Executive Talk with Chong-Ho Hwang
The CPO will have a different name in the future. His job is to break down the bottleneck that is the procurement department and to enable direct interaction between the consumer and the supplier. Chong-Ho Hwang, Head of Corporate Development and Innovation at Hyundai Glovis Europe, is certain: AI and blockchain will truly merge the functions of purchasing, logistics and production for the first time. We spoke with him about his thoughts.
Hyundai is the second largest company in South Korea after Samsung, a world-class corporation. What are you focusing on today in terms of AI?
Chong-Ho Hwang: Hyundai is in the middle of its transformation from an automaker to a global mobility and technology provider: We are developing robotics with Boston Dynamics as well as electric driving and air taxis. These technologies are designed to work with AI and machine learning. In my area, logistics services, it’s all about optimized, partially automated communication with all service providers, optimizing routes, increasing efficiency by eliminating manual process steps. But that is only a small part of a large, global group.
How far do you estimate the global logistics providers are in their digitalization?
Chong-Ho Hwang: Overall, the logistics industry could be much further along. The last three years have even set us back a bit, because we had to deliver on all fronts, while at the same time being affected to the maximum by the smoldering crises: Driver shortage, chip shortage. In our case, as an operator of 60 ships worldwide: closed ports. Sometimes we didn’t have enough time to push ahead with specific issues. This makes it all the more crucial that the industry is now tackling the necessary changes, now that everything is running a bit more routinely again. We have learned to deal with extreme situations.
Blockchain is considered a technology, but it has not yet made the leap to applications beyond cryptocurrencies to a sufficient extent. Does AI offer new opportunities here?
Chong-Ho Hwang: First of all, blockchain and artificial intelligence are two different technologies. For Hyundai, both yield excellent potential. Let me give you an example: In the field of battery cells, it will be very exciting in the future if they can be identified in a forgery-proof way using blockchain technology, for example. That way, you get the product you ordered – new as well as used batteries. When we think of AI with regard to battery cells, we want to use machine learning to predict more precisely in the future how long a particular cell will be able to store sufficient energy, for example. To decide: Dispose of it, sell it, or incorporate it into secondary technologies in order to extend its lifespan and. In line with the idea of the circular economy, make the best possible use of a good once it has been produced. This is a very important point economically, but also from an ESG and environmental point of view.
You have already been Head of Procurement yourself. If you look five years and then ten years into the future: What will the CPO actually do all day in these times?
Chong-Ho Hwang: The procurement manager of the past was responsible for best price and best delivery conditions. The purchasing manager of the future will become an interface partner who optimally brings supply and demand together. And he will ensure that demanders and suppliers can communicate directly with each other, without the bottleneck of ‘purchasing’. He must solve questions such as: How do I build the interfaces? Which technology do I use? How do I make targeted use of the platform economy? This will confront many people with very big, very personal challenges – because the job description also changes the necessary competencies. But the way I see it, for years we have been trying to better coordinate purchasing, logistics and production. And then we called it supply chain management. But where is the CSCO? It was very often to complicated to really melt these functions. Technologies such as blockchain and AI could make it possible for the first time to really merge the content of the three disciplines mentioned at their interfaces. And then there will be a CSCO rather than a CPO.
Meet Chong-Ho Hwang in person at Crowdfox’s masterclass “How AI is fundamentally changing procurement” at the Procurement Summit. For more information about Chong-Ho Hwang, please follow this link.