Identifying the potential of logistics technology
By Ella Copeland
Martin Wegner is the man with a plan. The Vice President of Solutions and Innovation at DHL, he is responsible for the development of a range of futuristic projects at DHL’s state-of-the-art Innovation Centre, he spends his time focusing on the potential of logistics technologies, working on sci-fi gadgets,, revolutionary concepts and challenging new business models.
As the person in the know when it comes to future logistics, Wegner has provided a unique insight into two of the most influential devices on the market; RFID, the technology of now, which will impact the industry in the immediate future, and 3D printing, which is expected to revolutionise the supply chain over the next decade.
Following a range of projects and investment into RFID solutions, DHL has been working with a number of retailers and warehousing companies to ensure that RFID will feature increasingly in the retail and warehousing industry in order to promote the merits of RFID when it comes to transparency and inventory efficiency.
In the past five years, DHL have worked with a range of major companies such as METRO Cash & Carry in France and Sony Electronics to demonstrate the efficiency and capabilities of RFID for textiles, foods, beverages and electronic products.
Following this research, the company is working with a number of major retailers to increase RFID uptake from next year, as they recognise the benefits of control in their supply chain, in addition to theft-reducing and anti-counterfeit capabilities as Martin Wegner, Vice President, Solutions and Innovation at DHL explained.
“RFID is a technology with an abundance of opportunities in a number of processes. There might be more applications for consumers in the near future using RFID as basis, e.g. anti-counterfeit, e-commerce and after-sales tools combined with easy-to-use mobile devices.”
However, it is important to think of the system as complementary, according to Wegner. In order to take the system further, he believes that RFID should not be considered to be a barcode replacement.
“We should stop thinking about replacing the barcode by an RFID tag without changing the setup of processes. This will probably never pay off. We need to think about changing the processes in a way that follows the customers’ need for more detailed information where it is the case. But we should push these changes wherever RFID (and no other technology) helps to make a process more profitable,” he explained.
With an RFID device already on the market, DHL is playing a huge part in pushing forwards this technology as a solution for inventory management and supply chain standardisation. However, it is important first to develop a set of standards; something which DHL is working closely with the standards implementation firm, GS1, to achieve.
With over 350 patents for products being developed at its innovation centre, the team at DHL believe we are far from utilizing the full potential of RFID applications which are able to interact with other devices, allowing active communications between goods and logistics providers.
One further technology at the centre of DHL’s innovation programme is 3D printing, which is set to revolutionise the way the supply chain operates, reducing the need for mass-produced manufacturing, transportation and storage. Potentially posing a threat to numerous businesses in the Supply Chain Sector, DHL is researching and developing ways to incorporate this new device into its service offering.
“It is inevitable that 3D printing will have an impact on global supply chains. At the moment, the technology and business applications are not mature enough yet,” explained Wegner.
“In certain industry sectors we will see a shift from central to decentralised production, from intercontinental shipping to more regional and domestic distribution. With our network of research partners and manufacturers, we have managed to get a comprehensive overview of where 3D printing is today and this will enable us to keep track of any new developments which open up new opportunities for our business,” he continued.
Driven by consumers to fulfil the need for more individualised consumer products, 3D printing offers a wide range of new opportunities which the industry will need to catch up with. According to Wegner, 3D printing shops for consumers or virtual warehouses to print spare parts on demand are visions that one day will become reality.
Developing the service offering
With an ever-increasing investment in complementary technologies, DHL are investing more and more into the development of value-added solutions for their customers to ensure they remain at the cutting edge of developments. According to Wegner, this focus is taking an increasingly important role in DHL’s global operations, where it will remains for years to come.
“Our business has always been a complementary one. Nowadays, being a logistics provider means more than just transporting goods and items. It’s more about covering and improving the entire supply chains of our customers, the transportation of data, security aspects, offering value added services such as assembling goods and exploring new technologies. The world has become faster and therefore logistics had to become faster and more complex,” he concluded.
NTT DATA Services, Remodelling Supply Chains for Resilience
Joey Dean, the man with the coolest name ever and Managing Director in the healthcare consulting practice for NTT DATA and is focused on delivering workplace transformation and enabling the future workforce for healthcare providers. Dean also leads client innovation programs to enhance service delivery and business outcomes for clients.
The pandemic has shifted priorities and created opportunities to do things differently, and companies are now looking to build more resilient supply chains, none needed more urgently than those within the healthcare system. Dean shares with us how he feels they can get there.
A Multi-Vendor Sourcing Approach
“Healthcare systems cannot afford delays in the supply chain when there are lives at stake. Healthcare procurement teams are looking at multi-vendor sourcing strategies, stockpiling more inventory, and ways to use data and AI to have a predictive view into the future and drive greater efficiency.
“The priority should be to shore up procurement channels and re-evaluate inventory management norms, i.e. stockpiling for assurance. Health systems should take the opportunity to renegotiate with their current vendors and broaden the supplier channel. Through those efforts, work with suppliers that have greater geographic diversity and transparency around manufacturing data, process, and continuity plans,” says Dean.
But here ensues the never-ending battle of domestic vs global supply chains. As I see it, domestic sourcing limits the high-risk exposure related to offshore sourcing— Canada’s issue with importing the vaccine is a good example of that. So, of course, I had to ask, for lifesaving products, is building domestic capabilities an option that is being considered?
“Domestic supply chains are sparse or have a high dependence on overseas centres for parts and raw materials. There are measures being discussed from a legislative perspective to drive more domestic sourcing, and there will need to be a concerted effort by Western countries through a mix of investments and financial incentives,” Dean explains.
Wielding Big Tech for Better Outcomes
So, that’s a long way off. In the meantime, leveraging technology is another way to mitigate the risks that lie within global supply chains while decreasing costs and improving quality. Dean expands on the potential of blockchain and AI in the industry.
“Blockchain is particularly interesting in creating more transparency and visibility across all supply chain activities. Organisations can create a decentralised record of all transactions to track assets from production to delivery or use by end-user. This increased supply chain transparency provides more visibility to both buyers and suppliers to resolve disputes and build more trusting relationships. Another benefit is that the validation of data is more efficient to prioritise time on the delivery of goods and services to reduce cost and improve quality.
“Artificial Intelligence and Machine Learning (AI/ML) is another area where there’s incredible value in processing massive amounts of data to aggregate and normalise the data to produce proactive recommendations on actions to improve the speed and cost-efficiency of the supply chain.”
Evolving Procurement Models
From asking more of suppliers to beefing up stocks, Dean believes procurement models should be remodelled to favour resilience, mitigate risk and ensure the needs of the customer are kept in view.
“The bottom line is that healthcare systems are expecting more from their suppliers. While transactional approaches focused solely on price and transactions have been the norm, collaborative relationships, where the buyer and supplier establish mutual objectives and outcomes, drives a trusting and transparent relationship. Healthcare systems are also looking to multi-vendor strategies to mitigate risk, so it is imperative for suppliers to stand out and embrace evolving procurement models.
“Healthcare systems are looking at partners that can establish domestic centres for supplies to mitigate the risks of having ‘all of their eggs’ in overseas locations. Suppliers should look to perform a strategic evaluation review that includes a distribution network analysis and distribution footprint review to understand cost, service, flexibility, and risks. Included in that strategy should be a “voice of the customer” assessment to understand current pain points and needs of customers.”
“Healthcare supply chain leaders are re-evaluating the Just In Time (JIT) model with supplies delivered on a regular basis. The approach does not require an investment in infrastructure but leaves organisations open to risk of disruption. Having domestic centres and warehousing from suppliers gives healthcare systems the ability to have inventory on hand without having to invest in their own infrastructure. Also, in the spirit of transparency, having predictive views into inventory levels can help enable better decision making from both sides.”
But, again, I had to ask, what about the risks and associated costs that come with higher inventory levels, such as expired product if there isn’t fast enough turnover, tying up cash flow, warehousing and inventory management costs?
“In the current supply chain environment, it is advisable for buyers to carry an in-house inventory on a just-in-time basis, while suppliers take a just-in-case approach, preserving capacity for surges, retaining safety stock, and building rapid replenishment channels for restock. But the risk of expired product is very real. This could be curbed with better data intelligence and improved technology that could forecast surges and predictively automate future supply needs. In this way, ordering would be more data-driven and rationalised to align with anticipated surges. Further adoption of data and intelligence and will be crucial for modernised buying in the new normal.
These are tough tasks, so I asked Dean to speak to some of the challenges. Luckily, he’s a patient guy with a lot to say.
On managing stakeholders and ensuring alignment on priorities and objectives, Dean says, “In order for managing stakeholders to stay aligned on priorities, they’ll need more transparency and collaborative win-win business relationships in which both healthcare systems and medical device manufacturers are equally committed to each other’s success. On the healthcare side, they need to understand where parts and products are manufactured to perform more predictive data and analytics for forecasting and planning efforts. And the manufacturers should offer more data transparency which will result in better planning and forecasting to navigate the ebbs and flows and enable better decision-making by healthcare systems.
Due to the sensitive nature of the information being requested, the effort to increase visibility is typically met with a lot of reluctance and push back. Dean essentially puts the onus back on suppliers to get with the times. “Traditionally, the relationships between buyers and suppliers are transactional, based only on the transaction between the two parties: what is the supplier providing, at what cost, and for what length of time. The relationship begins and ends there. The tide is shifting, and buyers expect more from their suppliers, especially given what the pandemic exposed around the fragility of the supply chain. The suppliers that get ahead of this will not only reap the benefits of improved relationships, but they will be able to take action on insights derived from greater visibility to manage risks more effectively.”
He offers a final tip. “A first step in enabling a supply chain data exchange is to make sure partners and buyers are aware of the conditions throughout the supply chain based on real-time data to enable predictive views into delays and disruptions. With well understand data sets, both parties can respond more effectively and work together when disruptions occur.”
As for where supply chain is heading, Dean says, “Moving forward, we’ll continue to see a shift toward Robotic Process Automation (RPA), Artificial Intelligence (AI), and advanced analytics to optimise the supply chain. The pandemic, as it has done in many other industries, will accelerate the move to digital, with the benefits of improving efficiency, visibility, and error rate. AI can consume enormous amounts of data to drive real-time pattern detection and mitigate risk from global disruptive events.”