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The Great Transformation: Steering Logistics Toward Profit and Precision · Speaking of Supply Chain

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Speaker 1: You're listening to Speaking of Supply Chain, a Meeboch podcast.
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Speaker 1: This is a show for logistics professionals looking to learn
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Speaker 1: more about the latest innovations in supply chain. Each episode
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Speaker 1: will feature a conversation on topics such as mitigating supply
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Speaker 1: chain disruption and reducing risk, current automation trends, sustainability initiatives,
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Speaker 1: and more. Let's dive right in.
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Speaker 2: Hello, and welcome to Speaking of Supply Chain, where we
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Speaker 2: explore trends, current events, and innovations impacting the logistics and
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Speaker 2: supply chain industries. I'm your host, Ellen Wood. Today we're
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Speaker 2: going to explore the transformative power of digitalization and logistics,
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Speaker 2: focusing on how SAP is reshaping the way businesses manage
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Speaker 2: their supply chains. Today, I'm joined by Michael and Andrea
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Speaker 2: from Westernoker, a global leader in SAP consulting, to discuss
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Speaker 2: how cutting edge solutions are solving today's challenge and preparing
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Speaker 2: for logistics in the future. Michael Andrea, welcome, thanks for
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Speaker 2: having us.
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Speaker 3: Thank you all right.
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Speaker 2: So let's get into our topic today, which is not
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Speaker 2: spontaneous at all. It is all about planning and preparing
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Speaker 2: for what's to come in supply chain. And logistics and
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Speaker 2: using the digital tools that we have available to us.
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Speaker 2: So what are some of the hurdles when it comes
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Speaker 2: to a digital transformation. We talk about this a lot
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Speaker 2: in supply chain where we need to rely on the
1:34
Speaker 2: data and companies are incorporating more digital tools into their
1:39
Speaker 2: planning processes. But what does that really mean and what
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Speaker 2: do they need to look out for? Michael, why don't
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Speaker 2: you start us off?
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Speaker 4: Yeah? Sure, And I immediately want to pick up on
1:51
Speaker 4: what you have said right because you have mentioned two
1:53
Speaker 4: very good aspects already. One is data and the other
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Speaker 4: one is in general the topic of collaboration such and
2:00
Speaker 4: when we are talking about digital transformation. First of all,
2:04
Speaker 4: a lot of our customers that we are talking about
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Speaker 4: are quite far away from the current trends that are
2:11
Speaker 4: around in technology. The logistics industry as such is quite
2:17
Speaker 4: a traditional industry that from time to time has its
2:21
Speaker 4: hurdles to change and also to change the way they work,
2:25
Speaker 4: which leads to the fact that a lot of our
2:27
Speaker 4: customers are from their entire innovation portfolio still and technology
2:32
Speaker 4: portfolio still quite far away from what is already there.
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Speaker 4: And that means that topic like topics like data management
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Speaker 4: and how do I share data, how do I store data?
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Speaker 4: What do I do with sensible data that I might
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Speaker 4: be gathering today? What can I do with that? Is
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Speaker 4: really a very new topic to our customers. So it
2:54
Speaker 4: is really about, first of all, the entire topic of
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Speaker 4: data management and so what data is around? What is
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Speaker 4: it that I can additionally capture nowadays with the latest
3:03
Speaker 4: technology that is there. But then obviously also what can
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Speaker 4: I do with that? Because I don't only want to
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Speaker 4: store data somewhere and have it lying around. I want
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Speaker 4: to use that data going forward in order to get
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Speaker 4: some value out of it. And that value most of
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Speaker 4: the times comes also from requirements that a lot of
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Speaker 4: customers have to logistics service providers nowadays, which is a
3:25
Speaker 4: much more increased visibility into anything that happens when something
3:30
Speaker 4: is in transit from A to B. So if I'm
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Speaker 4: gathering data and if I have a very good visibility
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Speaker 4: of tracking into my transportation, I can provide that data
3:40
Speaker 4: as part of a visibility to my customers and let
3:44
Speaker 4: them know in real time where the goods are, whether
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Speaker 4: they are stuck in a port, whether they are in transit,
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Speaker 4: what's the data is on customs and so on and
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Speaker 4: so forth, the foundation for that is all data in
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Speaker 4: the end of the day, and for that you need
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Speaker 4: to make sure that you manage data in the right way,
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Speaker 4: that you know which data to store, and that you
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Speaker 4: also I understand the value of data in that sense.
4:05
Speaker 4: And one thing that I also want to mention here
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Speaker 4: is that the other trend, and this is also what
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Speaker 4: data is very very important for is what I've already said, right, So,
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Speaker 4: customers expectation toward logistics service providers is that they are
4:20
Speaker 4: getting much more information on their transportation, on their goods
4:23
Speaker 4: that they have, and this goes nowadays through a lot
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Speaker 4: of business networks and concepts that are going into that
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Speaker 4: direction of business networks where when I'm a manufacturer of
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Speaker 4: goods that I automatically through integration, am getting updates from
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Speaker 4: my logistics service provider on the orders that I've for example,
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Speaker 4: just shipped, and for that you need good data integrated
4:46
Speaker 4: through business networks, so that basically this is into this
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Speaker 4: information flow is also then being enabled.
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Speaker 2: So the maturity path that a lot of these companies
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Speaker 2: are on, if I hear you right, is still very young.
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Speaker 2: With a lot of these companies, they want they know
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Speaker 2: that they need to they know that they want to,
5:01
Speaker 2: but they haven't built up that infrastructure in their own
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Speaker 2: organization yet in order to either handle the data or
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Speaker 2: understand what the data is telling them. So, for these
5:12
Speaker 2: companies that are very very young in their maturity in
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Speaker 2: terms of handling and processing this data, other than just
5:20
Speaker 2: getting started and really jumping in with both feet and
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Speaker 2: embracing the power of data and utilizing the different tools
5:31
Speaker 2: that are available to them, what is something else that
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Speaker 2: will make this journey harder? Just starting to use data
5:40
Speaker 2: is easy to say, but it's hard in practice. So
5:44
Speaker 2: what makes that so difficult to take that next step
5:47
Speaker 2: in their maturity to get to the point where all
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Speaker 2: of this data is working together and giving them actionable information.
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Speaker 3: I think the integration strategy is key in and get
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Speaker 3: this data actionable. So today we see two major trends.
6:05
Speaker 3: From one side, the selection of best of breed applications
6:08
Speaker 3: that are excelling in their own domain, and on the
6:12
Speaker 3: other handle, on the extreme opposite, we have companies that
6:16
Speaker 3: are going for a realistic platform like SAP, so best
6:21
Speaker 3: of breed solution exceed in their specialization, but often they
6:28
Speaker 3: demand a significant effort of integration to have the data
6:33
Speaker 3: flowing between them to have data consistency and think about
6:38
Speaker 3: also updates among different systems. On the other side, the
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Speaker 3: holistic platform like SAP is reducing silos within the organizations
6:48
Speaker 3: simply they simplify maintenance updates, scalability and provide end to
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Speaker 3: end visibility for better decision making or supporting standard proes
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Speaker 3: and operational processes efficiency and this can help to have
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Speaker 3: a long term vision for a company from system perspective
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Speaker 3: and to grow. And why integration is important Basically, I
7:14
Speaker 3: see three main factor. One is the cost because interfaces
7:18
Speaker 3: are very expensive and they draw resource to design, to develop,
7:23
Speaker 3: to maintain just interfaces okay, without any value added. Okay.
7:29
Speaker 3: The other key factor is the time, so implementing multiple
7:33
Speaker 3: standard and interface system takes longer than just one single
7:38
Speaker 3: holistic solution and platform and integrated system. And then the
7:43
Speaker 3: risk because the integration is one of the common reasons
7:47
Speaker 3: for project sub optimal performances. Okay, So all these factor
7:53
Speaker 3: has to be considered. So basically, you have the data,
7:56
Speaker 3: but you have you need the data the right time
7:59
Speaker 3: to take the disease, and we have so many examples.
8:03
Speaker 3: And then think about the technology evolution from one side,
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Speaker 3: you have the data and the power of data is
8:09
Speaker 3: integrating the data. Think about, for example, an order of
8:13
Speaker 3: a customer. Integrated the data about the kind of product
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Speaker 3: is shipping, the value, the estimated time of arrival of
8:21
Speaker 3: this product help logistics to run better. Okay. And if
8:26
Speaker 3: this simple data is not available, basically operators are just
8:31
Speaker 3: reacting or always acting the good old traditional way. On
8:36
Speaker 3: the other side, we have another factor that is the
8:38
Speaker 3: technology and the innovation. Think about artificial intelligence, how to
8:44
Speaker 3: adopt artificial intelligence. So having a single holistic platform like
8:50
Speaker 3: SAP helps to embed the new technologies like the artificial
8:54
Speaker 3: intelligence that is really driving optimization based on time data.
9:01
Speaker 3: And this can be done only if you have an
9:04
Speaker 3: integrated and holistic platform. Just to give you an example.
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Speaker 5: Okay, Michael, anything to add, nothing to add, But I
9:12
Speaker 5: want to second one thing and Andrea mentioned it already
9:14
Speaker 5: and we actually it's a nice example that we can
9:17
Speaker 5: also provide from the real world of our project work,
9:20
Speaker 5: and that is the SILOEDS within the cooperation.
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Speaker 4: Yeah, so we work right now with a logistics service
9:26
Speaker 4: provider for example, that is embracing their digital transformation and
9:30
Speaker 4: moving into this one holistic platform which in this case
9:34
Speaker 4: is SAP for all of their end to end processes
9:37
Speaker 4: within the organization. So that includes finance, that includes order
9:42
Speaker 4: managements or taking in the orders for transportation, that includes
9:45
Speaker 4: their operations, so basically taking care of the transportation from
9:49
Speaker 4: A to B t C or the charge caculation. So
9:52
Speaker 4: everything that is going to be done in this holistic platform.
9:55
Speaker 4: And one of the key targets of this project is
10:00
Speaker 4: breaking silos within the company. Why because today finance is
10:05
Speaker 4: not talking to operations, and operations is not talking to
10:08
Speaker 4: customer service. And that is exactly one of these key
10:13
Speaker 4: things that is a major hurdle on the one side,
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Speaker 4: because breaking these silos is very very very difficult, especially
10:22
Speaker 4: when we talk about change management. But on the other side,
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Speaker 4: the value gain is so so high. But the only
10:28
Speaker 4: way how you can break these silos is by providing
10:32
Speaker 4: an integrated platform that is able to cover all these
10:35
Speaker 4: processes and tie everything together and all parties within that
10:39
Speaker 4: end to end process together, so that we bring also
10:42
Speaker 4: the stakeholders in that process closer to each other, although
10:46
Speaker 4: they might be sitting in the same office now.
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Speaker 2: And you make an excellent point about breaking down these silos,
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Speaker 2: and I know we've been talking about this for a
10:56
Speaker 2: few years in the industry, that the business units need
10:58
Speaker 2: to be able to have access to the data from
11:02
Speaker 2: other siloed units in order to make the most conclusive
11:07
Speaker 2: decisions based on the entire business and not just that
11:11
Speaker 2: one section of the business. But the change management is
11:16
Speaker 2: so important because when we start to try to break
11:19
Speaker 2: down those silos, there's going to be resistance when those
11:24
Speaker 2: business units are challenged in the way that they've traditionally operated,
11:28
Speaker 2: and that change management is so difficult to overcome. It's
11:33
Speaker 2: really got to be a very comprehensive program in and
11:39
Speaker 2: of itself. Just getting new technology adopted into the organization
11:44
Speaker 2: is one thing, but then to make it so that
11:47
Speaker 2: it is a positive change a positive for the business
11:52
Speaker 2: requires a lot of interpersonal and it's a whole process.
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Speaker 2: The change management in and of itself is its own project. Andrea,
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Speaker 2: can you talk to us a little bit about how
12:04
Speaker 2: that is progressing in the industry, because I know we've
12:08
Speaker 2: talked about it a number of times, but is it
12:12
Speaker 2: getting better the adoption rate, the change management, the way
12:16
Speaker 2: that we're going about bringing in these new technologies into organizations.
12:20
Speaker 3: This is a very good question. So we are implementing
12:24
Speaker 3: the SAP in many organizations, but the innovation extend far
12:29
Speaker 3: beyond the mare. Software update is not just software update
12:33
Speaker 3: or technology announcement. It represents an holistic approach that integrates processes,
12:40
Speaker 3: people and technology and in order to achieve a meaningful
12:44
Speaker 3: transformation from one side, the process is basically innovation. Often
12:49
Speaker 3: the band evaluating or redesigning workflow, system and methodologies. So
12:55
Speaker 3: it's not just a software up to great because you
12:57
Speaker 3: will never pay for an project to have what you
13:01
Speaker 3: have today, so you have to think about the future.
13:03
Speaker 3: So to prove solution needs to be redesigned. We think
13:08
Speaker 3: in order to get all the future announcement all the
13:12
Speaker 3: answer that we come in the future. So it is
13:15
Speaker 3: about questioning the status quo and finding smarter way to
13:19
Speaker 3: achieve organizational goals. This is about processes about people in
13:25
Speaker 3: the basically at the heart of any innovation initiative are
13:30
Speaker 3: with the individuals with a single person who drive and
13:34
Speaker 3: sustain change from the top to the bottom. And this
13:39
Speaker 3: involves equipping team, involving team with the necessary skills, fostering culture,
13:45
Speaker 3: creativity and collaboration and resilience. And then we have a
13:50
Speaker 3: third element that is the technology, so of course the
13:54
Speaker 3: technology is there and play a pivotal role as a
13:58
Speaker 3: platform to enable all this, okay, And about change management,
14:04
Speaker 3: So basically we saw in many projects that effective change
14:08
Speaker 3: management is critical to navigate to the disruption and involves
14:14
Speaker 3: several parts. So first of all, engaging stakeholders is key,
14:17
Speaker 3: so building the buy in from every stakeholders. It is
14:22
Speaker 3: important to change manager to address resistance because the human
14:26
Speaker 3: being is always resistant to change, okay, so understanding concern
14:29
Speaker 3: and mitigating fears about changes very important. Then as well,
14:34
Speaker 3: another element is the adoption ensuring the adoption of the news,
14:39
Speaker 3: so providing training support, informing people about the new that
14:44
Speaker 3: will be the real world in the future since tomorrow
14:47
Speaker 3: and the clear benefits. And then continues improvement, so it's
14:51
Speaker 3: not just one step, but you will have innovation is
14:56
Speaker 3: an ongoing journey, so it continues in improvement. So that's
15:01
Speaker 3: the reason why change management is always important in especially
15:05
Speaker 3: in a software implementation, to evolve the full company to
15:11
Speaker 3: the future proof company basically prepared for the future.
15:15
Speaker 2: So one aspect of this that all of the leadership
15:20
Speaker 2: is going to be very interested in and to your point,
15:24
Speaker 2: it is top down. The change management so on the
15:28
Speaker 2: other side of that is once they have gone through
15:30
Speaker 2: the effort of number one, finding the technology, whether it's
15:34
Speaker 2: the best of breed or whether it is a holistic platform,
15:37
Speaker 2: they've gone through that, they've gone through the change management.
15:40
Speaker 2: Now we need to see the ROI. We need to
15:42
Speaker 2: see results. So what is the most difficult part of
15:47
Speaker 2: measuring that, especially when there are so many other aspects
15:51
Speaker 2: going on. So we've got all of these process change,
15:53
Speaker 2: We've got people who we've had to have buy into this.
15:56
Speaker 2: Now we've got obviously a potential new technology, we're doing
16:00
Speaker 2: things differently. How do we measure that we're successful at
16:05
Speaker 2: this implementation?
16:07
Speaker 4: So there are multiple ways how you can measure the
16:09
Speaker 4: success of an implementation in the end of the day. Yeah,
16:12
Speaker 4: and it can be for logistics service provider, very very
16:16
Speaker 4: easy or very profane things like efficiency, increase profitability that
16:21
Speaker 4: you have in your services, because these are typically the
16:24
Speaker 4: things that we are pointing out. But the thing is
16:26
Speaker 4: also that I want to say when we talk about
16:29
Speaker 4: a return on investment, and this is one of the
16:32
Speaker 4: what I also see because you have asked that as
16:34
Speaker 4: a first question, right, what are the hurdles in digital
16:36
Speaker 4: transformation for logistics service providers. It's also partially the expectation
16:43
Speaker 4: towards such a program and what we are getting out
16:46
Speaker 4: of this, because it's very clear that digital transformation is
16:51
Speaker 4: not a system upgrade. It's not we are looking at
16:55
Speaker 4: one part of our siloed operation that we are now
16:58
Speaker 4: going to make better in terms of new system whatever,
17:02
Speaker 4: and then all of a sudden things will be turning around.
17:05
Speaker 4: It's exactly not that this has implications to the our eye.
17:09
Speaker 4: So it's not a replacement of as its processes. It's
17:13
Speaker 4: not just a system upgrade. If you look at this
17:16
Speaker 4: from that perspective, your URI case is going to be
17:20
Speaker 4: very underwhelming. So the true URI comes out of rethinking,
17:25
Speaker 4: redesigning the way your company is working today and how
17:31
Speaker 4: it is supposed to work in the future, taking into
17:34
Speaker 4: consideration the latest technology that is available topics like AI
17:39
Speaker 4: and other innovations, and how that can basically boost your
17:42
Speaker 4: operations and can help your business to grow. This is
17:45
Speaker 4: the perspective that you need for which you need to
17:47
Speaker 4: have good change management in place to be able to
17:50
Speaker 4: take that position in and if you have achieved that,
17:54
Speaker 4: then you will see that a digital transformation enables new
17:58
Speaker 4: service offerings towards customers, which one example that we have
18:02
Speaker 4: already said, right, increased visibility, but also potentially other value
18:06
Speaker 4: added services that I'm able to now provide along the process,
18:10
Speaker 4: or very simply just operating more efficiently and more profitable.
18:14
Speaker 4: And we have customers, and you will not believe that
18:17
Speaker 4: we have customers who tell us we do not know
18:20
Speaker 4: whether we are profitable with a certain service that we
18:23
Speaker 4: are offering. We of course know on a high level
18:26
Speaker 4: when we do our year end balance and everything whether
18:28
Speaker 4: we have made money or made a loss, But on
18:31
Speaker 4: the bottom of our operation, when I am offering a service,
18:35
Speaker 4: I do not know whether that's going to be profitable
18:37
Speaker 4: or not. Yeah, I know what I'm charging a customer,
18:39
Speaker 4: but I don't know what my cost is. And these
18:41
Speaker 4: are exactly the topics that need to be looked at
18:44
Speaker 4: in order to unleash this return on investment in order
18:47
Speaker 4: to see, Okay, when we do a transformation, when we
18:50
Speaker 4: do an implementation, when we start seeing these things, can
18:54
Speaker 4: we have a job. Can we take it just as
18:56
Speaker 4: measures in order to now lower cost, increase profitability, make
19:00
Speaker 4: things more efficient or whatever these things, and that, as
19:03
Speaker 4: I've said, requires change management, especially on the people's site.
19:07
Speaker 4: Because technology we can change, and yes sometimes it's a
19:10
Speaker 4: little bit more difficult than we all like, but technology,
19:13
Speaker 4: changing technologies is possible. Changing processes is also a possibility.
19:17
Speaker 4: Changing people. That's the problem, and that's exactly where a
19:21
Speaker 4: lot of times these digital transformation projects are getting into
19:25
Speaker 4: rough waters because the visionary leadership thinking is not there
19:29
Speaker 4: in terms of how can we transform our business? And
19:33
Speaker 4: without that, it's very hard to really get a lot
19:36
Speaker 4: of our eye out of any major transformation project.
19:40
Speaker 2: So what I hear you saying is that it's not
19:43
Speaker 2: enough just to implement a new technology that has new
19:46
Speaker 2: capabilities and get buy in from the stakeholders. It's really
19:51
Speaker 2: about making sure that we have that spirit of continuous
19:54
Speaker 2: improvement that is enabled emboldened throughout the organization of It's
20:00
Speaker 2: not just this is not some magic ticket that's going
20:04
Speaker 2: to make everything work suddenly. We have to have the
20:08
Speaker 2: mindset going into this transformation that number one with the
20:12
Speaker 2: change management. As Andrea mentioned, that everyone understands what the
20:18
Speaker 2: purpose of the transformation is, but that everyone is also
20:23
Speaker 2: empowered and on board with the idea that it's not
20:27
Speaker 2: just one thing. This isn't one and done we have
20:29
Speaker 2: to continuously look to improve and this is going to
20:32
Speaker 2: enable that. But the job's not done as soon as
20:36
Speaker 2: the software turns on and the data starts filling up
20:38
Speaker 2: the servers. There's more to come. So what does that
20:42
Speaker 2: look like operationally? We've been talking a lot about the
20:45
Speaker 2: leadership and the stakeholders and organizing this type of transformation,
20:51
Speaker 2: but when it comes to the people on the ground
20:53
Speaker 2: floor in the operations, the day to day operations, what
20:58
Speaker 2: are some of the challenges that they're going to face.
21:00
Speaker 3: Once child it could be Okay, the supply chain visibility,
21:04
Speaker 3: for example, talking about data the splay chain in visibility
21:07
Speaker 3: is essential for maintaining proactive and responsive supply chain. So
21:12
Speaker 3: either enable organization to monitor and manage the movement of
21:17
Speaker 3: goods basically the inventory levels and the processes in real time.
21:21
Speaker 3: Ensure that issues are identified as soon as they happen
21:28
Speaker 3: and addressed before they escalate into customer complaint. Okay, why
21:34
Speaker 3: SPLA chain visibility is critical because from one side allows
21:39
Speaker 3: a proactive issue management basically addressing delays, shortages, disruption instead
21:45
Speaker 3: of having a customer calling you you know before that
21:49
Speaker 3: can be potentially in niche and you can resolve this
21:52
Speaker 3: issue and this also drives customer satisfaction. Resolve problems before
21:58
Speaker 3: they happen or basically help you to increase the customer satisfaction.
22:04
Speaker 3: On the other hand, operational people like the to have
22:08
Speaker 3: a better decision making use real time data to quickly adapt.
22:13
Speaker 3: Rerouting shipment for example, or expediting deliveries can be an example.
22:19
Speaker 3: Of course, visibility imply code savings, avoiding rash, fee penalties, losses,
22:30
Speaker 3: while at the same time optimize inventories. And then of
22:34
Speaker 3: course you can with visibility you can enans collaboration with
22:38
Speaker 3: your partners okay, customer supplier, service providers. And then as
22:45
Speaker 3: well there is another aspect that is the regulatory compliance,
22:49
Speaker 3: so ensure proper handling and documentation to meet industry standards.
22:54
Speaker 3: So this can be really how data can be helpful
22:59
Speaker 3: and visibility for supply chain is key in this sus
23:02
Speaker 3: formation to help the people on the ground.
23:05
Speaker 2: All right, Michael, what other challenges do you see.
23:08
Speaker 4: So besides what Andrea just said regarding visibility. Of course,
23:11
Speaker 4: when I'm a logistics service provider, another topic is in
23:15
Speaker 4: general capacity and network management, and that concerns global logistics
23:19
Speaker 4: service providers that are operating on a global scale and
23:22
Speaker 4: managing also supply chains for their customers. But that also
23:25
Speaker 4: concerns customers there that are trucking in just within the
23:30
Speaker 4: US or within Europe. Because what we I think can
23:33
Speaker 4: all agree on that is logistics as such is very,
23:38
Speaker 4: very volatile, because we have seen so many examples over
23:42
Speaker 4: the past five years alone and even before, whether it
23:45
Speaker 4: was the global pandemic which disrupted anything that had happened
23:50
Speaker 4: or that had something to do with moving goods and
23:53
Speaker 4: transporting things from A to B. We have still up
23:57
Speaker 4: until today a situation in the sewerz Canal which is
24:00
Speaker 4: disrupting transportation. We have seen it last year here in
24:03
Speaker 4: the US when the ship hit the bridge in Baltimore
24:06
Speaker 4: and all of a sudden the port of Baltimore become unavailable.
24:09
Speaker 4: So these are things that are not foreseeable. I mean,
24:14
Speaker 4: you cannot foresee that the vessel gets stuck in the
24:16
Speaker 4: ZUS or that politically something's happening. So you cannot foresee
24:20
Speaker 4: these things, but you know that they will happen, ya,
24:23
Speaker 4: So that's kind of the thing. So you need to
24:25
Speaker 4: be prepared for black Swan events along your daily operation,
24:30
Speaker 4: and that along with managing your capacities. Managing your network
24:35
Speaker 4: is key because in the end of the day, only
24:37
Speaker 4: because something bad happens doesn't mean that your customers don't
24:40
Speaker 4: demand the same service. For transportation, yeah, I mean your
24:43
Speaker 4: customers are transporting goods from Asia to Europe or to
24:49
Speaker 4: the US into their production where if something is delayed
24:53
Speaker 4: by a week or two, that heavily impacts their production
24:55
Speaker 4: and also then their supply chain. So only because something
24:58
Speaker 4: bad happens doesn't mean that you can now sit back,
25:00
Speaker 4: relax and say, Okay, you know what's something happened here
25:03
Speaker 4: and this will now take X amount of days more.
25:05
Speaker 4: We cannot solve that situation. So that is one of
25:08
Speaker 4: the key differentiator. How can I, as a logistics service
25:12
Speaker 4: provider ensure highest level although all of these things are
25:15
Speaker 4: happening and I do not really have an influence on
25:18
Speaker 4: So you need to manage your networks as prescriptive as possible,
25:24
Speaker 4: and there are multiple layers how you can do that.
25:26
Speaker 4: Prescriptive management is the top layer where you really you
25:30
Speaker 4: don't react any more to things. You plan for these
25:34
Speaker 4: things to happen at the end of the day. It's
25:37
Speaker 4: like a contingency plan that you're writing up that you
25:39
Speaker 4: are putting in somewhere, and then when things happen, you
25:42
Speaker 4: just pull it out and say, Okay, this is how
25:43
Speaker 4: it's done. And this is one of the key things
25:46
Speaker 4: from an operational perspective to be able to be prepared
25:49
Speaker 4: nowadays and then also to be able to execute that.
25:52
Speaker 4: And this comes all together to what we have discussed earlier,
25:56
Speaker 4: right with the Holistic platform book that we need because
25:59
Speaker 4: if something happened somewhere along the supply chain and along
26:03
Speaker 4: the transportation chain, and I immediately get notice of it
26:06
Speaker 4: because I'm tracking my vehicle, I'm tracking the shipments that
26:09
Speaker 4: I'm responsible for. If something happens, I can immediately start replanning.
26:13
Speaker 4: I'm getting that visibility that now flows back into operations
26:17
Speaker 4: and allows me to proactively replan if something has happened.
26:22
Speaker 4: If I do not have that level of transparency and
26:25
Speaker 4: visibility in my operations and in my other end to
26:30
Speaker 4: end streams, It's becoming very hard for me to react accordingly,
26:34
Speaker 4: and then I'm basically only chasing the problem rather than
26:38
Speaker 4: being ahead of the problem and trying to mitigate that
26:40
Speaker 4: as much as I can.
26:41
Speaker 2: It is absolutely reactive rather than proactive. To your point
26:45
Speaker 2: that it makes me think of airline pilots. When you're
26:48
Speaker 2: flying in a plane, and we've all been on a plane,
26:51
Speaker 2: the pilot doesn't know what to do in every possible
26:54
Speaker 2: situation with all the equipment and all of the navigation.
26:59
Speaker 2: If something goes wrong, he has a binder in that
27:02
Speaker 2: cockpit that is going to tell him what to do
27:04
Speaker 2: when this light goes off or that lever says this,
27:08
Speaker 2: and they're not trained for every possible contingency. But because
27:13
Speaker 2: what they're doing is so critical, the airlines the air
27:18
Speaker 2: craft manufacturers have developed these contingency plans to tell them, Okay,
27:23
Speaker 2: when this happens, this is what you have to do,
27:25
Speaker 2: because you have to get these people safely on the ground,
27:28
Speaker 2: or you have to get these goods safely on the ground.
27:30
Speaker 2: You have to get you safely on the ground in
27:32
Speaker 2: this aircraft. So they have that plan, and businesses don't
27:36
Speaker 2: think that same way that when something goes wrong, it
27:39
Speaker 2: is that critical and you have to have a contingency plan.
27:43
Speaker 2: You have to have a plan B, a Plan C
27:46
Speaker 2: and know when to pivot. And to your point, you
27:49
Speaker 2: can't do that unless you know that it's happening. If
27:51
Speaker 2: you wait until the news reports that there's a problem
27:55
Speaker 2: in the Suez Canal. You're already too late to react
27:58
Speaker 2: to your organization's impact that's going to result from that information.
28:05
Speaker 2: So what about some of the other aspects of obviously
28:11
Speaker 2: dealing with when we're talking about transportation and moving goods.
28:16
Speaker 2: One big one, especially when we're talking about customers, and
28:19
Speaker 2: not just internal customers but end customers, and that's that
28:22
Speaker 2: last mile delivery and making sure that that is executed properly.
28:28
Speaker 2: So what are some of the complexities or hurdles that
28:31
Speaker 2: that aspect of the supply chain which is so important
28:35
Speaker 2: to everyone in the equation that we can prepare for.
28:41
Speaker 3: I think a good example is how Amazon have completely
28:47
Speaker 3: changed the perception of everybody has an expectation in terms
28:52
Speaker 3: of last night delivery and delivery services.
28:56
Speaker 4: Okay.
28:57
Speaker 3: Now everybody internally, external customer, everybody demand for speed and convenience.
29:04
Speaker 3: Customer now expect near stantaneous delivery of good or services
29:09
Speaker 3: either they belong to the business or they are consumer. Okay.
29:14
Speaker 3: And this is the classical everybody called Amazon effect. Okay,
29:18
Speaker 3: it changed completely the perception of everyone okay, also personalized experience,
29:25
Speaker 3: the expectations for tailored the recommendation on specific product. Again,
29:32
Speaker 3: here artificial intelligence can help from a consumer perspective. Now,
29:38
Speaker 3: in general, consumer expect the business anticipate their need based
29:43
Speaker 3: on prior interaction and preferences. And also transparency and trust
29:49
Speaker 3: is another element. Basic customer needs detailed information about the products,
29:55
Speaker 3: the pricing, the delivery timeline, and like Amazon is doing
30:00
Speaker 3: on their website, they also expect reliable customer sell viz
30:05
Speaker 3: on their address on their specific premises okay, and also
30:10
Speaker 3: as well omnichannel availability. You can order business to business,
30:15
Speaker 3: but also you can order online and you get always
30:18
Speaker 3: the product. And also another aspect is the low price
30:22
Speaker 3: and the value perception. Basically you increase the value you
30:26
Speaker 3: get for less money. So that's the generic perpectional compared
30:30
Speaker 3: to twenty thirty, forty fifty years ago. So now you
30:34
Speaker 3: want to have always the best best option in the market.
30:38
Speaker 3: And so in that sense, generally speaking, the customer expectation
30:43
Speaker 3: changed and this represents from logistics, a big revolution in
30:49
Speaker 3: terms of delivered this expectation and comply with these expectations.
30:53
Speaker 2: Well, and that's an interesting point because in order for
30:57
Speaker 2: all of those things to happen, we're coming back to
31:00
Speaker 2: the original issue of having all of that data available. So,
31:05
Speaker 2: whether you're an individual doing your Christmas shopping like I
31:08
Speaker 2: did on Amazon, and you're looking to see is this available?
31:12
Speaker 2: Can I get it in time? What is the best
31:15
Speaker 2: price for this product? Do I need? Does this toy
31:17
Speaker 2: come with batteries? Do I need to order those separately?
31:20
Speaker 2: Does it need another piece? Does it have something else
31:23
Speaker 2: that goes with it? What does Amazon suggest I order
31:26
Speaker 2: to go with it? Or when we're talking about companies
31:29
Speaker 2: ordering product for their own production and getting those raw materials,
31:35
Speaker 2: you need to have that information. You need to have
31:37
Speaker 2: all of that information readily available to the consumer, and
31:41
Speaker 2: you need to have it accurate. So I think that
31:45
Speaker 2: that's an amazing point. But one of the other things
31:48
Speaker 2: that I know we're getting into with both last mile
31:51
Speaker 2: delivery and production and that is all of these sustainability
31:55
Speaker 2: topics and when it comes to making sure that we're
31:58
Speaker 2: we're good stewards of our planet, that we're making sure
32:00
Speaker 2: we're not having out of control emissions, all of these
32:04
Speaker 2: things are part of the equation. So what are we
32:07
Speaker 2: getting into when it comes to the sustainability aspect here?
32:12
Speaker 2: What are some of those challenges.
32:14
Speaker 4: So sustainability is a topic that becomes more and more important. Yeah.
32:18
Speaker 4: I mean across all industries of course, but for logistics
32:22
Speaker 4: service providers even more. Yeah, because there is this classification
32:26
Speaker 4: of emissions, right with scode one, Scope two, scope three. Yes,
32:30
Speaker 4: so Scope one means that's my emissions. I'm sitting in
32:33
Speaker 4: a car driving from A to B. That's my emissions
32:35
Speaker 4: that I'm producing. Scope b is then a little bit
32:38
Speaker 4: more indirect than Scope three is the emission that is
32:40
Speaker 4: now coming from my downstream or ups tore in value chain.
32:45
Speaker 4: The problem here is as a logistic service provider, I'm
32:49
Speaker 4: looking at two of these items number one Scope one
32:53
Speaker 4: items is my direct emission that I'm responsible for, and
32:56
Speaker 4: if I'm transporting goods, I Am going to have emissions. Period.
33:02
Speaker 4: That is what it is. And even with technology and
33:06
Speaker 4: everything trying to mitigate that at such a high pace,
33:10
Speaker 4: still in the foreseeable future, transportation and logistics will have emissions.
33:15
Speaker 4: So that's one thing, right, So how can I reduce
33:17
Speaker 4: my own emissions? We've talked about more efficient processes, but
33:21
Speaker 4: also getting visibility into that because nowadays companies need to
33:26
Speaker 4: report their emissions on a much more detailed level. Than
33:29
Speaker 4: they needed to do it five or ten or fifteen
33:31
Speaker 4: years ago. So I need to have the tools in
33:34
Speaker 4: my toolkits, so to say that, tell me and give
33:38
Speaker 4: me that visibility how much is it that I'm actually
33:40
Speaker 4: emitting based on my operation? And we are again tying
33:44
Speaker 4: this back to the holistic platform, right, if everything sits
33:47
Speaker 4: under one roof, it's easy for me to basically get
33:51
Speaker 4: that information and do a reporting on that and also
33:54
Speaker 4: identify where can I basically become better. Is there anything
33:59
Speaker 4: that I can do, for example, because I see that
34:02
Speaker 4: my twenty thirty year old trucks are put reading much
34:05
Speaker 4: more than the trucks they are in the free for
34:07
Speaker 4: your time. So this is exactly the level of granularity
34:10
Speaker 4: and decision making that you want to do and that
34:12
Speaker 4: you also want to have. And on the other side,
34:14
Speaker 4: as I've already said, right, scope three emissions is what
34:18
Speaker 4: my customers as a logistics service providers are concerned with. Yeah,
34:22
Speaker 4: what's starting to happen now is that when there is
34:26
Speaker 4: an RFP coming in for transportation and there is a
34:30
Speaker 4: tender for six or twelve month contract, when I'm answering
34:34
Speaker 4: that tender as a logistics service provider, I need to
34:37
Speaker 4: provide my emissions. I need to basically give that information
34:41
Speaker 4: already upfront to my customers because a day in their
34:44
Speaker 4: internal decision making processes nowadays have thresholds and have criteria
34:49
Speaker 4: to select customer or to select service providers that are
34:54
Speaker 4: looking after these topics. So it's not only for me
34:58
Speaker 4: a topic where I need more of visit ability in
35:00
Speaker 4: terms of knowing what is it that I'm doing, but
35:03
Speaker 4: I also need to make efforts in order to lower
35:05
Speaker 4: this because otherwise this turns into a business risk because
35:08
Speaker 4: then I might be losing business because I'm not able
35:11
Speaker 4: to pay ambissions for our customers at the end of
35:14
Speaker 4: the day. Yeah.
35:16
Speaker 3: Probably. Also in addition to Michael, I would say overall
35:21
Speaker 3: it is also about brand reputation if you think taking
35:25
Speaker 3: care of ability impact on your operation. Of course, supplay
35:30
Speaker 3: chain is responsible for a great part of the carbon
35:35
Speaker 3: footprint of the company, Okay, splay chain is the place
35:38
Speaker 3: where you can really reduce the carbon footprint of the company,
35:43
Speaker 3: and this has an impact of course on having green
35:48
Speaker 3: air operation from one side, but also long term announced
35:53
Speaker 3: the brand reputation of a company and also another point
35:57
Speaker 3: is help the company to meet regulatory requirements and at
36:03
Speaker 3: the end aligning with the customer and consumer demand for
36:07
Speaker 3: ethical and a or friendly practices.
36:09
Speaker 2: Basically, No, you make an excellent point because as we're
36:14
Speaker 2: talking about data being available, data being visible, another layer
36:18
Speaker 2: of that visibility is to the public at large, and
36:22
Speaker 2: they have access to those animal reports, They have access
36:26
Speaker 2: to see where companies are reporting on their sustainability practices
36:31
Speaker 2: and consumers, and consumers will make that vote with their purchases,
36:37
Speaker 2: and the amount of information that is available to the
36:41
Speaker 2: populace today means that they will absolutely use that data
36:46
Speaker 2: to make their determinations, to make decisions about who they
36:49
Speaker 2: will purchase from, which brands they will support, and that
36:53
Speaker 2: kind of information can be amazingly helpful or it can
36:58
Speaker 2: be horribly atrimental to a brand. So that's an excellent
37:03
Speaker 2: point that all of this data that we're talking about
37:06
Speaker 2: collecting and managing and understanding and then making decisions about
37:13
Speaker 2: whether it is using AI to help us make those
37:16
Speaker 2: decisions quickly, or whether it's talking about the continuous improvement
37:20
Speaker 2: of the organization to be looking at this data on
37:23
Speaker 2: a regular basis and making continuous improvements. That it's not
37:28
Speaker 2: all at once, it is step by step throughout the
37:32
Speaker 2: process over time to increase that maturity both in their
37:37
Speaker 2: own business but also within their digital transformation.
37:41
Speaker 4: Well said.
37:45
Speaker 2: Thank you so much Michael and Andrea for joining us
37:49
Speaker 2: today and talking us through some of these challenges that
37:53
Speaker 2: three pls specifically are going to be facing in the
37:56
Speaker 2: new year. And I hope that our listeners who are
38:00
Speaker 2: of the three pl industry have gotten something beneficial from
38:05
Speaker 2: our conversation today. I will make sure that your LinkedIn
38:10
Speaker 2: accounts are available so that people can reach you if
38:12
Speaker 2: they have any additional questions. That brings us to the
38:16
Speaker 2: end of our episode. A very very special things to
38:19
Speaker 2: both of you for joining us. If one of our
38:21
Speaker 2: listeners out there has a suggestion for a topic or
38:24
Speaker 2: would like to be a guest on the show, we'd
38:26
Speaker 2: love to hear from you. You can contact me at
38:28
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38:32
Speaker 2: listening to Speaking of Supply Chain. If you enjoyed the show,
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38:45
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