January 9, 2025 • 39 mins
Digital transformation in logistics is more than a tech upgrade—it’s a complete operational revolution.
In today’s episode, we sit down with Michael Augustin and Andrea Ricciarelli from Westernacher, a global leader in SAP consulting, to explore how digitalization is reshaping the logistics landscape. Together, we dive into the critical role of change management, organizational readiness, and continuous improvement in unlocking real ROI.
From boosting supply chain visibility to navigating disruptions and meeting the ever-growing demand for fast, reliable, and sustainable deliveries, this episode highlights the challenges and opportunities driving the future of logistics.
We also discuss:
In today’s episode, we sit down with Michael Augustin and Andrea Ricciarelli from Westernacher, a global leader in SAP consulting, to explore how digitalization is reshaping the logistics landscape. Together, we dive into the critical role of change management, organizational readiness, and continuous improvement in unlocking real ROI.
From boosting supply chain visibility to navigating disruptions and meeting the ever-growing demand for fast, reliable, and sustainable deliveries, this episode highlights the challenges and opportunities driving the future of logistics.
We also discuss:
- Why true transformation means redesigning operations with AI, not just upgrading systems.
- How to unlock ROI with readiness, leadership, and continuous improvement.
- Using data visibility and platforms to meet regulatory and consumer demands.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:06):
You're listening to Speaking of Supply Chain, a Meeboch podcast.
This is a show for logistics professionals looking to learn
more about the latest innovations in supply chain. Each episode
will feature a conversation on topics such as mitigating supply
chain disruption and reducing risk, current automation trends, sustainability initiatives,
and more. Let's dive right in.
Speaker 2 (00:31):
Hello, and welcome to Speaking of Supply Chain, where we
explore trends, current events, and innovations impacting the logistics and
supply chain industries. I'm your host, Ellen Wood. Today we're
going to explore the transformative power of digitalization and logistics,
focusing on how SAP is reshaping the way businesses manage
their supply chains. Today, I'm joined by Michael and Andrea
(00:53):
from Westernoker, a global leader in SAP consulting, to discuss
how cutting edge solutions are solving today's challenge and preparing
for logistics in the future. Michael Andrea, welcome, thanks for
having us.
Speaker 3 (01:06):
Thank you all right.
Speaker 2 (01:07):
So let's get into our topic today, which is not
spontaneous at all. It is all about planning and preparing
for what's to come in supply chain. And logistics and
using the digital tools that we have available to us.
So what are some of the hurdles when it comes
(01:28):
to a digital transformation. We talk about this a lot
in supply chain where we need to rely on the
data and companies are incorporating more digital tools into their
planning processes. But what does that really mean and what
do they need to look out for? Michael, why don't
you start us off?
Speaker 4 (01:48):
Yeah? Sure, And I immediately want to pick up on
what you have said right because you have mentioned two
very good aspects already. One is data and the other
one is in general the topic of collaboration such and
when we are talking about digital transformation. First of all,
a lot of our customers that we are talking about
are quite far away from the current trends that are
(02:11):
around in technology. The logistics industry as such is quite
a traditional industry that from time to time has its
hurdles to change and also to change the way they work,
which leads to the fact that a lot of our
customers are from their entire innovation portfolio still and technology
(02:32):
portfolio still quite far away from what is already there.
And that means that topic like topics like data management
and how do I share data, how do I store data?
What do I do with sensible data that I might
be gathering today? What can I do with that? Is
really a very new topic to our customers. So it
(02:54):
is really about, first of all, the entire topic of
data management and so what data is around? What is
it that I can additionally capture nowadays with the latest
technology that is there. But then obviously also what can
I do with that? Because I don't only want to
store data somewhere and have it lying around. I want
to use that data going forward in order to get
(03:15):
some value out of it. And that value most of
the times comes also from requirements that a lot of
customers have to logistics service providers nowadays, which is a
much more increased visibility into anything that happens when something
is in transit from A to B. So if I'm
gathering data and if I have a very good visibility
(03:36):
of tracking into my transportation, I can provide that data
as part of a visibility to my customers and let
them know in real time where the goods are, whether
they are stuck in a port, whether they are in transit,
what's the data is on customs and so on and
so forth, the foundation for that is all data in
the end of the day, and for that you need
(03:57):
to make sure that you manage data in the right way,
that you know which data to store, and that you
also I understand the value of data in that sense.
And one thing that I also want to mention here
is that the other trend, and this is also what
data is very very important for is what I've already said, right, So,
customers expectation toward logistics service providers is that they are
(04:20):
getting much more information on their transportation, on their goods
that they have, and this goes nowadays through a lot
of business networks and concepts that are going into that
direction of business networks where when I'm a manufacturer of
goods that I automatically through integration, am getting updates from
my logistics service provider on the orders that I've for example,
(04:43):
just shipped, and for that you need good data integrated
through business networks, so that basically this is into this
information flow is also then being enabled.
Speaker 2 (04:52):
So the maturity path that a lot of these companies
are on, if I hear you right, is still very young.
With a lot of these companies, they want they know
that they need to they know that they want to,
but they haven't built up that infrastructure in their own
organization yet in order to either handle the data or
understand what the data is telling them. So, for these
companies that are very very young in their maturity in
(05:16):
terms of handling and processing this data, other than just
getting started and really jumping in with both feet and
embracing the power of data and utilizing the different tools
that are available to them, what is something else that
will make this journey harder? Just starting to use data
(05:40):
is easy to say, but it's hard in practice. So
what makes that so difficult to take that next step
in their maturity to get to the point where all
of this data is working together and giving them actionable information.
Speaker 3 (05:56):
I think the integration strategy is key in and get
this data actionable. So today we see two major trends.
From one side, the selection of best of breed applications
that are excelling in their own domain, and on the
other handle, on the extreme opposite, we have companies that
(06:16):
are going for a realistic platform like SAP, so best
of breed solution exceed in their specialization, but often they
demand a significant effort of integration to have the data
flowing between them to have data consistency and think about
(06:38):
also updates among different systems. On the other side, the
holistic platform like SAP is reducing silos within the organizations
simply they simplify maintenance updates, scalability and provide end to
end visibility for better decision making or supporting standard proes
(07:01):
and operational processes efficiency and this can help to have
a long term vision for a company from system perspective
and to grow. And why integration is important Basically, I
see three main factor. One is the cost because interfaces
are very expensive and they draw resource to design, to develop,
(07:23):
to maintain just interfaces okay, without any value added. Okay.
The other key factor is the time, so implementing multiple
standard and interface system takes longer than just one single
holistic solution and platform and integrated system. And then the
(07:43):
risk because the integration is one of the common reasons
for project sub optimal performances. Okay, So all these factor
has to be considered. So basically, you have the data,
but you have you need the data the right time
to take the disease, and we have so many examples.
(08:03):
And then think about the technology evolution from one side,
you have the data and the power of data is
integrating the data. Think about, for example, an order of
a customer. Integrated the data about the kind of product
is shipping, the value, the estimated time of arrival of
this product help logistics to run better. Okay. And if
(08:26):
this simple data is not available, basically operators are just
reacting or always acting the good old traditional way. On
the other side, we have another factor that is the
technology and the innovation. Think about artificial intelligence, how to
adopt artificial intelligence. So having a single holistic platform like
(08:50):
SAP helps to embed the new technologies like the artificial
intelligence that is really driving optimization based on time data.
And this can be done only if you have an
integrated and holistic platform. Just to give you an example.
Speaker 5 (09:07):
Okay, Michael, anything to add, nothing to add, But I
want to second one thing and Andrea mentioned it already
and we actually it's a nice example that we can
also provide from the real world of our project work,
and that is the SILOEDS within the cooperation.
Speaker 4 (09:23):
Yeah, so we work right now with a logistics service
provider for example, that is embracing their digital transformation and
moving into this one holistic platform which in this case
is SAP for all of their end to end processes
within the organization. So that includes finance, that includes order
managements or taking in the orders for transportation, that includes
(09:45):
their operations, so basically taking care of the transportation from
A to B t C or the charge caculation. So
everything that is going to be done in this holistic platform.
And one of the key targets of this project is
breaking silos within the company. Why because today finance is
(10:05):
not talking to operations, and operations is not talking to
customer service. And that is exactly one of these key
things that is a major hurdle on the one side,
because breaking these silos is very very very difficult, especially
when we talk about change management. But on the other side,
(10:25):
the value gain is so so high. But the only
way how you can break these silos is by providing
an integrated platform that is able to cover all these
processes and tie everything together and all parties within that
end to end process together, so that we bring also
the stakeholders in that process closer to each other, although
(10:46):
they might be sitting in the same office now.
Speaker 2 (10:50):
And you make an excellent point about breaking down these silos,
and I know we've been talking about this for a
few years in the industry, that the business units need
to be able to have access to the data from
other siloed units in order to make the most conclusive
decisions based on the entire business and not just that
(11:11):
one section of the business. But the change management is
so important because when we start to try to break
down those silos, there's going to be resistance when those
business units are challenged in the way that they've traditionally operated,
and that change management is so difficult to overcome. It's
(11:33):
really got to be a very comprehensive program in and
of itself. Just getting new technology adopted into the organization
is one thing, but then to make it so that
it is a positive change a positive for the business
requires a lot of interpersonal and it's a whole process.
(11:57):
The change management in and of itself is its own project. Andrea,
can you talk to us a little bit about how
that is progressing in the industry, because I know we've
talked about it a number of times, but is it
getting better the adoption rate, the change management, the way
that we're going about bringing in these new technologies into organizations.
Speaker 3 (12:20):
This is a very good question. So we are implementing
the SAP in many organizations, but the innovation extend far
beyond the mare. Software update is not just software update
or technology announcement. It represents an holistic approach that integrates processes,
people and technology and in order to achieve a meaningful
(12:44):
transformation from one side, the process is basically innovation. Often
the band evaluating or redesigning workflow, system and methodologies. So
it's not just a software up to great because you
will never pay for an project to have what you
have today, so you have to think about the future.
So to prove solution needs to be redesigned. We think
(13:08):
in order to get all the future announcement all the
answer that we come in the future. So it is
about questioning the status quo and finding smarter way to
achieve organizational goals. This is about processes about people in
the basically at the heart of any innovation initiative are
(13:30):
with the individuals with a single person who drive and
sustain change from the top to the bottom. And this
involves equipping team, involving team with the necessary skills, fostering culture,
creativity and collaboration and resilience. And then we have a
third element that is the technology, so of course the
(13:54):
technology is there and play a pivotal role as a
platform to enable all this, okay, And about change management,
So basically we saw in many projects that effective change
management is critical to navigate to the disruption and involves
several parts. So first of all, engaging stakeholders is key,
(14:17):
so building the buy in from every stakeholders. It is
important to change manager to address resistance because the human
being is always resistant to change, okay, so understanding concern
and mitigating fears about changes very important. Then as well,
another element is the adoption ensuring the adoption of the news,
(14:39):
so providing training support, informing people about the new that
will be the real world in the future since tomorrow
and the clear benefits. And then continues improvement, so it's
not just one step, but you will have innovation is
an ongoing journey, so it continues in improvement. So that's
(15:01):
the reason why change management is always important in especially
in a software implementation, to evolve the full company to
the future proof company basically prepared for the future.
Speaker 2 (15:15):
So one aspect of this that all of the leadership
is going to be very interested in and to your point,
it is top down. The change management so on the
other side of that is once they have gone through
the effort of number one, finding the technology, whether it's
the best of breed or whether it is a holistic platform,
(15:37):
they've gone through that, they've gone through the change management.
Now we need to see the ROI. We need to
see results. So what is the most difficult part of
measuring that, especially when there are so many other aspects
going on. So we've got all of these process change,
We've got people who we've had to have buy into this.
Now we've got obviously a potential new technology, we're doing
(16:00):
things differently. How do we measure that we're successful at
this implementation?
Speaker 4 (16:07):
So there are multiple ways how you can measure the
success of an implementation in the end of the day. Yeah,
and it can be for logistics service provider, very very
easy or very profane things like efficiency, increase profitability that
you have in your services, because these are typically the
things that we are pointing out. But the thing is
also that I want to say when we talk about
(16:29):
a return on investment, and this is one of the
what I also see because you have asked that as
a first question, right, what are the hurdles in digital
transformation for logistics service providers. It's also partially the expectation
towards such a program and what we are getting out
of this, because it's very clear that digital transformation is
(16:51):
not a system upgrade. It's not we are looking at
one part of our siloed operation that we are now
going to make better in terms of new system whatever,
and then all of a sudden things will be turning around.
It's exactly not that this has implications to the our eye.
So it's not a replacement of as its processes. It's
(17:13):
not just a system upgrade. If you look at this
from that perspective, your URI case is going to be
very underwhelming. So the true URI comes out of rethinking,
redesigning the way your company is working today and how
it is supposed to work in the future, taking into
(17:34):
consideration the latest technology that is available topics like AI
and other innovations, and how that can basically boost your
operations and can help your business to grow. This is
the perspective that you need for which you need to
have good change management in place to be able to
take that position in and if you have achieved that,
(17:54):
then you will see that a digital transformation enables new
service offerings towards customers, which one example that we have
already said, right, increased visibility, but also potentially other value
added services that I'm able to now provide along the process,
or very simply just operating more efficiently and more profitable.
And we have customers, and you will not believe that
(18:17):
we have customers who tell us we do not know
whether we are profitable with a certain service that we
are offering. We of course know on a high level
when we do our year end balance and everything whether
we have made money or made a loss, But on
the bottom of our operation, when I am offering a service,
I do not know whether that's going to be profitable
(18:37):
or not. Yeah, I know what I'm charging a customer,
but I don't know what my cost is. And these
are exactly the topics that need to be looked at
in order to unleash this return on investment in order
to see, Okay, when we do a transformation, when we
do an implementation, when we start seeing these things, can
we have a job. Can we take it just as
measures in order to now lower cost, increase profitability, make
(19:00):
things more efficient or whatever these things, and that, as
I've said, requires change management, especially on the people's site.
Because technology we can change, and yes sometimes it's a
little bit more difficult than we all like, but technology,
changing technologies is possible. Changing processes is also a possibility.
Changing people. That's the problem, and that's exactly where a
(19:21):
lot of times these digital transformation projects are getting into
rough waters because the visionary leadership thinking is not there
in terms of how can we transform our business? And
without that, it's very hard to really get a lot
of our eye out of any major transformation project.
Speaker 2 (19:40):
So what I hear you saying is that it's not
enough just to implement a new technology that has new
capabilities and get buy in from the stakeholders. It's really
about making sure that we have that spirit of continuous
improvement that is enabled emboldened throughout the organization of It's
not just this is not some magic ticket that's going
(20:04):
to make everything work suddenly. We have to have the
mindset going into this transformation that number one with the
change management. As Andrea mentioned, that everyone understands what the
purpose of the transformation is, but that everyone is also
empowered and on board with the idea that it's not
(20:27):
just one thing. This isn't one and done we have
to continuously look to improve and this is going to
enable that. But the job's not done as soon as
the software turns on and the data starts filling up
the servers. There's more to come. So what does that
look like operationally? We've been talking a lot about the
leadership and the stakeholders and organizing this type of transformation,
(20:51):
but when it comes to the people on the ground
floor in the operations, the day to day operations, what
are some of the challenges that they're going to face.
Speaker 3 (21:00):
Once child it could be Okay, the supply chain visibility,
for example, talking about data the splay chain in visibility
is essential for maintaining proactive and responsive supply chain. So
either enable organization to monitor and manage the movement of
goods basically the inventory levels and the processes in real time.
(21:21):
Ensure that issues are identified as soon as they happen
and addressed before they escalate into customer complaint. Okay, why
SPLA chain visibility is critical because from one side allows
a proactive issue management basically addressing delays, shortages, disruption instead
(21:45):
of having a customer calling you you know before that
can be potentially in niche and you can resolve this
issue and this also drives customer satisfaction. Resolve problems before
they happen or basically help you to increase the customer satisfaction.
On the other hand, operational people like the to have
(22:08):
a better decision making use real time data to quickly adapt.
Rerouting shipment for example, or expediting deliveries can be an example.
Of course, visibility imply code savings, avoiding rash, fee penalties, losses,
(22:30):
while at the same time optimize inventories. And then of
course you can with visibility you can enans collaboration with
your partners okay, customer supplier, service providers. And then as
well there is another aspect that is the regulatory compliance,
so ensure proper handling and documentation to meet industry standards.
(22:54):
So this can be really how data can be helpful
and visibility for supply chain is key in this sus
formation to help the people on the ground.
Speaker 2 (23:05):
All right, Michael, what other challenges do you see.
Speaker 4 (23:08):
So besides what Andrea just said regarding visibility. Of course,
when I'm a logistics service provider, another topic is in
general capacity and network management, and that concerns global logistics
service providers that are operating on a global scale and
managing also supply chains for their customers. But that also
concerns customers there that are trucking in just within the
(23:30):
US or within Europe. Because what we I think can
all agree on that is logistics as such is very,
very volatile, because we have seen so many examples over
the past five years alone and even before, whether it
was the global pandemic which disrupted anything that had happened
or that had something to do with moving goods and
(23:53):
transporting things from A to B. We have still up
until today a situation in the sewerz Canal which is
disrupting transportation. We have seen it last year here in
the US when the ship hit the bridge in Baltimore
and all of a sudden the port of Baltimore become unavailable.
So these are things that are not foreseeable. I mean,
(24:14):
you cannot foresee that the vessel gets stuck in the
ZUS or that politically something's happening. So you cannot foresee
these things, but you know that they will happen, ya,
So that's kind of the thing. So you need to
be prepared for black Swan events along your daily operation,
and that along with managing your capacities. Managing your network
(24:35):
is key because in the end of the day, only
because something bad happens doesn't mean that your customers don't
demand the same service. For transportation, yeah, I mean your
customers are transporting goods from Asia to Europe or to
the US into their production where if something is delayed
by a week or two, that heavily impacts their production
and also then their supply chain. So only because something
(24:58):
bad happens doesn't mean that you can now sit back,
relax and say, Okay, you know what's something happened here
and this will now take X amount of days more.
We cannot solve that situation. So that is one of
the key differentiator. How can I, as a logistics service
provider ensure highest level although all of these things are
happening and I do not really have an influence on
(25:18):
So you need to manage your networks as prescriptive as possible,
and there are multiple layers how you can do that.
Prescriptive management is the top layer where you really you
don't react any more to things. You plan for these
things to happen at the end of the day. It's
like a contingency plan that you're writing up that you
(25:39):
are putting in somewhere, and then when things happen, you
just pull it out and say, Okay, this is how
it's done. And this is one of the key things
from an operational perspective to be able to be prepared
nowadays and then also to be able to execute that.
And this comes all together to what we have discussed earlier,
right with the Holistic platform book that we need because
if something happened somewhere along the supply chain and along
(26:03):
the transportation chain, and I immediately get notice of it
because I'm tracking my vehicle, I'm tracking the shipments that
I'm responsible for. If something happens, I can immediately start replanning.
I'm getting that visibility that now flows back into operations
and allows me to proactively replan if something has happened.
If I do not have that level of transparency and
(26:25):
visibility in my operations and in my other end to
end streams, It's becoming very hard for me to react accordingly,
and then I'm basically only chasing the problem rather than
being ahead of the problem and trying to mitigate that
as much as I can.
Speaker 2 (26:41):
It is absolutely reactive rather than proactive. To your point
that it makes me think of airline pilots. When you're
flying in a plane, and we've all been on a plane,
the pilot doesn't know what to do in every possible
situation with all the equipment and all of the navigation.
If something goes wrong, he has a binder in that
(27:02):
cockpit that is going to tell him what to do
when this light goes off or that lever says this,
and they're not trained for every possible contingency. But because
what they're doing is so critical, the airlines the air
craft manufacturers have developed these contingency plans to tell them, Okay,
(27:23):
when this happens, this is what you have to do,
because you have to get these people safely on the ground,
or you have to get these goods safely on the ground.
You have to get you safely on the ground in
this aircraft. So they have that plan, and businesses don't
think that same way that when something goes wrong, it
is that critical and you have to have a contingency plan.
(27:43):
You have to have a plan B, a Plan C
and know when to pivot. And to your point, you
can't do that unless you know that it's happening. If
you wait until the news reports that there's a problem
in the Suez Canal. You're already too late to react
to your organization's impact that's going to result from that information.
(28:05):
So what about some of the other aspects of obviously
dealing with when we're talking about transportation and moving goods.
One big one, especially when we're talking about customers, and
not just internal customers but end customers, and that's that
last mile delivery and making sure that that is executed properly.
(28:28):
So what are some of the complexities or hurdles that
that aspect of the supply chain which is so important
to everyone in the equation that we can prepare for.
Speaker 3 (28:41):
I think a good example is how Amazon have completely
changed the perception of everybody has an expectation in terms
of last night delivery and delivery services.
Speaker 4 (28:56):
Okay.
Speaker 3 (28:57):
Now everybody internally, external customer, everybody demand for speed and convenience.
Customer now expect near stantaneous delivery of good or services
either they belong to the business or they are consumer. Okay.
And this is the classical everybody called Amazon effect. Okay,
(29:18):
it changed completely the perception of everyone okay, also personalized experience,
the expectations for tailored the recommendation on specific product. Again,
here artificial intelligence can help from a consumer perspective. Now,
(29:38):
in general, consumer expect the business anticipate their need based
on prior interaction and preferences. And also transparency and trust
is another element. Basic customer needs detailed information about the products,
the pricing, the delivery timeline, and like Amazon is doing
(30:00):
on their website, they also expect reliable customer sell viz
on their address on their specific premises okay, and also
as well omnichannel availability. You can order business to business,
but also you can order online and you get always
the product. And also another aspect is the low price
(30:22):
and the value perception. Basically you increase the value you
get for less money. So that's the generic perpectional compared
to twenty thirty, forty fifty years ago. So now you
want to have always the best best option in the market.
And so in that sense, generally speaking, the customer expectation
(30:43):
changed and this represents from logistics, a big revolution in
terms of delivered this expectation and comply with these expectations.
Speaker 2 (30:53):
Well, and that's an interesting point because in order for
all of those things to happen, we're coming back to
the original issue of having all of that data available. So,
whether you're an individual doing your Christmas shopping like I
did on Amazon, and you're looking to see is this available?
Can I get it in time? What is the best
(31:15):
price for this product? Do I need? Does this toy
come with batteries? Do I need to order those separately?
Does it need another piece? Does it have something else
that goes with it? What does Amazon suggest I order
to go with it? Or when we're talking about companies
ordering product for their own production and getting those raw materials,
(31:35):
you need to have that information. You need to have
all of that information readily available to the consumer, and
you need to have it accurate. So I think that
that's an amazing point. But one of the other things
that I know we're getting into with both last mile
delivery and production and that is all of these sustainability
topics and when it comes to making sure that we're
(31:58):
we're good stewards of our planet, that we're making sure
we're not having out of control emissions, all of these
things are part of the equation. So what are we
getting into when it comes to the sustainability aspect here?
What are some of those challenges.
Speaker 4 (32:14):
So sustainability is a topic that becomes more and more important. Yeah.
I mean across all industries of course, but for logistics
service providers even more. Yeah, because there is this classification
of emissions, right with scode one, Scope two, scope three. Yes,
so Scope one means that's my emissions. I'm sitting in
a car driving from A to B. That's my emissions
(32:35):
that I'm producing. Scope b is then a little bit
more indirect than Scope three is the emission that is
now coming from my downstream or ups tore in value chain.
The problem here is as a logistic service provider, I'm
looking at two of these items number one Scope one
items is my direct emission that I'm responsible for, and
(32:56):
if I'm transporting goods, I Am going to have emissions. Period.
That is what it is. And even with technology and
everything trying to mitigate that at such a high pace,
still in the foreseeable future, transportation and logistics will have emissions.
So that's one thing, right, So how can I reduce
(33:17):
my own emissions? We've talked about more efficient processes, but
also getting visibility into that because nowadays companies need to
report their emissions on a much more detailed level. Than
they needed to do it five or ten or fifteen
years ago. So I need to have the tools in
my toolkits, so to say that, tell me and give
(33:38):
me that visibility how much is it that I'm actually
emitting based on my operation? And we are again tying
this back to the holistic platform, right, if everything sits
under one roof, it's easy for me to basically get
that information and do a reporting on that and also
identify where can I basically become better. Is there anything
(33:59):
that I can do, for example, because I see that
my twenty thirty year old trucks are put reading much
more than the trucks they are in the free for
your time. So this is exactly the level of granularity
and decision making that you want to do and that
you also want to have. And on the other side,
as I've already said, right, scope three emissions is what
my customers as a logistics service providers are concerned with. Yeah,
(34:22):
what's starting to happen now is that when there is
an RFP coming in for transportation and there is a
tender for six or twelve month contract, when I'm answering
that tender as a logistics service provider, I need to
provide my emissions. I need to basically give that information
already upfront to my customers because a day in their
(34:44):
internal decision making processes nowadays have thresholds and have criteria
to select customer or to select service providers that are
looking after these topics. So it's not only for me
a topic where I need more of visit ability in
terms of knowing what is it that I'm doing, but
I also need to make efforts in order to lower
(35:05):
this because otherwise this turns into a business risk because
then I might be losing business because I'm not able
to pay ambissions for our customers at the end of
the day. Yeah.
Speaker 3 (35:16):
Probably. Also in addition to Michael, I would say overall
it is also about brand reputation if you think taking
care of ability impact on your operation. Of course, supplay
chain is responsible for a great part of the carbon
footprint of the company, Okay, splay chain is the place
(35:38):
where you can really reduce the carbon footprint of the company,
and this has an impact of course on having green
air operation from one side, but also long term announced
the brand reputation of a company and also another point
is help the company to meet regulatory requirements and at
(36:03):
the end aligning with the customer and consumer demand for
ethical and a or friendly practices.
Speaker 2 (36:09):
Basically, No, you make an excellent point because as we're
talking about data being available, data being visible, another layer
of that visibility is to the public at large, and
they have access to those animal reports, They have access
to see where companies are reporting on their sustainability practices
(36:31):
and consumers, and consumers will make that vote with their purchases,
and the amount of information that is available to the
populace today means that they will absolutely use that data
to make their determinations, to make decisions about who they
will purchase from, which brands they will support, and that
(36:53):
kind of information can be amazingly helpful or it can
be horribly atrimental to a brand. So that's an excellent
point that all of this data that we're talking about
collecting and managing and understanding and then making decisions about
whether it is using AI to help us make those
(37:16):
decisions quickly, or whether it's talking about the continuous improvement
of the organization to be looking at this data on
a regular basis and making continuous improvements. That it's not
all at once, it is step by step throughout the
process over time to increase that maturity both in their
(37:37):
own business but also within their digital transformation.
Speaker 4 (37:41):
Well said.
Speaker 2 (37:45):
Thank you so much Michael and Andrea for joining us
today and talking us through some of these challenges that
three pls specifically are going to be facing in the
new year. And I hope that our listeners who are
of the three pl industry have gotten something beneficial from
our conversation today. I will make sure that your LinkedIn
(38:10):
accounts are available so that people can reach you if
they have any additional questions. That brings us to the
end of our episode. A very very special things to
both of you for joining us. If one of our
listeners out there has a suggestion for a topic or
would like to be a guest on the show, we'd
love to hear from you. You can contact me at
podcast at meboch at any time. As always, thanks for
(38:32):
listening to Speaking of Supply Chain. If you enjoyed the show,
please rate and review us on whatever podcast platform you
prefer and be sure to tune in next time.
Speaker 1 (38:45):
Meeboch Consulting is one of the largest and most globally
recognized supply chain consulting, engineering and advisory firms. For nearly
fifty years, we've helped clients achieve supply chain excellence and
sustainable competitive advantage across the entire your spectrum of the
supply chain by delivering improvements and innovation strategically, tactically, and digitally.
(39:07):
To learn more, visit meeboch dot com. You've been listening
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podcast player. If you like what you've heard, please rate
the show that helps us to keep delivering the latest
in supply chain information. Thanks for listening. Until next time,
You're listening to Speaking of Supply Chain, a Meeboch podcast.
This is a show for logistics professionals looking to learn
more about the latest innovations in supply chain. Each episode
will feature a conversation on topics such as mitigating supply
chain disruption and reducing risk, current automation trends, sustainability initiatives,
and more. Let's dive right in.
Speaker 2 (00:31):
Hello, and welcome to Speaking of Supply Chain, where we
explore trends, current events, and innovations impacting the logistics and
supply chain industries. I'm your host, Ellen Wood. Today we're
going to explore the transformative power of digitalization and logistics,
focusing on how SAP is reshaping the way businesses manage
their supply chains. Today, I'm joined by Michael and Andrea
(00:53):
from Westernoker, a global leader in SAP consulting, to discuss
how cutting edge solutions are solving today's challenge and preparing
for logistics in the future. Michael Andrea, welcome, thanks for
having us.
Speaker 3 (01:06):
Thank you all right.
Speaker 2 (01:07):
So let's get into our topic today, which is not
spontaneous at all. It is all about planning and preparing
for what's to come in supply chain. And logistics and
using the digital tools that we have available to us.
So what are some of the hurdles when it comes
(01:28):
to a digital transformation. We talk about this a lot
in supply chain where we need to rely on the
data and companies are incorporating more digital tools into their
planning processes. But what does that really mean and what
do they need to look out for? Michael, why don't
you start us off?
Speaker 4 (01:48):
Yeah? Sure, And I immediately want to pick up on
what you have said right because you have mentioned two
very good aspects already. One is data and the other
one is in general the topic of collaboration such and
when we are talking about digital transformation. First of all,
a lot of our customers that we are talking about
are quite far away from the current trends that are
(02:11):
around in technology. The logistics industry as such is quite
a traditional industry that from time to time has its
hurdles to change and also to change the way they work,
which leads to the fact that a lot of our
customers are from their entire innovation portfolio still and technology
(02:32):
portfolio still quite far away from what is already there.
And that means that topic like topics like data management
and how do I share data, how do I store data?
What do I do with sensible data that I might
be gathering today? What can I do with that? Is
really a very new topic to our customers. So it
(02:54):
is really about, first of all, the entire topic of
data management and so what data is around? What is
it that I can additionally capture nowadays with the latest
technology that is there. But then obviously also what can
I do with that? Because I don't only want to
store data somewhere and have it lying around. I want
to use that data going forward in order to get
(03:15):
some value out of it. And that value most of
the times comes also from requirements that a lot of
customers have to logistics service providers nowadays, which is a
much more increased visibility into anything that happens when something
is in transit from A to B. So if I'm
gathering data and if I have a very good visibility
(03:36):
of tracking into my transportation, I can provide that data
as part of a visibility to my customers and let
them know in real time where the goods are, whether
they are stuck in a port, whether they are in transit,
what's the data is on customs and so on and
so forth, the foundation for that is all data in
the end of the day, and for that you need
(03:57):
to make sure that you manage data in the right way,
that you know which data to store, and that you
also I understand the value of data in that sense.
And one thing that I also want to mention here
is that the other trend, and this is also what
data is very very important for is what I've already said, right, So,
customers expectation toward logistics service providers is that they are
(04:20):
getting much more information on their transportation, on their goods
that they have, and this goes nowadays through a lot
of business networks and concepts that are going into that
direction of business networks where when I'm a manufacturer of
goods that I automatically through integration, am getting updates from
my logistics service provider on the orders that I've for example,
(04:43):
just shipped, and for that you need good data integrated
through business networks, so that basically this is into this
information flow is also then being enabled.
Speaker 2 (04:52):
So the maturity path that a lot of these companies
are on, if I hear you right, is still very young.
With a lot of these companies, they want they know
that they need to they know that they want to,
but they haven't built up that infrastructure in their own
organization yet in order to either handle the data or
understand what the data is telling them. So, for these
companies that are very very young in their maturity in
(05:16):
terms of handling and processing this data, other than just
getting started and really jumping in with both feet and
embracing the power of data and utilizing the different tools
that are available to them, what is something else that
will make this journey harder? Just starting to use data
(05:40):
is easy to say, but it's hard in practice. So
what makes that so difficult to take that next step
in their maturity to get to the point where all
of this data is working together and giving them actionable information.
Speaker 3 (05:56):
I think the integration strategy is key in and get
this data actionable. So today we see two major trends.
From one side, the selection of best of breed applications
that are excelling in their own domain, and on the
other handle, on the extreme opposite, we have companies that
(06:16):
are going for a realistic platform like SAP, so best
of breed solution exceed in their specialization, but often they
demand a significant effort of integration to have the data
flowing between them to have data consistency and think about
(06:38):
also updates among different systems. On the other side, the
holistic platform like SAP is reducing silos within the organizations
simply they simplify maintenance updates, scalability and provide end to
end visibility for better decision making or supporting standard proes
(07:01):
and operational processes efficiency and this can help to have
a long term vision for a company from system perspective
and to grow. And why integration is important Basically, I
see three main factor. One is the cost because interfaces
are very expensive and they draw resource to design, to develop,
(07:23):
to maintain just interfaces okay, without any value added. Okay.
The other key factor is the time, so implementing multiple
standard and interface system takes longer than just one single
holistic solution and platform and integrated system. And then the
(07:43):
risk because the integration is one of the common reasons
for project sub optimal performances. Okay, So all these factor
has to be considered. So basically, you have the data,
but you have you need the data the right time
to take the disease, and we have so many examples.
(08:03):
And then think about the technology evolution from one side,
you have the data and the power of data is
integrating the data. Think about, for example, an order of
a customer. Integrated the data about the kind of product
is shipping, the value, the estimated time of arrival of
this product help logistics to run better. Okay. And if
(08:26):
this simple data is not available, basically operators are just
reacting or always acting the good old traditional way. On
the other side, we have another factor that is the
technology and the innovation. Think about artificial intelligence, how to
adopt artificial intelligence. So having a single holistic platform like
(08:50):
SAP helps to embed the new technologies like the artificial
intelligence that is really driving optimization based on time data.
And this can be done only if you have an
integrated and holistic platform. Just to give you an example.
Speaker 5 (09:07):
Okay, Michael, anything to add, nothing to add, But I
want to second one thing and Andrea mentioned it already
and we actually it's a nice example that we can
also provide from the real world of our project work,
and that is the SILOEDS within the cooperation.
Speaker 4 (09:23):
Yeah, so we work right now with a logistics service
provider for example, that is embracing their digital transformation and
moving into this one holistic platform which in this case
is SAP for all of their end to end processes
within the organization. So that includes finance, that includes order
managements or taking in the orders for transportation, that includes
(09:45):
their operations, so basically taking care of the transportation from
A to B t C or the charge caculation. So
everything that is going to be done in this holistic platform.
And one of the key targets of this project is
breaking silos within the company. Why because today finance is
(10:05):
not talking to operations, and operations is not talking to
customer service. And that is exactly one of these key
things that is a major hurdle on the one side,
because breaking these silos is very very very difficult, especially
when we talk about change management. But on the other side,
(10:25):
the value gain is so so high. But the only
way how you can break these silos is by providing
an integrated platform that is able to cover all these
processes and tie everything together and all parties within that
end to end process together, so that we bring also
the stakeholders in that process closer to each other, although
(10:46):
they might be sitting in the same office now.
Speaker 2 (10:50):
And you make an excellent point about breaking down these silos,
and I know we've been talking about this for a
few years in the industry, that the business units need
to be able to have access to the data from
other siloed units in order to make the most conclusive
decisions based on the entire business and not just that
(11:11):
one section of the business. But the change management is
so important because when we start to try to break
down those silos, there's going to be resistance when those
business units are challenged in the way that they've traditionally operated,
and that change management is so difficult to overcome. It's
(11:33):
really got to be a very comprehensive program in and
of itself. Just getting new technology adopted into the organization
is one thing, but then to make it so that
it is a positive change a positive for the business
requires a lot of interpersonal and it's a whole process.
(11:57):
The change management in and of itself is its own project. Andrea,
can you talk to us a little bit about how
that is progressing in the industry, because I know we've
talked about it a number of times, but is it
getting better the adoption rate, the change management, the way
that we're going about bringing in these new technologies into organizations.
Speaker 3 (12:20):
This is a very good question. So we are implementing
the SAP in many organizations, but the innovation extend far
beyond the mare. Software update is not just software update
or technology announcement. It represents an holistic approach that integrates processes,
people and technology and in order to achieve a meaningful
(12:44):
transformation from one side, the process is basically innovation. Often
the band evaluating or redesigning workflow, system and methodologies. So
it's not just a software up to great because you
will never pay for an project to have what you
have today, so you have to think about the future.
So to prove solution needs to be redesigned. We think
(13:08):
in order to get all the future announcement all the
answer that we come in the future. So it is
about questioning the status quo and finding smarter way to
achieve organizational goals. This is about processes about people in
the basically at the heart of any innovation initiative are
(13:30):
with the individuals with a single person who drive and
sustain change from the top to the bottom. And this
involves equipping team, involving team with the necessary skills, fostering culture,
creativity and collaboration and resilience. And then we have a
third element that is the technology, so of course the
(13:54):
technology is there and play a pivotal role as a
platform to enable all this, okay, And about change management,
So basically we saw in many projects that effective change
management is critical to navigate to the disruption and involves
several parts. So first of all, engaging stakeholders is key,
(14:17):
so building the buy in from every stakeholders. It is
important to change manager to address resistance because the human
being is always resistant to change, okay, so understanding concern
and mitigating fears about changes very important. Then as well,
another element is the adoption ensuring the adoption of the news,
(14:39):
so providing training support, informing people about the new that
will be the real world in the future since tomorrow
and the clear benefits. And then continues improvement, so it's
not just one step, but you will have innovation is
an ongoing journey, so it continues in improvement. So that's
(15:01):
the reason why change management is always important in especially
in a software implementation, to evolve the full company to
the future proof company basically prepared for the future.
Speaker 2 (15:15):
So one aspect of this that all of the leadership
is going to be very interested in and to your point,
it is top down. The change management so on the
other side of that is once they have gone through
the effort of number one, finding the technology, whether it's
the best of breed or whether it is a holistic platform,
(15:37):
they've gone through that, they've gone through the change management.
Now we need to see the ROI. We need to
see results. So what is the most difficult part of
measuring that, especially when there are so many other aspects
going on. So we've got all of these process change,
We've got people who we've had to have buy into this.
Now we've got obviously a potential new technology, we're doing
(16:00):
things differently. How do we measure that we're successful at
this implementation?
Speaker 4 (16:07):
So there are multiple ways how you can measure the
success of an implementation in the end of the day. Yeah,
and it can be for logistics service provider, very very
easy or very profane things like efficiency, increase profitability that
you have in your services, because these are typically the
things that we are pointing out. But the thing is
also that I want to say when we talk about
(16:29):
a return on investment, and this is one of the
what I also see because you have asked that as
a first question, right, what are the hurdles in digital
transformation for logistics service providers. It's also partially the expectation
towards such a program and what we are getting out
of this, because it's very clear that digital transformation is
(16:51):
not a system upgrade. It's not we are looking at
one part of our siloed operation that we are now
going to make better in terms of new system whatever,
and then all of a sudden things will be turning around.
It's exactly not that this has implications to the our eye.
So it's not a replacement of as its processes. It's
(17:13):
not just a system upgrade. If you look at this
from that perspective, your URI case is going to be
very underwhelming. So the true URI comes out of rethinking,
redesigning the way your company is working today and how
it is supposed to work in the future, taking into
(17:34):
consideration the latest technology that is available topics like AI
and other innovations, and how that can basically boost your
operations and can help your business to grow. This is
the perspective that you need for which you need to
have good change management in place to be able to
take that position in and if you have achieved that,
(17:54):
then you will see that a digital transformation enables new
service offerings towards customers, which one example that we have
already said, right, increased visibility, but also potentially other value
added services that I'm able to now provide along the process,
or very simply just operating more efficiently and more profitable.
And we have customers, and you will not believe that
(18:17):
we have customers who tell us we do not know
whether we are profitable with a certain service that we
are offering. We of course know on a high level
when we do our year end balance and everything whether
we have made money or made a loss, But on
the bottom of our operation, when I am offering a service,
I do not know whether that's going to be profitable
(18:37):
or not. Yeah, I know what I'm charging a customer,
but I don't know what my cost is. And these
are exactly the topics that need to be looked at
in order to unleash this return on investment in order
to see, Okay, when we do a transformation, when we
do an implementation, when we start seeing these things, can
we have a job. Can we take it just as
measures in order to now lower cost, increase profitability, make
(19:00):
things more efficient or whatever these things, and that, as
I've said, requires change management, especially on the people's site.
Because technology we can change, and yes sometimes it's a
little bit more difficult than we all like, but technology,
changing technologies is possible. Changing processes is also a possibility.
Changing people. That's the problem, and that's exactly where a
(19:21):
lot of times these digital transformation projects are getting into
rough waters because the visionary leadership thinking is not there
in terms of how can we transform our business? And
without that, it's very hard to really get a lot
of our eye out of any major transformation project.
Speaker 2 (19:40):
So what I hear you saying is that it's not
enough just to implement a new technology that has new
capabilities and get buy in from the stakeholders. It's really
about making sure that we have that spirit of continuous
improvement that is enabled emboldened throughout the organization of It's
not just this is not some magic ticket that's going
(20:04):
to make everything work suddenly. We have to have the
mindset going into this transformation that number one with the
change management. As Andrea mentioned, that everyone understands what the
purpose of the transformation is, but that everyone is also
empowered and on board with the idea that it's not
(20:27):
just one thing. This isn't one and done we have
to continuously look to improve and this is going to
enable that. But the job's not done as soon as
the software turns on and the data starts filling up
the servers. There's more to come. So what does that
look like operationally? We've been talking a lot about the
leadership and the stakeholders and organizing this type of transformation,
(20:51):
but when it comes to the people on the ground
floor in the operations, the day to day operations, what
are some of the challenges that they're going to face.
Speaker 3 (21:00):
Once child it could be Okay, the supply chain visibility,
for example, talking about data the splay chain in visibility
is essential for maintaining proactive and responsive supply chain. So
either enable organization to monitor and manage the movement of
goods basically the inventory levels and the processes in real time.
(21:21):
Ensure that issues are identified as soon as they happen
and addressed before they escalate into customer complaint. Okay, why
SPLA chain visibility is critical because from one side allows
a proactive issue management basically addressing delays, shortages, disruption instead
(21:45):
of having a customer calling you you know before that
can be potentially in niche and you can resolve this
issue and this also drives customer satisfaction. Resolve problems before
they happen or basically help you to increase the customer satisfaction.
On the other hand, operational people like the to have
(22:08):
a better decision making use real time data to quickly adapt.
Rerouting shipment for example, or expediting deliveries can be an example.
Of course, visibility imply code savings, avoiding rash, fee penalties, losses,
(22:30):
while at the same time optimize inventories. And then of
course you can with visibility you can enans collaboration with
your partners okay, customer supplier, service providers. And then as
well there is another aspect that is the regulatory compliance,
so ensure proper handling and documentation to meet industry standards.
(22:54):
So this can be really how data can be helpful
and visibility for supply chain is key in this sus
formation to help the people on the ground.
Speaker 2 (23:05):
All right, Michael, what other challenges do you see.
Speaker 4 (23:08):
So besides what Andrea just said regarding visibility. Of course,
when I'm a logistics service provider, another topic is in
general capacity and network management, and that concerns global logistics
service providers that are operating on a global scale and
managing also supply chains for their customers. But that also
concerns customers there that are trucking in just within the
(23:30):
US or within Europe. Because what we I think can
all agree on that is logistics as such is very,
very volatile, because we have seen so many examples over
the past five years alone and even before, whether it
was the global pandemic which disrupted anything that had happened
or that had something to do with moving goods and
(23:53):
transporting things from A to B. We have still up
until today a situation in the sewerz Canal which is
disrupting transportation. We have seen it last year here in
the US when the ship hit the bridge in Baltimore
and all of a sudden the port of Baltimore become unavailable.
So these are things that are not foreseeable. I mean,
(24:14):
you cannot foresee that the vessel gets stuck in the
ZUS or that politically something's happening. So you cannot foresee
these things, but you know that they will happen, ya,
So that's kind of the thing. So you need to
be prepared for black Swan events along your daily operation,
and that along with managing your capacities. Managing your network
(24:35):
is key because in the end of the day, only
because something bad happens doesn't mean that your customers don't
demand the same service. For transportation, yeah, I mean your
customers are transporting goods from Asia to Europe or to
the US into their production where if something is delayed
by a week or two, that heavily impacts their production
and also then their supply chain. So only because something
(24:58):
bad happens doesn't mean that you can now sit back,
relax and say, Okay, you know what's something happened here
and this will now take X amount of days more.
We cannot solve that situation. So that is one of
the key differentiator. How can I, as a logistics service
provider ensure highest level although all of these things are
happening and I do not really have an influence on
(25:18):
So you need to manage your networks as prescriptive as possible,
and there are multiple layers how you can do that.
Prescriptive management is the top layer where you really you
don't react any more to things. You plan for these
things to happen at the end of the day. It's
like a contingency plan that you're writing up that you
(25:39):
are putting in somewhere, and then when things happen, you
just pull it out and say, Okay, this is how
it's done. And this is one of the key things
from an operational perspective to be able to be prepared
nowadays and then also to be able to execute that.
And this comes all together to what we have discussed earlier,
right with the Holistic platform book that we need because
if something happened somewhere along the supply chain and along
(26:03):
the transportation chain, and I immediately get notice of it
because I'm tracking my vehicle, I'm tracking the shipments that
I'm responsible for. If something happens, I can immediately start replanning.
I'm getting that visibility that now flows back into operations
and allows me to proactively replan if something has happened.
If I do not have that level of transparency and
(26:25):
visibility in my operations and in my other end to
end streams, It's becoming very hard for me to react accordingly,
and then I'm basically only chasing the problem rather than
being ahead of the problem and trying to mitigate that
as much as I can.
Speaker 2 (26:41):
It is absolutely reactive rather than proactive. To your point
that it makes me think of airline pilots. When you're
flying in a plane, and we've all been on a plane,
the pilot doesn't know what to do in every possible
situation with all the equipment and all of the navigation.
If something goes wrong, he has a binder in that
(27:02):
cockpit that is going to tell him what to do
when this light goes off or that lever says this,
and they're not trained for every possible contingency. But because
what they're doing is so critical, the airlines the air
craft manufacturers have developed these contingency plans to tell them, Okay,
(27:23):
when this happens, this is what you have to do,
because you have to get these people safely on the ground,
or you have to get these goods safely on the ground.
You have to get you safely on the ground in
this aircraft. So they have that plan, and businesses don't
think that same way that when something goes wrong, it
is that critical and you have to have a contingency plan.
(27:43):
You have to have a plan B, a Plan C
and know when to pivot. And to your point, you
can't do that unless you know that it's happening. If
you wait until the news reports that there's a problem
in the Suez Canal. You're already too late to react
to your organization's impact that's going to result from that information.
(28:05):
So what about some of the other aspects of obviously
dealing with when we're talking about transportation and moving goods.
One big one, especially when we're talking about customers, and
not just internal customers but end customers, and that's that
last mile delivery and making sure that that is executed properly.
(28:28):
So what are some of the complexities or hurdles that
that aspect of the supply chain which is so important
to everyone in the equation that we can prepare for.
Speaker 3 (28:41):
I think a good example is how Amazon have completely
changed the perception of everybody has an expectation in terms
of last night delivery and delivery services.
Speaker 4 (28:56):
Okay.
Speaker 3 (28:57):
Now everybody internally, external customer, everybody demand for speed and convenience.
Customer now expect near stantaneous delivery of good or services
either they belong to the business or they are consumer. Okay.
And this is the classical everybody called Amazon effect. Okay,
(29:18):
it changed completely the perception of everyone okay, also personalized experience,
the expectations for tailored the recommendation on specific product. Again,
here artificial intelligence can help from a consumer perspective. Now,
(29:38):
in general, consumer expect the business anticipate their need based
on prior interaction and preferences. And also transparency and trust
is another element. Basic customer needs detailed information about the products,
the pricing, the delivery timeline, and like Amazon is doing
(30:00):
on their website, they also expect reliable customer sell viz
on their address on their specific premises okay, and also
as well omnichannel availability. You can order business to business,
but also you can order online and you get always
the product. And also another aspect is the low price
(30:22):
and the value perception. Basically you increase the value you
get for less money. So that's the generic perpectional compared
to twenty thirty, forty fifty years ago. So now you
want to have always the best best option in the market.
And so in that sense, generally speaking, the customer expectation
(30:43):
changed and this represents from logistics, a big revolution in
terms of delivered this expectation and comply with these expectations.
Speaker 2 (30:53):
Well, and that's an interesting point because in order for
all of those things to happen, we're coming back to
the original issue of having all of that data available. So,
whether you're an individual doing your Christmas shopping like I
did on Amazon, and you're looking to see is this available?
Can I get it in time? What is the best
(31:15):
price for this product? Do I need? Does this toy
come with batteries? Do I need to order those separately?
Does it need another piece? Does it have something else
that goes with it? What does Amazon suggest I order
to go with it? Or when we're talking about companies
ordering product for their own production and getting those raw materials,
(31:35):
you need to have that information. You need to have
all of that information readily available to the consumer, and
you need to have it accurate. So I think that
that's an amazing point. But one of the other things
that I know we're getting into with both last mile
delivery and production and that is all of these sustainability
topics and when it comes to making sure that we're
(31:58):
we're good stewards of our planet, that we're making sure
we're not having out of control emissions, all of these
things are part of the equation. So what are we
getting into when it comes to the sustainability aspect here?
What are some of those challenges.
Speaker 4 (32:14):
So sustainability is a topic that becomes more and more important. Yeah.
I mean across all industries of course, but for logistics
service providers even more. Yeah, because there is this classification
of emissions, right with scode one, Scope two, scope three. Yes,
so Scope one means that's my emissions. I'm sitting in
a car driving from A to B. That's my emissions
(32:35):
that I'm producing. Scope b is then a little bit
more indirect than Scope three is the emission that is
now coming from my downstream or ups tore in value chain.
The problem here is as a logistic service provider, I'm
looking at two of these items number one Scope one
items is my direct emission that I'm responsible for, and
(32:56):
if I'm transporting goods, I Am going to have emissions. Period.
That is what it is. And even with technology and
everything trying to mitigate that at such a high pace,
still in the foreseeable future, transportation and logistics will have emissions.
So that's one thing, right, So how can I reduce
(33:17):
my own emissions? We've talked about more efficient processes, but
also getting visibility into that because nowadays companies need to
report their emissions on a much more detailed level. Than
they needed to do it five or ten or fifteen
years ago. So I need to have the tools in
my toolkits, so to say that, tell me and give
(33:38):
me that visibility how much is it that I'm actually
emitting based on my operation? And we are again tying
this back to the holistic platform, right, if everything sits
under one roof, it's easy for me to basically get
that information and do a reporting on that and also
identify where can I basically become better. Is there anything
(33:59):
that I can do, for example, because I see that
my twenty thirty year old trucks are put reading much
more than the trucks they are in the free for
your time. So this is exactly the level of granularity
and decision making that you want to do and that
you also want to have. And on the other side,
as I've already said, right, scope three emissions is what
my customers as a logistics service providers are concerned with. Yeah,
(34:22):
what's starting to happen now is that when there is
an RFP coming in for transportation and there is a
tender for six or twelve month contract, when I'm answering
that tender as a logistics service provider, I need to
provide my emissions. I need to basically give that information
already upfront to my customers because a day in their
(34:44):
internal decision making processes nowadays have thresholds and have criteria
to select customer or to select service providers that are
looking after these topics. So it's not only for me
a topic where I need more of visit ability in
terms of knowing what is it that I'm doing, but
I also need to make efforts in order to lower
(35:05):
this because otherwise this turns into a business risk because
then I might be losing business because I'm not able
to pay ambissions for our customers at the end of
the day. Yeah.
Speaker 3 (35:16):
Probably. Also in addition to Michael, I would say overall
it is also about brand reputation if you think taking
care of ability impact on your operation. Of course, supplay
chain is responsible for a great part of the carbon
footprint of the company, Okay, splay chain is the place
(35:38):
where you can really reduce the carbon footprint of the company,
and this has an impact of course on having green
air operation from one side, but also long term announced
the brand reputation of a company and also another point
is help the company to meet regulatory requirements and at
(36:03):
the end aligning with the customer and consumer demand for
ethical and a or friendly practices.
Speaker 2 (36:09):
Basically, No, you make an excellent point because as we're
talking about data being available, data being visible, another layer
of that visibility is to the public at large, and
they have access to those animal reports, They have access
to see where companies are reporting on their sustainability practices
(36:31):
and consumers, and consumers will make that vote with their purchases,
and the amount of information that is available to the
populace today means that they will absolutely use that data
to make their determinations, to make decisions about who they
will purchase from, which brands they will support, and that
(36:53):
kind of information can be amazingly helpful or it can
be horribly atrimental to a brand. So that's an excellent
point that all of this data that we're talking about
collecting and managing and understanding and then making decisions about
whether it is using AI to help us make those
(37:16):
decisions quickly, or whether it's talking about the continuous improvement
of the organization to be looking at this data on
a regular basis and making continuous improvements. That it's not
all at once, it is step by step throughout the
process over time to increase that maturity both in their
(37:37):
own business but also within their digital transformation.
Speaker 4 (37:41):
Well said.
Speaker 2 (37:45):
Thank you so much Michael and Andrea for joining us
today and talking us through some of these challenges that
three pls specifically are going to be facing in the
new year. And I hope that our listeners who are
of the three pl industry have gotten something beneficial from
our conversation today. I will make sure that your LinkedIn
(38:10):
accounts are available so that people can reach you if
they have any additional questions. That brings us to the
end of our episode. A very very special things to
both of you for joining us. If one of our
listeners out there has a suggestion for a topic or
would like to be a guest on the show, we'd
love to hear from you. You can contact me at
podcast at meboch at any time. As always, thanks for
(38:32):
listening to Speaking of Supply Chain. If you enjoyed the show,
please rate and review us on whatever podcast platform you
prefer and be sure to tune in next time.
Speaker 1 (38:45):
Meeboch Consulting is one of the largest and most globally
recognized supply chain consulting, engineering and advisory firms. For nearly
fifty years, we've helped clients achieve supply chain excellence and
sustainable competitive advantage across the entire your spectrum of the
supply chain by delivering improvements and innovation strategically, tactically, and digitally.
(39:07):
To learn more, visit meeboch dot com. You've been listening
to Speaking of Supply Chain, a meboch podcast. Keep connected
with us by subscribing to the show in your favorite
podcast player. If you like what you've heard, please rate
the show that helps us to keep delivering the latest
in supply chain information. Thanks for listening. Until next time,
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