SmartOpt Co-Founder & CEO Soner Babüroğlu: Driving Efficiency In Logistics

Soner Babüroğlu (SB): Our specialization lies in optimizing the complete spectrum of processes within our organization, spanning from the supply chain to the final product, including the company's internal trade & business operations. Instead of simply manufacturing products, we provide comprehensive solutions for forecasting and planning. For instance, imagine you own a refrigerator factory in Kyiv and you want to understand market trends and develop a solid plan for the future. This is where SmartOpt comes in.

We offer reliable predictions for predictive planning, and optimizing the entire process, including your supply chain. It helps you choose the best suppliers for necessary materials and suggests the most efficient means of transportation, such as air cargo, truck, sea, or train. This process, known as milk run, is automatically optimized by SmartOpt within seconds.

Additionally, our company manages and optimizes inventory, ensuring efficient use of existing stock while facilitating the procurement of new stock. It also predicts future market trends, including fluctuations in raw material prices. By anticipating market changes, SmartOpt advises on the timing of investments in raw materials and production, enabling cost savings and maximizing profits.

We're currently collaborating with some of the largest multinational companies worldwide, providing them with our comprehensive optimization solutions.

(SB): AI is a trending topic, with many people incorporating it into their operations, even if they're just using spreadsheets or Excel files. However, the most crucial aspect before implementing AI is managing processes autonomously. This is where AI becomes essential. For example, let's say you can produce a refrigerator with 500 people in the production line and 1000 people in the entire factory without SmartOpt services.

With our AI-embedded solutions, you can achieve the same with only 600 people. This allows you to allocate the remaining 400 people to more valuable areas, thereby increasing the value of the factory operation level and the brand's reputation. AI plays a vital role in forecasting, optimization, and overall operations by providing quick results in seconds that would take months for a person to calculate.

By obtaining results in seconds instead of months, you can focus on developing new products, expanding into new regions, or securing new distribution contracts. Our AI-embedded tools serve as the engine behind our operations, handling tasks such as prediction and weather forecasting. For instance, if there's a significant slowdown in the supply chain, the systems alert us to adjust production plans accordingly.

We integrate AI into all our products, relying on data collected from factories, warehouses, or logistic companies to run AI processes effectively. This data ensures that we provide the most accurate solutions to our customers.

(SB): For our clients, having access to any historical data related to their production facility is incredibly valuable. Whether it spans 3, 5, or 10 years, this data serves as a cornerstone for us and our customers. We gather all past data, as well as any relevant external data sources, and amalgamate them to provide comprehensive solutions tailored to each factory's needs.

We position ourselves and our tools as integral members of the decision-making process, akin to having a seat at the boardroom table. Instead of traditional brainstorming sessions, where people discuss various scenarios, we present Smart Ops, our predictive tool, which offers 3 distinct solutions or outcomes. The factory then selects the most suitable option based on their expertise.

To illustrate, we collaborate with major companies like Bosch and Siemens, predicting variables such as electricity and raw material prices with over 92% accuracy. In comparison, traditional methods, even when led by seasoned executives or purchasing managers, typically achieve only a 55% accuracy rate.

(SB): Absolutely. Our focus is on integrating linguistic AI methodologies rather than solely relying on generative AI. Instead of indiscriminately gathering data from various sources such as news articles or social media posts, we aim to incorporate linguistic nuances into our AI algorithms. Even minor improvements, such as increasing precision from 95 to 96%, hold immense value, as they can translate into significant financial gains.

While Generative AI is indeed making strides, we recognize the importance of tailoring our solutions to the specific needs and cultures of each customer, factory, or region. Approximately 80% of our products and engines are standardized, while the remaining 20% is customizable based on customer feedback. This approach allows us to make tailor-made offers that adapt to diverse production environments, contributing to our business expansion not only in Turkey but also across Europe and the United States.

Despite similarities in products, factories, or work cultures, production dynamics vary significantly across regions. Our ability to accommodate these differences has positioned us as a formidable competitor to industry giants. Winning over customers previously served by such established players demonstrates the efficacy of our approach and fuels our internal growth and expertise.

We prioritize delivering tangible outcomes, not just the incorporation of AI technology, ensuring relevance and effectiveness across various regions.

(SB): Convincing customers is a crucial aspect for startups and companies alike. To achieve this, we offer a free trial period, known as a Proof of Concept (POC). During this period, we collect users' data, analyze it, and present the outcomes to them. The response determines whether they proceed with our services or not. However, convincing customers to adopt AI models poses its own set of challenges.

In corporate culture, the adoption of AI tools is still relatively new and can be met with apprehension. Many individuals fear that AI may render their jobs obsolete. However, we assure them that AI will enhance their roles, enabling them to focus on more valuable tasks. Overcoming these concerns remains a challenge, but we believe attitudes will shift within the next 5 years.

Startups tend to be more receptive to incorporating AI and automation into their operations compared to enterprises. Startups often engage us to develop core AI products swiftly. Conversely, enterprises require more education and have longer adoption cycles. While educating them, employees may transition to other companies, complicating the process.

(SB): It's remarkable. Based on the data our customers provided and the accolades they bestowed upon us, the return on investment (ROI) for our solutions is astonishingly rapid, with a turnaround time of just under 4 months. Considering our typical 24-month contract period with customers, this quick ROI is a testament to the effectiveness of our solution.

When clients invest in SmartOpt solutions, they have 2 primary objectives in mind: profitability and ROI. They aim to generate revenue from our product while also ensuring that their investment yields a return in a reasonable timeframe. Initially, we anticipated an ROI of just under 4 months, but we were pleasantly surprised to achieve it in less than 2.5 weeks in some cases — an exceptional success rate by any measure.

One of our notable clients, Bosch Siemens, has implemented our tools for container yard management and planning optimization. For example, in their washing machine production, we've advised them to adjust their manufacturing schedule to a certain time calculated by our solutions. This strategic timing coincides with lower electricity prices and optimized inventory management, resulting in substantial savings. While the factory maintains consistent production levels, we've demonstrated that optimizing processes can yield significant profits.

(SB): Well, with the rise of AI, traditional roles like CEOs, general managers, and directors are becoming less essential, to be frank. Recent data shows that nearly 500 CEOs from top companies have stepped down, with many positions remaining vacant. The increasing digitalization of industries drives this trend. Instead of consolidating power in the hands of a single leader, firms are turning to digital tools and software for management.

The future of SmartOpt solutions holds promise in creating more value while reshaping the nature of work. As AI takes over repetitive tasks and data-driven decision-making, humans can focus on more creative and emotionally engaging endeavors. While AI excels in processing data and performing tasks efficiently, it cannot experience emotions or sensations, making human input invaluable.