Embracing Ethical AI for Future-Ready Automotive Supply Chains

[Transcript]

[00:00:00] Jan Griffiths: This is the Auto Supply Chain Prophets podcast, where you'll hear from experts of all facets of supply chain in the auto industry to help you prepare for the future. I'm Jan Griffiths, your co-host and producer.

[00:00:17] Terry Onica: I'm Terry Onica, your podcast co-host. Let's dive in.

[00:00:23] Jan Griffiths: Hello and welcome to another episode of the Auto Supply Chain Prophets podcast. Let's check in with my co-host, Terry Onica. Terry, what have you been up to?

[00:00:31] Terry Onica: Well, I just got back from our customer conference, and I got to do a panel session with three industry leaders in IT: Pam Meenalochani, she's from Clarios; Andy Amstutz, from Autokiniton; and French Williams, from Royal Technologies. And it was amazing. I love it because we really need to embrace technology, and here's three leaders they're making it not only happen but making it happen fast in their organization. They all were awarded at the conference for what they've done with their implementations and their leadership, so it was really great to see that. I really enjoyed the conversation, and so did the audience. And then, the other thing that I really liked is we had an expert from Google—I should say prior from Google and McKinsey—and he talked about AI and transforming your business with it. I love this quote that he had. I'm going to read it here; it says, "AI is like an intern. They keep learning the more instructions that you give it." And I thought, what a great analogy to explain to somebody how AI works. It's true. It's like an intern. You give them an assignment. They're new. Sometimes, they don't do it exactly the way; maybe you wanted them to do it, but you go back and teach them more. And then, the next time they do, you know, they just keep increasing their knowledge and doing a better job. I thought, isn't that amazing? I love that analogy. It was really good.

[00:01:52] Jan Griffiths: Yeah. You know, I've been using AI lately in my podcasting business because I found a way to use an AI tool to take English audio—so it would take our audio—and it will translate it to another language. I did it in Spanish using our own voices. It's still our voice, but we're speaking a different language, and that is amazing. Now, I will be perfectly honest, Terry, and tell you that AI only gets it 70% right. I've got to use a human translator and an audio editor to modify the speed on the back end. But at the end of it, once I have the humans that interact with the AI tool, I can get it about 98% right. And that's a great, wonderful, positive use of AI. It's helping employee engagement. I can take a CEO of a company and have him speak several different languages to his people, which is so meaningful. If you're an employee in a plant and your native language is Spanish, here's your CEO speaking in his voice, your language. It's incredibly powerful, and I love it. But there's a dark side to that, too. The fact that we can clone somebody's voice is a little scary, and that's why this topic has been coming up a lot lately. And I'm not sure I understand it, but it's a term that I know we're going to be using a lot. And that's ethical AI. Have you been hearing the term, Terry?

[00:03:18] Terry Onica: Absolutely. And when you think about it, you have to think about ethical AI in your business and how you're using it. I can imagine there's all kinds of legal ramifications to it.

[00:03:27] Jan Griffiths: Yeah. And that's why today I am thrilled that our guest is at the top of her game. She is the thought leader on ethical AI, she is indeed Dr. Charlotte de Brabandt. Charlotte, welcome to the show.

[00:03:45] Dr. Charlotte de Brabandt: Hey, Jan and Terry. Thank you so much for having me. It's a great pleasure to be here.

[00:03:49] Jan Griffiths: Now, for those of us in the automotive industry who may not know Charlotte—and if you don't, you need to connect with her on LinkedIn, please. She has a career that is rooted in the automotive industry, but also some other industries too. So let me start. She has worked for Porsche in Germany. She has worked for Volkswagen, both in Germany and in China. She's worked for J&J—I know Johnson & Johnson's not automotive—but it's quite some time at J&J. And then, she's worked at Amazon. And if that isn't enough, she comes back to us in our beloved automotive industry as Head of IT Partner Management at ZF. Charlotte! Wow! What a career! So, tell us, Head of IT Partner Management at ZF, and now you are the thought leader on ethical AI. What is ethical AI?

[00:04:54] Dr. Charlotte de Brabandt: Well, Jan, thank you so much for this kind introduction and just to touch a little bit on ethical AI—since it is a fairly new buzzword, I would say, in the field of AI—ethical AI actually focuses on continuously developing artificial intelligence systems that ensure fairness, and transparency, and accountability, respect for privacy. It is extremely crucial to get more familiar with this word, and as businesses evolve, integrating that ethical AI element is just essential to aligning technology with ethical standards and addressing biases, protecting data privacy. So, companies that then prioritize ethical AI, they get to build trust with their partners, with the vendors, they get to reduce risks, they gain a whole lot of competitive advantage, the whole competitive edge as being responsible leaders.

[00:06:07] Terry Onica: How does the current economic environment really impact the development of ethical AI in business?

[00:06:13] Dr. Charlotte de Brabandt: Terry, the current economic environment, it affects the whole adoption of ethical AI in absolutely various ways. So, we have a lot of economic turmoil globally, as we all know—economic uncertainty—and it may push businesses to prioritize cost savings, that magic word, over ethics but slowing AI adoption. So, in contrast, growth and technology, and that whole technological advancement can spur a lot more investment into ethical AI. And if companies see its value, so additionally, firms that focus on ethical AI then can gain a whole new competitive edge by attracting customers who prioritize ethical practices and then avoiding costly legal disputes and all these reputational issues.

[00:07:14] Terry Onica: And it's so important right now when you think of the sustainability requirements around the world, and part of sustainability is ethics, right? And there's so many surveys going on right now in the industry. So, it's so timely that you're here on the show talking about it because you have to think about this. I mean, it's part of all the sustainability, being ethical, being fair. So, I find it really fascinating.

[00:07:38] Dr. Charlotte de Brabandt: Absolutely. I mean, we have emerging economic trends influencing ethical AI integration. And the whole emphasis on green technology and sustainable practices definitely shapes AI initiatives. So, aligning them with environmental and social goals—ESG goals—staying ahead of these trends is just vital for maintaining that market relevance.

[00:08:03] Terry Onica: How is AI transforming procurement and supply chain, and what ethical considerations need to come into play in those areas as well?

[00:08:12] Jan Griffiths: Yeah. You know what, Terry? I was thinking that because our audience—it's mostly automotive supply chain leaders, right? Or IT—and they're going to be thinking, okay, well, this is great at the business level, but let's bring it down. Bring it down to what does it mean to me as a supply chain leader.

[00:08:30] Dr. Charlotte de Brabandt: Yes. Well, ladies, an excellent question. And AI is definitely revolutionizing procurement and supply chain management by, very much, automating all the tasks that we have going on, also enhancing decision-making, and especially improving the supplier relationships. So, I would say key ethical considerations. They include avoiding these biases but also going more into depth into ensuring transparency and protecting sensitive data. And while AI can help to identify supply chain risks, in my opinion, it's just essential to ensure algorithms are fair and do not disadvantage specific suppliers or regions, if you would like to say.

[00:09:21] Jan Griffiths: How do you do that, though, Charlotte, right? So, if you're a supply chain leader, you've never worked in IT, right, and you're talking about introducing AI—you mentioned decision-making, perhaps making a decision between one supplier or another—how do you make sure that those algorithms are correct? How do you do that?

[00:09:40] Dr. Charlotte de Brabandt: I believe there are various elements. So, ethical AI can definitely strengthen, firstly, supplier relationships just by ensuring the whole fair treatment and transparency. It allows for having objective evaluations of supplier performance and pricing and fostering the magic word: trust and equal opportunities. I would say, additionally, AI though enhances a lot of communication and collaboration by providing real-time insights and enabling a lot more effective engagement. So, overall, ethical AI just helps businesses build stronger, and more transparent, and collaborative relationships with their suppliers.

[00:10:28] Terry Onica: And we love that. I mean, our whole podcast is about building more collaboration, transparency, being better between customers and suppliers to each other—you know, having really good relationships. So, it's really great to hear that can help in that process of collaboration between customers and suppliers.

[00:10:48] Jan Griffiths: And I think it also depends on your mindset towards AI, right? If you have the mindset that, "Oh my gosh, AI is coming. It's going to take over my job. I'm doomed," you might as well hang it up now. But if you look at AI as exactly the way you described it, Charlotte—it is a way to help us drive collaboration, a way to help us build trust—think about all the things that you do in your job that you don't particularly like doing, that is not allowing you to operate at your highest level of creativity and engagement, and using your true human brainpower. Imagine if you could strip all of those things away, all of that data could come to you, and you are focused only on the highest-value task as a human. What a world that would be, and what could you do? I think, in my mind, it's a mindset. Do you think, Charlotte?

[00:11:38] Dr. Charlotte de Brabandt: Absolutely. It's a mindset, and looking also ahead, I think the next five to ten years, ethical AI will continue to play a more prominent role in supply chain management technology than ever. And companies will need to adopt this mindset to continue to evolve with upcoming regulations and societal expectation matching while also leveraging these tools for more innovation and efficiency. So, I think ethical AI will just be crucial for addressing all the challenges like transparency and risk management, sustainability, helping businesses navigate in this complex landscape. But, you know, I wanted to also, just from all my experience, maybe I can also just pull out one example, which could be interesting to other procurement supply chain professionals out there, how others have also successfully implemented ethical AI. And if you, for example, take IBM, they have successfully integrated AI in its supply chain management, actually to enhance procurement, supplier management. And I recently read, leading to improved efficiency and risk management, and all while prioritizing ethical considerations like bias avoidance and transparency. And similarly, to Unilever, they also use AI to optimize its supply chain while addressing ethical issues like fair labor practices and environmental sustainability. So, both these examples, they just show that integrating ethical AI can actually yield significant benefits, including a lot better operational efficiency and an enhanced reputation. Just as an example.

[00:13:33] Terry Onica: One of the things I really like today is this Process Intelligence Solutions. And when you were talking about supply chain purchasing, one of the things that I think is fascinating is when you look at these tools—just the very first step of watching, for instance, do you pay your suppliers, and just seeing how it goes. And sometimes you watch. What you're doing in the process intelligence, and you see it's got, why did it go up to that step? It shouldn't went there. You know, it should have took the straight line across, and now it's going here. It's going down here. It's circling in this step.

So, what fascinates me is that ability, back to collaboration, by these tools can really help. With suppliers, they might be able to get paid faster. You might have better efficiencies and really increasing that collaboration. Even just looking at process intelligence, I think, is fascinating and what it might be able to do for relationships as well.

[00:14:22] Dr. Charlotte de Brabandt: Oh, absolutely. Especially for the relationships. Mentioning a very good point, and stakeholder engagement and engaging, I think, stakeholders is essential for the ethical use of AI. And this involves including our employees, our customers, suppliers, and others in these continuous discussions about AI ethics and governance. And I would say, just a best practice from my toolbox: it's having regular consultations, also gathering feedback consistently, continuously on AI policies, and then having full transparency and addressing concerns. And this whole stakeholder engagement, it definitely builds trust, and gathers just a diverse perspective, and identifies all the potentials that we see for ethical issues early on, leading to a lot more effective and inclusive AI solutions that align with our shared company values.

[00:15:24] Jan Griffiths: So, I'm thinking, I'm listening to you talking, both of you, and you're talking about paying suppliers faster. You're talking about transparency, right? You're talking about making sure that people can see what's going on in the process. There are purchasing and supply chain people out there right now listening to this going, "Oh no, we don't want that." I've worked in many companies where we purposely did not want the supplier to see the data. We did not want to pay suppliers faster. And I think that goes back to this whole idea of leadership and culture. Do you want to treat your suppliers truly as a partner, as an extension of your organization, or do you want to keep them at arm's length and keep them in the dark? And that's a much broader issue. And I think we're going to have to address that first before we can address AI. And Terry and I, fresh off the QAD conference—the Transform conference in Chicago—and the CEO of QAD, Anton, he talked about now it's about being the fast fish, not the big fish. And those words have stayed with me, and I'm going to quote him again and again because it's so true. We're so used to operating with this mindset, this big fish mindset. And certainly, in automotive, it's true. And it's not so much about controlling and being the big fish; it's about being fast and nimble. It's about agility. And I know we overuse those words all day long, but it truly is. It's about looking at what can we apply AI to so that we can focus on supplier relationships. We can actually spend more time at the supplier, not doing all the silly spreadsheets and all the things that we love to do in procurement in order to make sourcing decisions and manage suppliers. Let's have that data come to us. Let AI make some of the basic decisions so we can focus at a much higher level.

[00:17:23] Terry Onica: But you know what, Jan, what people don't think about in paying suppliers and making sure that process is good, you could have a very highly paid person wasting time on a $5-$10 invoice for something.

[00:17:35] Jan Griffiths: Oh, I've seen it. Seen it time and time again.

[00:17:37] Terry Onica: Exactly. So, you know, understanding your processes

and seeing where that's at—just the first step of monitoring and seeing what's going on—there's a lot of savings there. There is good for the customer in this, too, right? And there's good for the supplier. And you know, what excites Jan and I is we're all about going from—I'm gonna steal Jan's line—command and control to collaborative supply chain. And so, I love this, that there's just opportunities there to improve it through AI.

[00:18:08] Dr. Charlotte de Brabandt: Oh, you've both mentioned such great points, and I just need to add a little bit, especially when you both touched upon two great topics. And then, how do we assess the impact of ethical AI? So, I think that's something definitely to keep in mind. And, of course, we need to align with our leadership. But, in my opinion, establishing these matrices that can help to align with our ethical goals and have measurements, like the measurement of fairness, such as like training data diversity and bias absence. Then, also the whole transparency, so having clarity decision-making and then the stakeholder trust and having regular evaluations. And by having these matrices, it helps to ensure that AI systems meet our ethical objectives and allow for necessary adjustments just to enhance their impact. But you were also then talking about, at the beginning again, about our favorite—just how it's transforming supply chain in particular. And aligning, I think, these ethical AIs with supply chain strategies, it really means integrating ethical considerations throughout from procurement to logistics, and this, just coming back to the matrix, it really involves setting clear guidelines of AI use and ensuring that system supports the strategic goals that you set and could then continuously redefining them. So, for instance, if sustainability is a goal, ethical AI then can help to optimize and routes to reduce carbon emissions or assess suppliers based on environmental practices. And then, embedding these ethical AI and supply chain strategies, I think, it really drives for transformations while making sure that we still keep up to our ethical standards.

[00:20:09] Terry Onica: One of the things that I'm thinking about—I participate a lot in the automotive industry—and the first thing I think about is, are there guidelines or frameworks out there for organizations that they need to follow?

[00:20:20] Dr. Charlotte de Brabandt: I think, firstly, establishing a solid governance framework within the organization and integrating ethics into all stages of AI development and engaging the stakeholders for insights that should be the step number one. So, investing into trainings to build internal expertise and then staying informed. But for businesses aiming to then integrate ethical AI as the second step, I do recommend resources such as the IEEE guidelines, the European Commission's AI ethics guidelines, and materials from the AI Now Institute, actually. Additionally, industry-specific resources and case studies can also be found just all over. And there is no perfect match, as there is never perfection around us, but there are just insights into best practices, sharing, and real-world applications of ethical AI. And I do believe that you take it on a case-by-case basis. What does fit into your company's requirements? What fits into your strategic goals? And using the guidelines, using best practice sharing, benchmarking discussions—I think this is a way how you can come up with your optimum starting point and then improving from then onwards.

[00:21:45] Terry Onica: Speaking of that, are there conferences that people could attend that you find particularly useful yourself to go get information on this topic?

[00:21:53] Dr. Charlotte de Brabandt: Well, I understand we have a lot of automotive conferences globally. I'm always a fan of expanding my horizon, and as Jan and I met, of course—I don't want to make any advertisements for conferences—but I do have some conferences in mind where it's important in the field of procurement and supply chain management to just be on top of individuals. And it's not necessarily about whether they are really talking about the topics you're searching for at the conference, but it's more about meeting your peers and then being able to have that network and that conversation and literally setting up a call—you can have an NDA or not—but it's literally an open book call and having these conversations. That's what brings us, in my opinion, a lot forward.

[00:22:42] Jan Griffiths: You know, what you just made me think about, Charlotte, is that you're very well established with ISM, with the Institute of Supply Management, and that's where we met many years ago. What's great about that is, in automotive, we tend to stay within our industry silo, right? Because there are people, and we love to go to industry-specific conferences. But I think it is good to go to a conference where there are other industries represented because you just mentioned—you said Unilever and IBM are way ahead in terms of ethical AI and integrating AI into the supply chain process. And when you're in these conferences that go across multiple industries, then you're able to have those conversations and learn from other industries. And I think we need to do more of that in automotive. Don't you, Terry?

[00:23:31] Terry Onica: Absolutely. You know, it's funny because this past week I was at a conference and I was talking about a supply chain standard. We talk about MMOG/LE all the time—the Materials Management Operations Guideline, Logistics Evaluation—and it's a best practice in automotive. And I created an assessment how you can go through supplier performance in your organization and prove it. And I originally did it for the automotive vertical, which I'm responsible for at QAD. But we had a life sciences customer that adopted it because they really don't have a supply chain standard to follow right now. And, Jan, their success story of implementing automotive best practices and life sciences is amazing. So, absolutely, I believe that we can learn from each other, and I'm sure auto can learn from other people as well too. But it just, when you said that, it was a great example. Just this past week, I'm like, wow, look at how much this is helping somebody else.

[00:24:25] Jan Griffiths: Yeah, we need to do more of that. Charlotte, tell us, what advice would you give to somebody in the automotive supply chain right now, starting to think about AI? What would be the very first steps that they should take? Tell us.

[00:24:41] Dr. Charlotte de Brabandt: The most critical factor just for businesses to get started is to establish a strong governance framework that integrates ethical considerations into aspects or every aspect of AI development and deployment. And this anxious transparency and accountability, and aligning on these organizational values, fostering trust amongst the stakeholders, and then really enhancing our supply chain management. So, it all comes down to really establishing the governance framework. And I do believe it needs to be aligned on your top leadership first because once they are aligned, then it does trickle down within your organization.

[00:25:29] Jan Griffiths: Yeah, you need to know, don't you? How and where are we going to start with bringing AI into this business?

[00:25:36] Dr. Charlotte de Brabandt: Definitely.

[00:25:36] Jan Griffiths: And you've got to start somewhere, but the time to start is right now. It's not tomorrow, it's not next month, next year. You got to start this right now because AI is coming fast and furious, and it's learning and it's getting better every single day. So, you are missing out on an opportunity if you don't start right now. Is that correct?

[00:25:54] Dr. Charlotte de Brabandt: Absolutely. Start yesterday, as we say in automotive.

[00:25:58] Terry Onica: And it should be right at the beginning of your AI journey, right? You need to think about this right up front.

[00:26:03] Dr. Charlotte de Brabandt: Absolutely. And having these continuous conversations—and you mentioned a lovely sentence in this podcast how before, we didn't used to speak with our vendors openly, and it was all kind of top secret—and I cannot resonate more with you on that statement.

When I started 2009 working for Volkswagen, it was really just hiding the vendors and no information and really having that poker face. But then, as time emerged and as COVID happened, and we went into that virtual environment, I remember I then hosted this global RFP, and for the first time, I actually set up a call with 77 vendors. And back then, it was not normal to have that. And they were able to see each other, and that was the very first call I ever did as an experiment—like a social experiment. They were able to see each other, and I said, this is what we are aiming for, striving for, aligning on what is it that you desire to achieve. You guys can see each other, use your vivid imagination, partner up, and come to me with that ultimate solution. So, as I said, there is no perfection. Perfection doesn't exist, but we have experts in the market. And helping them to join up their knowledge and come to us with a proposal—I think that is ultimately what will change and revolutionize the way we will do procurement, and especially with Ethical AI.

[00:27:26] Jan Griffiths: Perfect. And that is a perfect way to close today. Charlotte, thank you so much for joining us. You are indeed the digital futurist that you claim to be on your LinkedIn profile, and we thank you for sharing your knowledge today.

[00:27:41] Dr. Charlotte de Brabandt: Thank you so much for having me. It was a great pleasure.

[00:27:43] Terry Onica: Thank you

[00:27:43] Jan Griffiths: Are you ready to find the money in your supply chain? Visit www.autosupplychainprophets.com to learn how or click the link in the show notes below.