For more than two years, global developments have been continuously defining new requirements for the organization of goods movements. Procurement and logistics are faced with the task of developing new solutions for current and future challenges. Stephan Schiller, CEO at Hermes International, a business unit of Hermes Germany, explains which steps have now become necessary, why collaboration matters and what the supply chain management of the future should look like.
Mr. Schiller, what lessons do you draw from the current world market situation and the associated challenges for procurement and logistics?
Since 2020, developments in logistics and supply chain management have been severely accelerated. After all, we have not witnessed a comparable large number of effective changes in the past decades – unfortunately they were born out of crises. Both business and society have recognized the functioning of supply chains and logistics as the engine and enabler of almost all economic activity. As a result, the importance of logistics services and, increasingly, supply chain management has become very clear.
“The importance of logistics and supply chain management has become very clear.”
What challenges will global companies increasingly face in the future?
We have recognized that supply chains, procurement and supply structures should be set up with maximum flexibility and designed independently. The principle of literally putting ‘all eggs in one basket’ with an excessive focus on a few markets, suppliers or service providers will and must no longer exist. However, this comes with an increase in complexity in the structures and interfaces for all players in the supply chain. On the customer side, additional know-how will become increasingly important – this applies to the development of markets, the implementation of digital solutions and risk monitoring in the supply chain. Logistics service providers, on the other hand, will rarely operate in exclusive contractual situations and must become more agile and diverse in terms of their offerings, even beyond traditional services. The importance of cooperative action and collaborative offerings will increase. Logistics service providers will need to find the optimal mix of high professional competence and technological capabilities and also act strongly customer-centric in their organization.
With regard to which challenges can cooperation provide particular support?
Generally speaking, cooperation always helps when several players are facing a similar challenge. In many areas such as logistics, the cooperative principle has long been the rule – for example, in container shipping. In the aviation industry and on the road, too, companies already share cargo space and loading areas to achieve optimum utilization. Up to now, cost efficiency has been the main driving factor – in the future, however, the issue of sustainability will also ensure that transport capacities are utilized as efficiently as possible. In my view, the CEP market in particular, with its individually tailored courier, express, and parcel services, holds a lot of potential for more cooperation.
How important is digital transformation in this context?
Where different participants act together across divisions or companies, complexity automatically increases. To master such a network, a high degree of agility and transparency is necessary. This cannot be achieved without technology. The availability of data will increasingly be the decisive business enabler. In the past, the focus – also in line with the technological possibilities – had rather been on the evaluation of existing data. In the future, real-time data, simulations and predictions based on predictive analytics will determine the success of a company. This also affects the ability to control the entire supply chain: prioritizing, accelerating, changing warehouse locations and transport modes – all this and so much more will have to become standard throughout the life cycle of a shipment in order to be able to react to customer wishes or external changes at short notice. Hermes International no longer necessarily needs to be the executing company – it is conceivable that we will act as a hybrid of 3PL (third party logistics) and 4PL (fourth party logistics) in the future and thus become the reliable manager of all services in the transport and warehouse logistics of our clients.
“As a tech-driven forwarder, we want to provide optimal support in logistics and SCM”
How does Hermes International support customers in their further development?
With our physical and digital supply chain management solutions, we already offer our customers comprehensive services that go far beyond pure logistics. The past years have strengthened our drive to develop even more effective solutions – we want to take our offering to the next level and become a tech-driven forwarder of the industry. In addition to solid logistics craftsmanship with highly qualified professionals – we work exclusively with highly trained forwarding specialists – we want to orchestrate the respective business model of our customers with custom-fit solutions and the use of smart digital technologies. A portal solution should enable maximum convenience, collaboration and efficient control.
What benefits can a collaborative platform provide for cooperative purposes?
A collaborative solution significantly simplifies the access to data and information for all supply chain stakeholders. Instead of a multitude of interfaces from a variety of systems, authorized actors now have direct access to the physical and digital supply chain. This will enable the flow of data, information, and goods to be managed even more efficiently and transparently. New analysis and reporting functions complement the transformation of supply chain management. Thereby, we intend to take our Supply Chain Solutions to a new level from 2023 onwards in a continuous process of further development.