Logistics is more than just transporting products. It’s an interdisciplinary field that keeps our economy running and our goods on the road. Logistics experts are working hard in the background and are planning ahead. Their visions aren’t just about the fastest way of getting from A to B, but about loading products with information so that they can intelligently control themselves. Requirements are becoming more specific and technology more complex. Dr Susanne Hetterich, Professor of Technical Logistics Management at the Heilbronn University of Applied Sciences, explains the challenges the industry is facing.
Prof. Susanne Hetterich was appointed professor of the Technical Logistics Management course in the Faculty of Technical Processes at the Heilbronn University of Applied Sciences in 2010. She studied industrial engineering at the TH Karlsruhe (renamed KIT) before completing a doctorate at the University of Ulm in the Faculty of Mathematics and Economic Sciences. She has also worked as a senior manager at PricewaterhouseCoopers, as an academic at the Ulm Forschungsinstitut für Anwendungsorientierte Wissensverarbeitung (FAW) amongst others, as a senior consultant at WPC Consult and as an IT auditor at Revidata GmbH.
First and foremost, logistics means the supply chain security, i.e. a need is by and large fulfilled without wasting any goods or resources. The “Six Rs” define the core elements of logistics: the right amount of the right item needs to arrive at the right time, in the right place, with the right quality and at a reasonable price. This doesn’t only require intelligent control strategies, but also a lot of more fundamental expertise. On top of supply security, environmental aspects are becoming more central, for example, how to create a sustainable packaging cycle and dispose of old devices.
The spotlight is currently on two areas: climate protection and digitalisation. Limited energy resources and global environmental pollution primarily affect transport logistics, but also have an impact on the overall logistics processes. Packaging, the business model (e.g. online trading) and the related subject of returns all play a role with the effects going far beyond transportation and disposal—and we have to find answers. Sustainability is playing an ever more important role, but alongside environmental aspects, human rights and corruption are also more frequently topics of discussion.
Digitalisation is another topic of the moment that is closely linked with infrastructure and a lack of a skilled workforce, closely followed by global factors such as the current economic and trade relationships. In the medium-term, I see strategic activities such as the new Silk Road project securing strategic resources and structures by global players. We have to make sure that we don’t lose pace in any of these areas.
At the same time, customers are becoming more demanding—they expect fast processing speeds, a high level of transparency and consistency all the way through from ordering to service provisioning. Another point that should not be underestimated is demographics.
According to a recent Ernst & Young study, by 2030, Germany will be have roughly 3.5 million fewer workers while the age of those in employment will have continued to rise. Our working world is becoming increasingly digitalised, and so we need to consider how we can preserve the learning and performance capabilities of employees in an ageing society. How do I train my employees? And what improvements are possible in terms of an ergonomic workplace? The brain drain is therefore, in this context, a hot topic. What’s more, it’s becoming even more critical that IT develops so that it can meet the requirements for lean and flexible processes. In this area, Bechtle has already shown a high level of innovation. It’s essential to plan for the future, develop a vision and structure logistics in such a way to be able to operate successfully in the future.
The benefit of cloud computing for logistics is that data are available at any time on a variety of end devices. This is the foundation of lean logistics concepts and therefore for intelligent, fast, flexible and lean structures. This lean philosophy applies to the entire logistics process and should be seen as a way of avoiding all kinds of waste—no excess inventory, no unnecessary movement of goods or people— and I see it as a driver for affordable and service-oriented solutions. One problem is the storage of sensitive data on central servers of foreign data giants in USA or China. In this situation, there is the new potential risk that entire networks and even industries can be compromised. We are also working on local and technologies considered safe, such as blockchain, that facilitate digital, always available information on the complete supply chain—and in real-time as far as possible. This of course makes new IT infrastructures and IT expertise essential.
This is a topic that will continue to be uppermost in our minds. Today, logistics are secondary in the cost calculations in many production companies, but we are starting to see a change. While logistics always used to be understood as the cost-minimal provisioning of materials with high availability and corresponding stock quantities with the impression of increasing individuality, speed and complexity, intelligent and proactive control systems are becoming more significant for company success. In addition to this, customers are becoming increasingly interested in the sustainability of products and services. We only need to think about the Fridays for Future demonstrations drawing attention to the issues of global warming, particulate matter and marine pollution and the pressure on the politics and the economy. Sustainability has become a sign of quality and customers base purchase decisions on it. What’s more, sustainability helps to improve profitability more frequently than a company realises, but this often only becomes clear when an indicator system providing transparency is in place, which can then be used for reporting and certification.
Sustainability has become a sign of quality and customers base purchase decisions on it. What’s more, sustainability helps to improve profitability more frequently than a company realises.
Prof. Susanne Hetterich
In your opinion, which industry is leading the way in terms of logistics?
That depends on the point of view. The auto industry is ahead of the game in terms of just-in-time deliveries and a trailblazer in supplier management. On the other hand, food logistics has to be transparent, the cool chain cannot be broken and perishable goods must be transported from A to B as quickly as possible. Very high standards are already in place here. In medical technology, batch tracing must be guaranteed. Those who want to drive innovation do well to cherry-pick the best parts of other industries’ processes. A good example is Henry Ford. He copied the conveyor belt principle found in American slaughterhouses and revolutionised the car industry. Being able to think beyond your own industry when benchmarking is an essential part of innovation.
Logistics is an interdisciplinary field which is why the research questions are so diverse. The focus of most researchers has been on process optimisation and Factory 4.0 is also an important topic for them. There are also a lot of questions related to digitalisation, for example, how products can control themselves as information carriers and how logistics facilities can be intelligently equipped so that shelving and conveyor systems can be structured to exactly meet the current demands of logistical processes. This means innovation mapping by IT. Data analytics, independent control through algorithms and machine learning are only just beginning to be developed and will unleash enormous potential.
At the University of Applied Sciences in Heilbronn, we are working intensively on the subject of ergonomics, which was previously a topic in production research. However; logistics covers a wide range of activities—think of commissioning! When collecting and packing ordered goods, a lot of process steps are necessary, varying greatly depending on the size and weight of the goods. Which technological solutions can support employees and therefore protect their health in the long term? This is also a question of research.
There are limits. In certain circumstances, direct deliveries from manufacturers to customers leads to an increase in traffic and therefore a rise in CO2. Increasing process efficiency has more to do with better organisation and bundling orders so that capacities are used optimally. That’s why I don’t use the expression supply chain any more. I think network is much more appropriate. Incidentally, this is also an important topic for the future as in networked structures, IT will be the key.
Consumers are online and data has become economic gold.
Real-time means data consistency and transparency over the whole process in order to be able to directly respond to demands. In this situation, the bullwhip effect needs to be taken into account. This describes shifts in customer demands that can lead to huge stock surpluses. To find a way around this and avoid extra costs, you have to be able to react quickly and this brings us back to the requirements of intelligent organisational models and the IT behind them.
... requires equally fast order processing. Consistency in a company’s logistics processes and between suppliers is incredibly important. The world is becoming more mobile in every way, and this is having an effect on the various modes of transport and on the use of portable IT end devices. The biggest players on the markets are showing us how intelligent, networked logistics works.
The competition plus volumes being transported and returned are generating completely new ideas. Technical concepts such as drones and shuttles, 3D printing and intelligent vending machines will play just as big a role as proactive planning through data-supported replacement part forecasts. Data analytics and artificial intelligence play a central role. Consumers are online and data has become economic gold. If you know your customers well enough to know want they want before they do, you can proactively plan and thus achieve a competitive edge.
This post was published on Nov 7, 2019.