Martina Morawietz

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Logistics: through thick and thin thanks to digitization

Logistics is the link between all economic processes. This makes its crisis resilience all the more important. Digitization is the decisive factor for success. Funding programs help companies get started.

The industry should shout "Hooray!" - nothing runs without them. From procurement and production to delivery to end customers and recycling of used materials: There is a logistics element in every process of our economy. The majority of companies are small and medium-sized enterprises. Almost every second German orders more frequently online than before Corona. The pressure on the sector is growing: there is currently a shortage of around 40,000 drivers. Poor management of time slots at the ramp causes waiting times and traffic jams. Digitizing their supply chains is a major challenge for companies. 

Customer accepts delivery.

Digitization provides transparency and the real-time information on deliveries that customers nowadays expect.

Corona has sharpened the light and shade: Thanks to their comparatively high level of digitization, the transport and logistics companies of the German "Mittelstand" (SMEs) have come through the pandemic well. This is the conclusion of the "Digitization index for medium-sized businesses 2020/2021". In the face of future crisis, one-third of the companies even plan to increase the digitization of their processes. Due to the pandemic, the focus is on equipping employees with digital solutions for flexible working. 

Quite right, would agree Bernhard Steimel, Head of Mind Digital, the consultant network for digital future markets: "The times remain uncertain and volatile".  In collaboration with Mind Digital, Deutsche Telekom has published the “Business Resilience trend book”. It describes what distinguishes resilient, that is resistant, companies and what are important tasks to achieve more crisis protection. In his view, there is a particular need for action in three areas: 1. customer orientation. 2. business processes, because they make a company faster. 3. the technological foundation: this involves the cloud, security, infrastructure, development and operation of software.

1. Creating a good customer experience - or the "Amazonization" of logistics

The online ecommerce company and cloud provider Amazon has set standards: processes and software are perfectly aligned towards customer benefits: Customers want same-day express delivery, maximum transparency on delivery dates, and changes to the delivery location even at short notice. This requires reliable communication and end-to-end processes. Certainly, medium-sized businesses cannot keep up with a globally operating tech giant. But with the help of digitization, complex processes between logistics partners and their different IT solutions can be harmonized. End-to-end IT systems provide transparency and the real-time information customers nowadays expect: Where is the delivery, when will it arrive? The customer gets a direct update on his telephone inquiry, an e-mail, an SMS. If you're satisfied, you'll go with the company through thick and thin.

2. Streamline processes, be faster

Resilience involves ensuring that crises hit a company less severely and that the company recovers quickly. Digitization helps to make processes faster and more flexible. There is no need of having an end-to-end digitized supply chain right away. 

The basic entry point is digital support for manual processes. Namely, where the greatest bottleneck lies: with the resource of personnel. According to a study by the nonprofit logistics association BVL (Bundesvereinigung Logistik) and T-Systems, the industry is lacking 40,000 truck drivers. By 2030, 150,000 positions could be unfilled. The greatest potential for making drivers' working hours more productive, according to those surveyed, is in the area of transport management/telematics. In other words, all processes on the road and regarding the vehicle, including route and load planning.

With GPS tracking, companies manage their fleets as well as the goods and their employees on the road via a cloud-based platform - enjoying optimized route guidance. With fleetmanagement solutions, the dispatcher has a tool for transparency: he knows the location of the vehicles. He has an overview of the operating times and the availability of the drivers. He is able to provide information to the customer at any time. He knows the fuel and maintenance costs and the maintenance requirements. He saves costs.

Poorly planned loading areas result in long loading times, additional transports or empty runs. In order to galvanize steel parts, The Coatinc Company (TCC) from the Siegerland region picks up huge components from the customer and brings them back. Inaccurate measurements provided by customers meant that individual parts did not fit on the loading area. With an app, customers can now photograph the steel objects in advance with their smartphone using Augmented Reality (AR) and send them to TCC.

In addition to transport and storage costs, the manual process of picking is one of the major effort and cost blocks of logistics. Beverage delivery service flaschenpost promises "delivery in 120 minutes". To achieve this, connected glove scanners are used in the warehouses. They automatically record the barcodes of the crates. The order pickers have their hands free. This speeds up logistics and makes the orders ready for transport even faster.

3. Strengthening the digital foundation - with advice on funding.

Resilient companies remain operational and flexible despite disruptions. They even continue to grow. This is not possible without investments like in a new IP telephone system, in mobile devices for the workforce, the interlinking of employees via Microsoft Teams or the migration of the IT infrastructure to the cloud. What is essential is a target image: how companies want to work in the future. 

In addition, a consistent digitization plan is required. The German federal and state governments provide funding programs that cover up to 70 percent of the costs of digitization projects. Mars received 50,000 euros in non-repayable funding through the "Digital Jetzt" program from the German Federal Ministry of Economics. The freight forwarder was in a position to digitize and professionalize its processes much faster than originally planned.

What does resilience mean for companies? Every week we will publish stories about resilience through digitization in our special.

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