that there is a
trend that we see across allproduction companies globally to
source locally and produce evenlocally as much as possible.
And I think that is somethingthat in the long run will lead
to a bit higher prices, but itwill also lead to greater
(19:36):
flexibility and a greater way toserve local markets with local
products.
And it also fits into a strategythat selected local markets,
anyways, nowadays want to havetailor-made products that are
different from the products soldin other markets.
So I think overall it itprobably directs businesses in
(19:59):
that sense in a good direction,that it that it encourages
businesses to produce atdifferent stages for different
markets or different countriesfor different markets, and so it
creates greater flexibility anda greater selection of products
that are accepted by the localcustomers in a better way.
SPEAKER_01 (20:17):
And do you think this uh shift in strategy, um,
if you will, is that you thinkthat that may remain going
forward?
Let's say we, you know, the theconstant changing of tariffs and
the percentages um being thrownout and changing, once we get
past it, I'm being positivehere, and and and realize a
(20:41):
little bit more um consistency.
Do you think this greater, thisthis open book way of doing
things and um the increasedflexibility, you think that will
remain?
SPEAKER_02 (20:53):
I think so, because tariffs is one element out of a
globally, yeah, out of a globaldevelopment of greater
uncertainty.
And and tariffs is one elementthat is actually relatively easy
to handle from an ethical pointof view because you can clearly
explain it.
There's other things that aremuch more difficult, like for
(21:14):
example, how do you deal with uhraw material increases that that
happened due to uh stockexchange speculations that
happen somewhere else in theworld?
Or when you think about uh whenuh when Russia invaded Ukraine,
then there was a big impact onuh on uh on certain grocery
(21:34):
prices because they were mostlyproduced in the Ukraine.
And that had a big impact ofthese products to be sold or to
be available in Africa, wherethe price points are actually
very sensitive and where peoplecannot afford to pay even 10 or
20 percent more.
And I think changes like this isobviously beyond or yeah,
uncertainties like this isbeyond terrorists, that's
(21:56):
geopolitics, but that might bealso triggered by uh.
By nature, situations like an amore unpredictable climate,
which might also change in thefuture and and create higher
uncertainty about the ability toproduce products in certain
markets at certain quantities.
Like think about what'shappening currently in uh in
(22:18):
southern Italy and Spain, wherethe olives are getting uh are
getting lesser and lesser.
So I think it maybe olive oil isnot the thing that we should
really worry about in the world,but I think it's one example of
of many more things that arehappening.
And I think companies areprobably well advised to to
generally think about a greaterflexibility so that they can
(22:40):
have this resilience for changesthat come up.
SPEAKER_01 (22:44):
And and the geopolitical challenges that
you've just noted, and no doubtthere will be more to come, and
climate change and you know theafter effects of it.
I'm I I'd like to throw in AIintegration into that as part of
the conversation.
And I think companies may lookat that a little differently.
(23:06):
I mean, for some, you know, itmight be it might be something
they are using and it feels likeit's all happening at the right
time.
But then maybe for othercompanies they might look at AI
as just another disruption.
So how is there a I don't wantto say like a one size fits all
(23:27):
on how to add AI into into yourdirections, you know, your
options when you're at thatintersection?
Is there something that, youknow, maybe it stands out as uh
as a barometer to decide when AIis a good good way to go for you
or not?
SPEAKER_02 (23:46):
Yeah, and and probably to stick with this
analogy of the intersection,yeah.
And I would think that AI isprobably something like a super
highway that you can build ontop of your intersection, and
that in any direction you wantto go, it brings you faster
there with less stops and andand less and also less risk on
the way to to run your business.
(24:08):
And I tell you why.
When um when when I did and Imentioned the SAP projects that
I did in Japan in 2008, whenwhen that happened, that was the
time where companies were allabout integrating large and
standardized software.
And SAP was one example, butlater on in the procurement
space, we had Ariba, which wasthen acquired by SAP, or we have
(24:31):
Cooper, we have we have manyother systems.
And and all these systemsbasically work on a very simple
logic of input and output.
And they work or they needstructured data to work, and
that limits the systems becauseyou somehow need to get this
data in.
And if you don't have the datain the systems, don't perform as
efficiently as you might think.
(24:53):
And when you look at currentlywhat's happening in companies,
um, then most of the work thatcannot be handled by those
systems, and let's stick toprocurement and let's talk a
little bit about things likefree text orders or services
procurement.
Then the reason why those thingsare manual is because they are
not so easy standardizable, andand they would actually need to
(25:17):
have people to look at it.
They would need to have peopleto compare different offers and
to standardize them and usetheir brain power to standardize
offers so that they can be thenput into a system to make a
decision.
And that system can be aprocurement system or can even
be Excel or Word or whatever.
And I think with AI, what wehave seen nowadays is that AI
(25:40):
can do this, and especially theagent capabilities of AI.
And I I give you one examplethat was really fascinating for
me to see that I work with a fewstartups here in Europe, um, and
usually these startups all needcapital.
And then there are selected wayshow to raise capital from angel
investment to series A, B, andso on.
And there is uh in SiliconValley, there's a company that
(26:02):
does AI-based investments.
And what you do is you send yourpitch deck to an AI agent, and
this agent asks you questions.
And you go into a call with thisagent, this agent identifies
himself not as a human but as anAI.
And you have a conversation withthat person about your business.
And I mean, I've done it myselffor a few of the startups here,
(26:25):
and it's like you if you wouldnot look at the screen and see
that it's not a human being, youwould think it is a human being.
You can actually also chat withthem while you while you are on
the call.
You can send them emails and youget you get answers.
And I mean it's way beyondwhatever you probably have in
mind of other chatbots that aresomewhere used, or or you know,
(26:47):
these these hotlines thatsometimes on your phone you call
and it says, say one for thisoption and two for this option,
and in many cases these systemssay, I didn't understand what
you say, can you please repeat?
And yeah, we all know thatprobably.
But but you know, this AI agent,this is so advanced.
And and and it's also likeinvestments, you think it's
(27:07):
simple, but it's actuallyunderstanding a pitch deck,
assessing the business, relatingthis to other global data, it's
actually very complicated.
And the first 70% or 80% isprobably easy, but then really
making that final decision, andthat's what the agent does,
making that final decision toinvest into a company, yes or
no, that is actually very, verychallenging.
(27:29):
And when you think that an agentcan do this already now, then I
would ask you in three yearsfrom now, don't you think that
agents can can fix anything?
Like in our world of logistics,where where we where we work a
lot with manual processes, whenwe need to reroute containers or
pallets on a on an airplane, orwhen when things get stuck at a
(27:53):
at a terminal somewhere and theycouldn't be loaded on this ship
and reload on the next ship.
I mean, many of these things aremanual.
But this can this can all bedone by agents.
So when customers log into awebsite and check where their
stuff is, and then they get theoption to either fly it from the
next port to save seven days, orunload it at an earlier port and
(28:16):
truck it, or bring it to theoriginal port.
And then you know all thesethings have basically a mix
included of costs and time.
I mean, this decision can bedone by an agent.
It's very simple.
And um, and I think we are weare just at the beginning of a
revolution that that I thinkwill be so fundamental, it's
(28:37):
probably like theindustrialization that happened
in the in the 19th century.
SPEAKER_01 (28:41):
I don't know.
The the AI agents that you'respeaking about, um, for me, just
hearing the details and and whatthey can do, um I kind of have
mixed feelings, like it's veryexciting and so frightening at
the same time.
SPEAKER_02 (28:59):
Yeah, and I I think the good thing is that when you
again think about the IndustrialRevolution, the the steam
machines, they took a lot, theytook away a lot of dangerous and
routine work from people.
And now, if you think about umyou work in an office, you work
in procurement, and you need todo services procurement, then
(29:19):
that's not a dangerous job,maybe, except you could hurt
your back by sitting wrongly ona chair or so.
But it's not reallylife-threatening in that sense,
like it was before.
But but still, I mean, many ofthese jobs, uh they are not
really.
I mean, I have I've seldom metpeople who were really so
excited about uh running thesetenders every day.
SPEAKER_01 (29:39):
Right.
SPEAKER_02 (29:40):
I mean, they are excited, obviously, you are
talking to suppliers and youknow, finding the best deal, but
then many of these practicalsteps on the way, they are
probably not.
I have really barely met peoplewho said, Oh, yeah, I'm so
excited about comparing these5,000 Excel lines or so.
And even if I use a tool tocompare it, I'm not so excited
to do that.
So I think it will it will levelup the the complex or the yeah,
(30:05):
the complexity of a job, orlet's say the output that a
person can produce, but it willalso, to my understanding, make
it much more fun for people thatthey work on because they will
suddenly work on things that aremuch more strategic, that are
much more interesting, and theywill and and I I think that
everybody will be a manager atsome point in time because
(30:28):
people need to supervise the AIagents.
I mean, somebody needs to lookat them and make sure they're
doing the right thing, that willnot go away.
So everything that that isassociated to human beings and
is exclusively there will stay,and that is somebody needs to
make a final business decision,right?
Somebody needs to uh to usecreativity to think about new
(30:52):
solutions and products andtechnologies.
And yeah, you can ask the AI,give me a few options and
calculate a business case and soon.
And that works already now withany of the tools that we use,
they in and out.
But then the final decision onsome of this, this is something
that will not go away.
So, and this is what what Ithink is interesting for people
(31:12):
that they will be able to workon on you know making strategic
decisions around in contrast toexecuting let's say purchase
orders in that example.
SPEAKER_01 (31:22):
So I I'm I'd like to know.
Um so if you take all the thingsyou mentioned and and we're
looking at moving our businessforward, let's say over the next
couple of years, I I'm wonderingif we're, you know, now we're
going back to that intersection,what should we prioritize?
(31:43):
Our business operations, AI,ethical behaviors, ethics,
ethical practices, or ourprofitability?
While we're sitting here, we'vegot all those avenues in front
of us, behind us, to the sides.
What can you give us like anorder of prioritization, or is
that too difficult?
SPEAKER_02 (32:04):
Yeah, no, no, I'm I'm happy to try that.
So uh in in my business and myventures that I'm invested, I
usually really start with theethical point of view because I
believe that's the foundationfor everything else.
And uh and I tell you why I hadthe Amazon example at the
beginning of our conversation.
And and you and you can probablyresonate if you build a company
(32:25):
based on customer obsession,that directs everything else
what you do.
And and so Amazon did that formany years until they they
shifted a bit into other areasas well where they focused on
business ethics.
But if you as a business nowdecide that you focus on values
that you would like to bring foryour customers, bring to the
market, that directs everythingelse you do.
(32:47):
So I think that's the firststarting point.
And then you as a business needto decide how deep do you want
to go.
Like I had this example earlierabout pricing and then different
understanding of negotiations inthe world.
I think in every of thesemarkets where I talked about,
there is there's probably a goldstandard of how most people
(33:08):
would think that should be done,and then there's something else.
And then there are some thingsthat are non-negotiable.
Like usually, what isnon-negotiable is that if you
give somebody a price, that'sthe price, and then you don't
come around a day later and say,Oh, by the way, I forgot you
also need to pay this in orderto get the service.
So those things are globallyuniversal.
That's why I think it startswith values and it starts with
(33:30):
your own positioning of whereyou want your business to be in
that construct.
The second thing is what Imentioned about de-risking, so
the idea of multi-sourcing localpresences.
I think that really becomesincreasingly valuable, and I
tell you why I put this as asecond priority because I think
it takes a lot of work to dothat, it's not so easy.
(33:52):
Ethics is relatively easy.
You can well, making thedecision how to operate your
business, it's easy, then youneed to do it.
That's also hard work.
But de-risking and your supplychains and your sourcing and
production is much more complex.
You need to build somethingphysically up and you need to
make sure you do that.
And that's why, to me, thatwould be the second priority.
(34:13):
And the third one would be AI,because I think that once you
have decided how where youproduce in the world, where
you're selling the work, whatyour supply chains look like,
then you can think of how youoptimize that with AI and which
functions you bring into ahigher degree of automation.
And then profitability, and thatis really proven by our projects
(34:36):
globally, but also by ourstudies.
Profitability is an output ofbasically running your business
very ethical as one element, butobviously very well in many
other elements too.
And uh, and and so I thinkprofitability is something you
will always watch, you willalways have a goal.
It's also non-negotiable.
You you can't run a businesswithout profitability, but it's
(34:57):
it's more for me kind of anoutput that that you steer by
looking at the right inputs.
And the inputs is an ethicalbehavior, a global de-risking,
and then using AI as technologyto really improve improve your
operations.
SPEAKER_01 (35:13):
Burkhard, this has been so helpful.
Thank you so much for beinghere.
Um, very informative.
Um, this has been great.
Um, if uh anyone listening wouldlike to kind of keep this going
with you, is there a way you'dlike them to reach out, get in
touch?
SPEAKER_02 (35:33):
Yeah, so we have actually published our research
uh on a website calledultracentric.foundation.
And that is uh it's again anonprofit association that uh
that we work with and and thatwe have founded.
And there you find much moreinformation, and there you also
find the contact details to getin touch with us.
SPEAKER_01 (35:51):
Thank you.
Thank you so much.
I'll keep in touch with you forsure.
Um and to uh replay thisepisode, check out all of the
other great shows we have.
You could check out the libraryof content, ismworld.org.
Head over to the news andpublication drop-down menu.
Also, if there's a topic youthink we should be chatting
(36:13):
about, you know what?
Let us know.
Send us an email, supplychainunfiltered at ismworld.org.
Thanks so much for being here.
Always appreciate yourlistenership.
I'm Melanie Stern for ISM andSupply Chain Unfiltered.
For real stories on how global business gets done,
this is Supply Chain Unfiltered,presented by the Institute for
Supply Management.
SPEAKER_01 (00:16):
You know, I do love that show intro.
I just had to say it.
I'm Melanie for ISM, and yes,Supply Chain Unfiltered.
We are ready to go today.
I'm going to start things off bykind of giving you, I'll say a
supposition.
So imagine, you know, wherewherever you're working, whether
(00:38):
it's you're working for someoneelse or it's your own your own
entity.
Imagine you are literallysitting at the middle of an
intersection, and and it's abusy intersection, okay?
And you've got obviously fourdifferent directions.
One of them is your business,how you operate, another one is
(01:00):
AI, the other one is yourethical practices, and the other
one is profitability.
And you've got to navigate allof them.
Today, with us to help us diveinto that, we have Burkhard
Schemmel.
He's president, member of theBoard of Trustees, Research
(01:21):
Institute of AlterocentricBusiness Ethics, and Senior
Director, Head of Sales NorthEurope, AP Muller Maersk.
Hi, Burkard.
We have been uh waiting to dothis for quite some time, right?
SPEAKER_02 (01:35):
Yeah, and it's a pleasure to be here, Melanie.
Really excited.
SPEAKER_01 (01:38):
Me too.
I have a real pleasure to haveyou.
Um, so uh first off, you know,just share a little bit about
yourself and some of thebusinesses you've been involved
in.
I I understand you've coveredAsia, the US, European markets.
So uh give us some tidbits ofinformation.
SPEAKER_02 (01:57):
Yeah, happy to do that.
And my life really brought meinto various different places
globally for work, besidesobviously all my personal
travels as well.
But you know, I when I studied,I founded my my own company, and
then uh once I sold that twoyears later after my studies, I
went into consulting, and thatbrought me to working in the US
(02:17):
for some time, a couple ofyears, uh, but also in uh in
Japan and in China, andespecially in Japan.
I mean, that was superinteresting at that time.
That was in 2008, at a timewhere Japan was already opening
up, but you really had a lot oftraditional culture.
And I remember I was sent thereto introduce an SAP rollout that
(02:39):
we had configured back inEurope, actually in Germany,
with a with a German largecorporation, and we wanted to
roll it out to the Japaneselegal entity there.
And you know, I had I hadn'tbeen to Japan before, I traveled
a bit to other Asian countries,and you know, I heard about all
these things that it would bevery hard for foreigners to do
business there and the languagebear and everything.
(03:01):
And to be honest, it was mucheasier than I thought, because
the rules of how businessoperates there had been very
strict.
And if you read them and if youfollow them, it's actually
relatively easy to get along.
And the people are and and stillthey are, have been there just
last year recently for apersonal wedding of a friend of
mine.
(03:21):
Uh, but the rules, if you followthem, the people are so friendly
and helpful, and we actuallyfinished the rollout ahead of
time with fewer changes andadditions to the standard
solution that we have configuredback in Germany.
So that was a good experienceand and really taught me a lot
about that.
You should not only think aboutor or listen to what others say,
(03:43):
but you really need to, youknow, get your arms around
yourself and then understandwhat's happening and and then
and then judge yourself.
And then later, after this timein consulting, I spent a few
years at Amazon, and that wasreally where business ethics
kicked off as an as a concept inmy head, because um at that
time, and that was 2017 whenwhen I joined Amazon, um, it was
(04:06):
basically all about customerobsession.
And uh and Amazon was obviouslyalready very big in Europe,
Germany was the biggest marketoutside the US at that time, and
they had just launched a newservice called Amazon Business,
which is basically a B2B saleschannel.
So if you think you are if youare a customer or a company like
(04:27):
ISM or any other uh or aninstitution, then you can buy
your products on Amazon Businessas opposed to Amazon, and that
gives you additional selection,better prices, and so on.
So we rolled that out in Europe,and I was employee number five
or six in Europe to do that.
And and and you know, it waslike there was a great hype of
everybody was interested inworking with Amazon.
(04:50):
And you know, after a few years,then we had great trajectories
and great success stories, butafter a few years we came to a
bit of a plateau, and then Ilooked into that, and then I
realized that there was a bigamount of customers, especially
public entities here in Europeand any countries in Europe that
we were present, like Germany,France, Italy, Spain, and so on.
(05:12):
And they were there was a lot ofreluctance, and mostly because
these public entities, theythought like Amazon might be not
as ethical as as we like it tobe.
And then you know, I starteddigging into it and starting to
to understand what does businessethics actually mean, and how
can you how can you uh elevateor not elevate, how can you how
(05:35):
can you measure whether acompany is ethical or not?
And then actually was startingright there.
And I had in my head alreadythat I want to build a system so
that we can understand howethical companies are, and uh
and and that really kicked offat that time.
And then um nowadays I'm at atuh Mersk, which is a global
logistics company, where weagain have every single week
(05:58):
ethical discussions in myleadership team around how we
treat certain customers, if youhave global congestions in uh in
traffic, if you have lesscapacity, which customers do we
prioritize?
And I mean these decisions, andyou said that very well in your
introduction, it feels likethese decisions are an
intersection with fourdirections.
(06:20):
But actually, what we cameacross, and I think we'll talk
about in this interview a littlebit, is what we came across is
that it's not mutuallyexclusive.
And and there are actually somethings that by ethical behaviors
you might even benefit from afinancial point of view.
And and I find that superexciting, and that actually
brought me to uh to launching myown think tank, which is a
(06:42):
non-profit association calledResearch Institute of
Ultracentric Business Ethics,where we do exactly this.
Like we work with academia, butalso with uh with customers from
from all sizes of industry, allsizes and all industries, and
really work on projects and helpthese customers to navigate in
today's world.
And that includes obviouslybusiness ethics, but a lot of
(07:03):
other discussions.
And you mentioned a bit of AIand technology, uh, we have a
big transformation ahead of usin in not only in Europe but
also in the US at the moment.
And and we are really at theforefront of all these
discussions with customers, andthat's super exciting.
SPEAKER_01 (07:17):
So I I'm I mean I'm curious about a lot of things,
but first off, first off.
So, with all your experiencesand the challenges that you've
dealt with and the triumphs thatyou've enjoyed, what do you
think is the most perplexingaspect when you're looking to
integrate ethics into yourbusiness practices and and at
(07:39):
the same time, does itcompromise profitability?
And I know it's not an absoluteanswer, but can you just give us
some insights into how to how tolook look at that?
SPEAKER_02 (07:52):
Yeah, happy to do that.
And first of all, it's probablyI I probably started this a bit
like when you are listening tome now, where you think about
hey, this guy is talking aboutbusiness ethics, but what does
this actually mean?
Is that ESG?
Is it sustainability?
Is that compliance with localregulations?
Like what is this ethics?
And uh and and that shouldanswer a bit the the challenge
(08:17):
that we are facing here becausebefore we has have actually
scientifically and with withactual customer projects defined
what business ethics is, therewas no unified definition
around.
There was a lot of literaturearound that was very academic
and very theoretical, and thenthere was a lot of practical
projects that were not reallyfundamentally successful,
(08:40):
besides maybe certifying certaincustomers or institutions on
ethical behavior, but not somuch really impacting their
business.
So we started working on that,and what really struck me was
that it's it's much wider thanyou think.
So we have built a framework, anetwork, a framework of 120
(09:00):
single criteria that we lookacross the whole operations of a
company.
And now you asked me what wasmost interesting about this
research and about the projectswe are doing, and that is
basically that these 120criteria, they are they are the
same across the globe.
Like whether we talk aboutcompanies in the US, uh in Asia,
(09:22):
in China, in Japan, in Singaporeand other countries, they are
across Europe, everywhere.
These 120 criteria really seemto be uh a good set of what a
company should consider whenthey talk about ethics.
Now, as we always say, the devilis in the detail.
Um, how do you how do you definethe thresholds and the bars of
(09:45):
each and every of thesecriterion?
This has local nuances.
And I give you a very goodexample that probably many of us
uh here who listen in canresonate with.
Um when when I worked inconsulting many years ago, uh we
had a few core principles of howthis consultancy would operate,
and that was Accenture at thattime.
(10:06):
And we were always wondering whyis honesty not a core principle?
Like you would think about ifyou are a consultant, then you
you you have an and you comefresh from uh your own business
or university.
You think about, hey, honestyshould be something that people
should strive for.
But then what we found out ishonesty is actually very
difficult to measure.
Like everybody understandssomething something differently
(10:28):
about it.
And when you make that a bitmore concrete of price
negotiations, like there's acomplete different world of how
if you walk into a let's say afurniture store in New Jersey,
and and it's not like a storewhere the prices are fixed, it's
more like a store where they docustom-made things for you and
then they build it in and so on.
(10:50):
Then the way how a salespersonwould work with you is very
different as if you would walkin a similar furniture store,
let's say, in um in northernEurope, like in Denmark or or um
or in Sweden or in Finland.
And it would also be verydifferent if it was Italy, and
it would even be more differentif it was China.
(11:11):
And and that has to do withmostly with the way how sales
works and how what we would callhonesty is interpreted
differently.
Um and and one good example inthat sense is really that the
starting point of where youstart a price and how much
you're willing to discount isvery different.
So when you think about ethicsnowadays and and how do you
(11:34):
bring this now to life, is thatacross this 120 criteria,
there's one dimension that'scalled sales, and within there
is a sub-dimension that's calledpricing, and then you have a few
factors around.
And now when we work withcustomers, the interesting thing
is that we really work on thenuances of the sub-factors in
every element and define whatdoes ethical mean in a very
(11:57):
specific market.
And I find that as just onesimple example super exciting,
that that this that there are somany nuances globally.
SPEAKER_01 (12:05):
But so this is this is what I'm this is what I'm
wondering here, and I I I'mamazed that there's 120
different criteria.
But uh, so if you take thecriteria and then you throw in
the fact that uh we all may havea different perception of
exactly what ethical behavioris, right?
(12:26):
Ethical practices.
And so is it simply based on theI'll say the business funnel
where there may be a difference,or the country of origin where
the business is taking place, oris it a a cultural thing?
Um is it a depending on aperson's you know personality or
(12:46):
character, I mean, aren't thereother areas that affect uh how
we look at ethics?
SPEAKER_02 (12:55):
Yeah, I think it's a very good question.
And and I I feel like althoughwe're doing this for quite a few
years now, we are still at thebeginning of all this research.
Um what I can tell you, besidesthe country focus, there is a
lot of difference between thesize of the organizations and
larger organizations globallytend to have a different
(13:17):
understanding because they havemore standards and they have
less individual contributions,less individual nuances that
people bring in.
So there's more standards, andtherefore you could argue that
in our world, and that's reallyin our very personal opinion,
the business might be moreethical because it's more
standardized, and there is thereis less, let's say, unethical
(13:38):
cases potentially happeningbecause there's less variations
in how salespeople, for example,or anyone in the company treat
customers.
So that's one thing.
The other big uh element that wehave seen, and this is also true
globally, is that businessesthat are family owned, and that
can be again all sizes ofbusinesses, but think about even
in in Europe, we have a fewhidden champions that have five
(14:01):
or ten thousand employees andthey are fully family-owned, not
a single uh euro taken from thecapital markets 100%
self-financed.
So there's actually an owner orfamily on top who make the
decision.
And those businesses have adifferent view on on some of the
elements that that we wouldrelate to um, how should I
(14:24):
describe that that we wouldrelate to to the to the to the
long-term impact a businessshould make.
In contrast to in otherbusinesses, you usually have
leaders that are incentivized byquarterly numbers and quarterly
outputs or even monthly numbers.
And in family businesses,usually there is a longer, a
(14:46):
longer cycle, and there is thewillingness to sacrifice profits
for some time for a greatergood.
And I give you a practicalexample at Mersk, where I'm
currently working, we have uh weactually to a large extent
family-owned.
And and we have a very peculiarway of how we treat customers
and how and how we how webelieve we want to ensure a
(15:10):
long-term customer success and along-term customer almost
happiness by by not jumping thecurve on every single global
change in logistics, capacitychange, and so on, but really
adhering more to contracts andto long-term agreements.
And that is something that Ihave seen across our research
with many family businesses orfamily-owned businesses.
SPEAKER_01 (15:34):
Okay, so I want to pivot a little bit.
I want to let's let's go back tothat intersection that we
started from.
And imagine we've got a trafficlight, and that traffic light is
tariffs.
So, how do we negotiate with ourpartners in the face of sitting
(15:57):
at this intersection and nowlooking at that tariff traffic
light?
And when it comes to ethics andtrust and our strategic
partners, do you think all ofthis increases, allows us to
increase our trust in ourthird-party relationships, or
does it make us second-guessthem a little bit more?
SPEAKER_02 (16:22):
I think it's it's again a very good question, and
it's also highly related to whatis happening in the world
globally, where we see not onlytariffs, but generally we see a
higher unpredictability of thefuture.
And that I think is critical onall aspects because usually
everybody in business wantspredictability.
Think about supply chains, theyare all originally built for
(16:45):
obviously efficiency, but alsopredictability.
And with tariffs, I think itgoes back to one of the
questions that I think I haven'tanswered earlier when you when
you started talking aboutwhether ethics have an impact on
financial performance.
So let me let me start with thata little bit because then I I
can I can explain the tariffsituation better.
(17:06):
So, what we have found out inall our research, and that is
true for big and small customersglobally, is that if you
perceive or if you pursue along-term relationship with your
customers and if you have alonger-term view than one
quarter, then any ethical changethat you make has a positive
(17:26):
impact on your financialperformance.
And it goes, this goes forrevenue, but also for
profitability.
Now, when you and we can talkabout this a bit later, but uh
when you when you think aboutthe situation with tariffs now,
then I think one key criterionthat that we have in any
customer discussions thatcompanies should pursue is a
(17:48):
certain degree of uprightnessand a certain degree of
transparency about how or whichelements drive a price.
And tariffs is usually somethingthat is totally out of control
of as an individual company.
This is something that is uhimposed by governments and it's
it's it's subject to to globalnegotiations, and a single
(18:12):
company can usually not impactthat on the short term.
So, what what we found out isthat in in similar cases, that
the transparency about theimpact, and we can call that
open book policy, is somethingthat is perceived very well.
And I see that every day indifferent situations where we
have a shortage of capacity, andwhen we are upright with
(18:34):
customers about the shortage ofcapacity and that we somehow
need to solve it, then theacceptance is usually higher.
Customers might still not likeit to pay more, but they
understand it, and then thelevel of trust is higher, and
then the future business ishigher.
And that's the link that Imentioned between ethical
behavior and financialperformance.
(18:54):
Uh now I think ethics or tariffsalso have a second element, and
that is a long-term function ofhow to direct business or how to
direct supply chains.
And I think what we globally seealready since a few years, and
it actually started before thetariff discussion with a few
other discussions aboutdecoupling from certain markets
(19:16):
or de-risking from certainmarkets, is that there is a
trend that we see across allproduction companies globally to
source locally and produce evenlocally as much as possible.
And I think that is somethingthat in the long run will lead
to a bit higher prices, but itwill also lead to greater
(19:36):
flexibility and a greater way toserve local markets with local
products.
And it also fits into a strategythat selected local markets,
anyways, nowadays want to havetailor-made products that are
different from the products soldin other markets.
So I think overall it itprobably directs businesses in
(19:59):
that sense in a good direction,that it that it encourages
businesses to produce atdifferent stages for different
markets or different countriesfor different markets, and so it
creates greater flexibility anda greater selection of products
that are accepted by the localcustomers in a better way.
SPEAKER_01 (20:17):
And do you think this uh shift in strategy, um,
if you will, is that you thinkthat that may remain going
forward?
Let's say we, you know, the theconstant changing of tariffs and
the percentages um being thrownout and changing, once we get
past it, I'm being positivehere, and and and realize a
(20:41):
little bit more um consistency.
Do you think this greater, thisthis open book way of doing
things and um the increasedflexibility, you think that will
remain?
SPEAKER_02 (20:53):
I think so, because tariffs is one element out of a
globally, yeah, out of a globaldevelopment of greater
uncertainty.
And and tariffs is one elementthat is actually relatively easy
to handle from an ethical pointof view because you can clearly
explain it.
There's other things that aremuch more difficult, like for
(21:14):
example, how do you deal with uhraw material increases that that
happened due to uh stockexchange speculations that
happen somewhere else in theworld?
Or when you think about uh whenuh when Russia invaded Ukraine,
then there was a big impact onuh on uh on certain grocery
(21:34):
prices because they were mostlyproduced in the Ukraine.
And that had a big impact ofthese products to be sold or to
be available in Africa, wherethe price points are actually
very sensitive and where peoplecannot afford to pay even 10 or
20 percent more.
And I think changes like this isobviously beyond or yeah,
uncertainties like this isbeyond terrorists, that's
(21:56):
geopolitics, but that might bealso triggered by uh.
By nature, situations like an amore unpredictable climate,
which might also change in thefuture and and create higher
uncertainty about the ability toproduce products in certain
markets at certain quantities.
Like think about what'shappening currently in uh in
(22:18):
southern Italy and Spain, wherethe olives are getting uh are
getting lesser and lesser.
So I think it maybe olive oil isnot the thing that we should
really worry about in the world,but I think it's one example of
of many more things that arehappening.
And I think companies areprobably well advised to to
generally think about a greaterflexibility so that they can
(22:40):
have this resilience for changesthat come up.
SPEAKER_01 (22:44):
And and the geopolitical challenges that
you've just noted, and no doubtthere will be more to come, and
climate change and you know theafter effects of it.
I'm I I'd like to throw in AIintegration into that as part of
the conversation.
And I think companies may lookat that a little differently.
(23:06):
I mean, for some, you know, itmight be it might be something
they are using and it feels likeit's all happening at the right
time.
But then maybe for othercompanies they might look at AI
as just another disruption.
So how is there a I don't wantto say like a one size fits all
(23:27):
on how to add AI into into yourdirections, you know, your
options when you're at thatintersection?
Is there something that, youknow, maybe it stands out as uh
as a barometer to decide when AIis a good good way to go for you
or not?
SPEAKER_02 (23:46):
Yeah, and and probably to stick with this
analogy of the intersection,yeah.
And I would think that AI isprobably something like a super
highway that you can build ontop of your intersection, and
that in any direction you wantto go, it brings you faster
there with less stops and andand less and also less risk on
the way to to run your business.
(24:08):
And I tell you why.
When um when when I did and Imentioned the SAP projects that
I did in Japan in 2008, whenwhen that happened, that was the
time where companies were allabout integrating large and
standardized software.
And SAP was one example, butlater on in the procurement
space, we had Ariba, which wasthen acquired by SAP, or we have
(24:31):
Cooper, we have we have manyother systems.
And and all these systemsbasically work on a very simple
logic of input and output.
And they work or they needstructured data to work, and
that limits the systems becauseyou somehow need to get this
data in.
And if you don't have the datain the systems, don't perform as
efficiently as you might think.
(24:53):
And when you look at currentlywhat's happening in companies,
um, then most of the work thatcannot be handled by those
systems, and let's stick toprocurement and let's talk a
little bit about things likefree text orders or services
procurement.
Then the reason why those thingsare manual is because they are
not so easy standardizable, andand they would actually need to
(25:17):
have people to look at it.
They would need to have peopleto compare different offers and
to standardize them and usetheir brain power to standardize
offers so that they can be thenput into a system to make a
decision.
And that system can be aprocurement system or can even
be Excel or Word or whatever.
And I think with AI, what wehave seen nowadays is that AI
(25:40):
can do this, and especially theagent capabilities of AI.
And I I give you one examplethat was really fascinating for
me to see that I work with a fewstartups here in Europe, um, and
usually these startups all needcapital.
And then there are selected wayshow to raise capital from angel
investment to series A, B, andso on.
And there is uh in SiliconValley, there's a company that
(26:02):
does AI-based investments.
And what you do is you send yourpitch deck to an AI agent, and
this agent asks you questions.
And you go into a call with thisagent, this agent identifies
himself not as a human but as anAI.
And you have a conversation withthat person about your business.
And I mean, I've done it myselffor a few of the startups here,
(26:25):
and it's like you if you wouldnot look at the screen and see
that it's not a human being, youwould think it is a human being.
You can actually also chat withthem while you while you are on
the call.
You can send them emails and youget you get answers.
And I mean it's way beyondwhatever you probably have in
mind of other chatbots that aresomewhere used, or or you know,
(26:47):
these these hotlines thatsometimes on your phone you call
and it says, say one for thisoption and two for this option,
and in many cases these systemssay, I didn't understand what
you say, can you please repeat?
And yeah, we all know thatprobably.
But but you know, this AI agent,this is so advanced.
And and and it's also likeinvestments, you think it's
(27:07):
simple, but it's actuallyunderstanding a pitch deck,
assessing the business, relatingthis to other global data, it's
actually very complicated.
And the first 70% or 80% isprobably easy, but then really
making that final decision, andthat's what the agent does,
making that final decision toinvest into a company, yes or
no, that is actually very, verychallenging.
(27:29):
And when you think that an agentcan do this already now, then I
would ask you in three yearsfrom now, don't you think that
agents can can fix anything?
Like in our world of logistics,where where we where we work a
lot with manual processes, whenwe need to reroute containers or
pallets on a on an airplane, orwhen when things get stuck at a
(27:53):
at a terminal somewhere and theycouldn't be loaded on this ship
and reload on the next ship.
I mean, many of these things aremanual.
But this can this can all bedone by agents.
So when customers log into awebsite and check where their
stuff is, and then they get theoption to either fly it from the
next port to save seven days, orunload it at an earlier port and
(28:16):
truck it, or bring it to theoriginal port.
And then you know all thesethings have basically a mix
included of costs and time.
I mean, this decision can bedone by an agent.
It's very simple.
And um, and I think we are weare just at the beginning of a
revolution that that I thinkwill be so fundamental, it's
(28:37):
probably like theindustrialization that happened
in the in the 19th century.
SPEAKER_01 (28:41):
I don't know.
The the AI agents that you'respeaking about, um, for me, just
hearing the details and and whatthey can do, um I kind of have
mixed feelings, like it's veryexciting and so frightening at
the same time.
SPEAKER_02 (28:59):
Yeah, and I I think the good thing is that when you
again think about the IndustrialRevolution, the the steam
machines, they took a lot, theytook away a lot of dangerous and
routine work from people.
And now, if you think about umyou work in an office, you work
in procurement, and you need todo services procurement, then
(29:19):
that's not a dangerous job,maybe, except you could hurt
your back by sitting wrongly ona chair or so.
But it's not reallylife-threatening in that sense,
like it was before.
But but still, I mean, many ofthese jobs, uh they are not
really.
I mean, I have I've seldom metpeople who were really so
excited about uh running thesetenders every day.
SPEAKER_01 (29:39):
Right.
SPEAKER_02 (29:40):
I mean, they are excited, obviously, you are
talking to suppliers and youknow, finding the best deal, but
then many of these practicalsteps on the way, they are
probably not.
I have really barely met peoplewho said, Oh, yeah, I'm so
excited about comparing these5,000 Excel lines or so.
And even if I use a tool tocompare it, I'm not so excited
to do that.
So I think it will it will levelup the the complex or the yeah,
(30:05):
the complexity of a job, orlet's say the output that a
person can produce, but it willalso, to my understanding, make
it much more fun for people thatthey work on because they will
suddenly work on things that aremuch more strategic, that are
much more interesting, and theywill and and I I think that
everybody will be a manager atsome point in time because
(30:28):
people need to supervise the AIagents.
I mean, somebody needs to lookat them and make sure they're
doing the right thing, that willnot go away.
So everything that that isassociated to human beings and
is exclusively there will stay,and that is somebody needs to
make a final business decision,right?
Somebody needs to uh to usecreativity to think about new
(30:52):
solutions and products andtechnologies.
And yeah, you can ask the AI,give me a few options and
calculate a business case and soon.
And that works already now withany of the tools that we use,
they in and out.
But then the final decision onsome of this, this is something
that will not go away.
So, and this is what what Ithink is interesting for people
(31:12):
that they will be able to workon on you know making strategic
decisions around in contrast toexecuting let's say purchase
orders in that example.
SPEAKER_01 (31:22):
So I I'm I'd like to know.
Um so if you take all the thingsyou mentioned and and we're
looking at moving our businessforward, let's say over the next
couple of years, I I'm wonderingif we're, you know, now we're
going back to that intersection,what should we prioritize?
(31:43):
Our business operations, AI,ethical behaviors, ethics,
ethical practices, or ourprofitability?
While we're sitting here, we'vegot all those avenues in front
of us, behind us, to the sides.
What can you give us like anorder of prioritization, or is
that too difficult?
SPEAKER_02 (32:04):
Yeah, no, no, I'm I'm happy to try that.
So uh in in my business and myventures that I'm invested, I
usually really start with theethical point of view because I
believe that's the foundationfor everything else.
And uh and I tell you why I hadthe Amazon example at the
beginning of our conversation.
And and you and you can probablyresonate if you build a company
(32:25):
based on customer obsession,that directs everything else
what you do.
And and so Amazon did that formany years until they they
shifted a bit into other areasas well where they focused on
business ethics.
But if you as a business nowdecide that you focus on values
that you would like to bring foryour customers, bring to the
market, that directs everythingelse you do.
(32:47):
So I think that's the firststarting point.
And then you as a business needto decide how deep do you want
to go.
Like I had this example earlierabout pricing and then different
understanding of negotiations inthe world.
I think in every of thesemarkets where I talked about,
there is there's probably a goldstandard of how most people
(33:08):
would think that should be done,and then there's something else.
And then there are some thingsthat are non-negotiable.
Like usually, what isnon-negotiable is that if you
give somebody a price, that'sthe price, and then you don't
come around a day later and say,Oh, by the way, I forgot you
also need to pay this in orderto get the service.
So those things are globallyuniversal.
That's why I think it startswith values and it starts with
(33:30):
your own positioning of whereyou want your business to be in
that construct.
The second thing is what Imentioned about de-risking, so
the idea of multi-sourcing localpresences.
I think that really becomesincreasingly valuable, and I
tell you why I put this as asecond priority because I think
it takes a lot of work to dothat, it's not so easy.
(33:52):
Ethics is relatively easy.
You can well, making thedecision how to operate your
business, it's easy, then youneed to do it.
That's also hard work.
But de-risking and your supplychains and your sourcing and
production is much more complex.
You need to build somethingphysically up and you need to
make sure you do that.
And that's why, to me, thatwould be the second priority.
(34:13):
And the third one would be AI,because I think that once you
have decided how where youproduce in the world, where
you're selling the work, whatyour supply chains look like,
then you can think of how youoptimize that with AI and which
functions you bring into ahigher degree of automation.
And then profitability, and thatis really proven by our projects
(34:36):
globally, but also by ourstudies.
Profitability is an output ofbasically running your business
very ethical as one element, butobviously very well in many
other elements too.
And uh, and and so I thinkprofitability is something you
will always watch, you willalways have a goal.
It's also non-negotiable.
You you can't run a businesswithout profitability, but it's
(34:57):
it's more for me kind of anoutput that that you steer by
looking at the right inputs.
And the inputs is an ethicalbehavior, a global de-risking,
and then using AI as technologyto really improve improve your
operations.
SPEAKER_01 (35:13):
Burkhard, this has been so helpful.
Thank you so much for beinghere.
Um, very informative.
Um, this has been great.
Um, if uh anyone listening wouldlike to kind of keep this going
with you, is there a way you'dlike them to reach out, get in
touch?
SPEAKER_02 (35:33):
Yeah, so we have actually published our research
uh on a website calledultracentric.foundation.
And that is uh it's again anonprofit association that uh
that we work with and and thatwe have founded.
And there you find much moreinformation, and there you also
find the contact details to getin touch with us.
SPEAKER_01 (35:51):
Thank you.
Thank you so much.
I'll keep in touch with you forsure.
Um and to uh replay thisepisode, check out all of the
other great shows we have.
You could check out the libraryof content, ismworld.org.
Head over to the news andpublication drop-down menu.
Also, if there's a topic youthink we should be chatting
(36:13):
about, you know what?
Let us know.
Send us an email, supplychainunfiltered at ismworld.org.
Thanks so much for being here.
Always appreciate yourlistenership.
I'm Melanie Stern for ISM andSupply Chain Unfiltered.
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