"Successful collaboration is only possible if data are made available and shared, enabling both partners to act and react far more rapidly"

Interview with Prof. Dr.-Ing. Thomas Wimmer, Chairman of the Board of BVL
 

Bundesvereinigung Logistik e.V. (BVL) was founded in 1978 in order to promote the logistics mindset through the systematic documentation of logistics problems and potential solutions, primarily in companies involved in the various sectors of the economy (industry, trade, transport and other services).

Can you give a brief introduction on the history and objectives of the BVL and yourself, prof. Wimmer? 

Up to this day, BVL is an open network comprising over 11,000 specialists and management executives worldwide in industry, trade, services and academia who are actively committed to effective collaboration in the globalised economy. Their main objective is to communicate the importance of supply chain management and logistics as well as to support the application and development of these two key activities.

This is of particular importance in times like the present because in an era of change it is essential that we connect with each other, are open to cooperation and are willing to learn from one another in order to remain successful. BVL furthers this objective by staging events – most of which are naturally in digital format in the current situation – by making knowledge and experience available to its members, and through the process of exchange and interaction with and within the various association bodies. 

Changes organisational structures due to supply chain collaboration platforms? 

One of the consequences of digitalisation is that people will increasingly work in networks. There will be more cooperation between production, the trading sector and logistics service providers, and this will lead to the emergence of joint business models in the longer term. The pace of future activities will be determined by the preferences of the customer. This will result in new challenges in terms of the optimisation of interfaces. Some logistics service providers will act like software companies and operate the necessary platforms. Others will focus on physical transportation and storage while also benefiting from the digital management of these processes. Both types of provider can learn with and from each other.

An agile organisation, short decision-making paths and a leadership style that engages employees on their own terms are of the utmost value in this respect. New digital tools are expected to significantly boost employee productivity and efficiency; but they will also make greater demands on companies, and the borders between work and private life will become increasingly blurred.

The actors in the logistics sector are ideally equipped to face these challenges – as they are currently showing by the way in which they are dealing with the corona pandemic. Their flexibility and the benefits of digital change ensure that the supply of basic essential goods and the disposal process at the other end of the chain work smoothly in Germany – and this is still true in times of crisis. Logistics tasks are anything but trivial even in “normal” times and require both a high level of expertise and perfect organisation.

Are there any obstacles when it comes to horizontal collaboration between shippers and if so what are they?

Successful collaboration is only possible if data are made available and shared, enabling both partners to act and react far more rapidly. This means that companies will have to open themselves up and sacrifice part of their independence. The data in question are often non-sensitive, but this still requires trust and ethical behaviour – otherwise there is a risk that companies may lose out if their competitors have access to in-house information and use it to further their own business activities.

What’s important in a process like this is that both partners are stable enough financially to engage in this type of cooperation over a longer period of time. And both parties must be willing to open themselves up to cooperation. It’s equally important that the technical systems of the companies are in sync via such things as standardised IT interfaces. And we need clear rules on which data and information is to be exchanged, what happens with it and who uses it for what purpose. Moreover, it will take time to implement and optimise this process.

The effort is worthwhile, because collaboration will help companies to cut costs and workloads while also providing them with access to new procurement and sales markets. Think of the trend towards individualisation, for example. If the aim is to cater to the highly specific preferences of end customers, collaboration creates a setting in which each company can bring its own specialised skillset to the table.

What actions need to be taken to expand “the last mile” in high density populated areas in a profitable as well as sustainable way? 

The last mile – in other words, the final part of a parcel’s journey to the doorstep of the recipient – is seen as a particular challenge for logistics. The cities are congested, and this limits mobility and agility. This is why we need intelligent logistics concepts that organise delivery traffic in such a way that the cities still remain liveable and that both emissions and traffic volumes are kept within certain limits The precondition for this is a functional digital infrastructure. What’s even more important, however, in countries like Germany is that the many involved parties work together and that best practices from individual cities are promoted so that they can be implemented elsewhere.

This is why BVL set up an “Urban Logistics” focus group. Its members are decision-makers from industry, trade, academia and politics, and they regularly exchange ideas and opinions on problems and developmental trends in urban logistics, also with reference to social, ecological and economic factors. Through its work, the focus group helps to inform the public at large about sustainable and innovative concepts and to raise awareness levels among all involved parties for the importance of open, collaboration-based and targeted action in the interest of sustainable urban and traffic development.

The “Urban Logistics” focus group sees itself as a kind of “base camp” initiating projects in the field of urban logistics and bringing together stakeholders to engage in project activities. Here are two real-world examples: 

• The GeNALog project for low-noise night-time logistics, which uses quiet eTrucks on the low-traffic inner city streets after dark as well as low-noise loading and conveyor systems on the delivery ramps
• The SMILE – Smart Last Mile Logistics – project that integrates logistics and transport planning in Hamburg’s urban planning concept; the city of Hamburg and in particular the “Neue Mitte Hamburg-Altona” district are the pioneering new model region for this approach

We also need new ideas, or more specifically new ways of thinking. Again, here are a couple of examples of what I mean:

• At certain times, the infrastructures are completely overloaded. But there are also quieter times which could be used for delivery trips. The same applies to resources in the inner cities that are currently unused (such as open spaces or buildings) and that can be repurposed to serve as intermediate storage sites. And there are also many places where there is room for improvement in terms of the flow of information – with regard to traffic management, for example.
• Modern information and communication technology can play a key role. Can we develop guidance systems for delivery and disposal transports? Or vehicles that can communicate with each other, report bottlenecks and identify suitable detours? Where can we set up decentral parcel stations and private carpools to reduce traffic volumes? Digitalisation facilitates the necessary communication, and if data are available in real time, decisions can be made even faster.

This calls for an adequate infrastructure, and this in turn brings political and administrative decision-makers into the equation. Supply or disposal transports, local public transport, taxis, individual transport or the deployment of fire services and rescue teams can be harmonised – if all those involved agree on common standards and are willing to share information. Central coordination offices in the cities could speed up bureaucratic procedures.

Which innovations do you see as positive within the supply chain in Germany and Europe?

Digitalisation and all new technologies that promote greater transparency and improved interconnection. They are the answer to most of the pressing questions, and they include sensor systems, artificial intelligence and robotics as well as business analytics. In concrete terms, this means that digital twins in production and at point of sale or the material flows between the two pave the way for smart factories, batch sizes of 1 and just-in-sequence deliveries, all of which ultimately form the basis for the entire world of eCommerce.  Real-time data availability drives more effective decisions by the people responsible for production and logistics in industrial and trading companies. Supply chains also become more flexible and resilient.

It’s important to remember that the companies in the logistics sector – industry, trade and logistics service providers – rely on an intact transport infrastructure and an outstanding digital infrastructure for their established business models. This is particularly the case when it comes to the development of innovative, modern supply chain business models. Analogue and digital investments must be planned, merged and implemented in an interdisciplinary context.

What are the main challenges in the supply chain in general?

The major challenges are global political uncertainty, disruptions due to such factors as the current pandemic or natural disasters – as well as the growing demands on not only the economic but also the ecological and social sustainability of supply chains. The skill shortage also plays a role. The intelligent and collaborative use of digital tools can greatly enhance transparency along the supply chain and in supply chain networks.

The availability of information all the way through to real-time data improves the basis for decisions on business activities or logistics operations. In times of crisis, for example, it makes it easier for companies to choose alternative routes with alternative modes of transport – and this renders supply chains more flexible and more resilient. The challenge is to build the necessary digital infrastructure.

If you needed to predict the landscape of the supply chain in 10 years’ time what current trends will have had the most influence on that landscape? 

It will be the current top trends that will result in the biggest changes in the supply chain landscape over the next decade. The recently published “Trends and Strategies” study of BVL provides a compact summary of the key insights. The three main trends in the coming years will be the digitalisation of business processes, transparency in the value added chain and the ever-present pressure of costs. Interconnection and the willingness to engage in trust-based data exchange, artificial intelligence, business analytics and robotics are all closely related to digitalisation and transparency.

Pressure on costs is driving changes in purchasing behaviour, demand fluctuations, risks and interruptions as well as protectionism and the theoretical possibility of deglobalisation. The top trends also include the sustainability of logistics processes and the skill shortage. A wide range of information on these trends can be found on the Internet at www.bvl-trends.de. But there will also be greater security in the logistics systems. The primacy of cost pressure will be under review, but there will continue to be a vibrant international exchange of goods and services. A fair system of global trade is to the benefit of all.

Are there any (international) examples of retailers that we can learn/benefit from and why?

BVL has just presented the German Award for SCM to a really good example. The dm drugstore chain has developed an innovative logistics concept with a highly automated intralogistics provision process for deliveries to its stores from Northern Bavaria in the south all the way to the Baltic in the north. The centrepiece of this system is a new distribution terminal in Wustermark near Berlin.

But this project is about much more than just the construction of a new logistics facility. The experts also developed an innovative logistics infrastructure revolving around digital outlet twins for each individual store. For this purpose, dm digitalised the specific shelf infrastructure and item positions in each of its 2,000-plus stores. The concept of the “digital twin” paves the way for the intelligent combination of products on the delivery pallets leaving the distribution facility in Wustermark.

This highly automated upstream logistics process has cut annual logistics costs by several million euros – due to, among other things, a reduction of tens of thousands of hours in employee working time in the dm stores and a decrease of almost two million kilometres in truck transport distances.