Creating more sustainable global value chains through logistics. Digitalization is an important element in this process. We talk with logistics expert Prof. Dr. Ulrich Müller-Steinfahrt about challenges and solutions and how small measures can help save fuel costs of 4,000 euros per driver, and, of course, CO2 emissions accordingly.
By 2030, the German government wants to reduce greenhouse gas emissions by 55 percent. What role does transportation logistics play in this?
Prof. Dr. Ulrich Müller-Steinfahrt: A very important one. Freight traffic accounts for about one third of all traffic in Germany. Transportation logistics is a key factor in the emission of greenhouse gases. Freight traffic burdens our public infrastructures and causes traffic jams in city centers. On the other hand, transportation logistics is systemically important. It is integrated into all steps of the value chain, from purchasing to production and distribution to the end customer. It is necessary for prosperity and economic growth, but at the same time is highly responsible for CO2 emissions. With over three million employees, it is also the third largest business sector in Germany, after the automotive industry and retail. For this reason alone, it bears a responsibility for the future.
Companies rank sustainability at the center of their corporate strategy. Where does the logistics industry stand?
Prof. Dr. Ulrich Müller-Steinfahrt: In the logistics sector, too, leading companies have recognized that society and customers are demanding more sustainability. And that they can create competitive advantages for themselves through a strict sustainability strategy. Traditionally, the industry has been under great pressure to improve profitability and efficiency. Some companies therefore shy away from investments in sustainability measures that do not directly improve the business result - especially in the current times. But there is a whole range of digital solutions that increase sustainability and profitability at the same time.
"Profitability and sustainability are not contradictory, they are mutually dependent and enhance each other".
What would you advise companies to do?
Prof. Dr. Ulrich Müller-Steinfahrt: On the one hand, you can achieve a noticeable effect with relatively small measures. For example, a course in which a driver trains a fuel-efficient driving style costs around 350 euros. Calculated on an annual basis, this can reduce fuel costs per driver by three to four thousand euros and, of course, CO2 emissions accordingly.Secondly, it is a question of increasing the capacity used in transport vehicles on the road, rail, water or air. Well utilized vehicles mean fewer trips, less personnel and less fuel consumption. After all, profitability and sustainability are not contradictory; they are mutually dependent and enhance each other. Digital instruments can effectively support both. Intelligent forecasting systems help to better plan the number, load and routes of vehicles. And thirdly, it pays to rethink your business model and invest in digitalization. For example, relying on cooperative models and partnerships pays off. For example, competitors Ferrero and Mars merged their transport operations years ago. Because they serve the same customers and were previously operating with half-full trucks. Other cooperative alliances such as Nestlé and PepsiCo or Eckes and Kaufland are also examples of companies that operate a joint distribution center or a joint vehicle fleet. Additional approaches are certainly possible in the value chain.
"Digitization as a lever for more sustainability".
How can digitalization help?
Prof. Dr. Ulrich Müller-Steinfahrt: Digitalization certainly is a lever, for example to increase vehicle capacity utilization or schedule reliability. By analyzing historical and real-time data, for example, it is possible to predict very accurately with what probability which transport will take place with what level of demand. In addition, there is a whole range of digital solutions that can reduce costs, accelerate transports and increase efficiency. Electronic freight documents, for example, replace paper printouts, reduce error rates and increase transparency for all parties involved during the delivery route. Telematics solutions reduce fuel consumption by improving route navigation and taking into account traffic jams in real time. Tracking tools in fleet management analyze the driving style and provide tips for improvement. They also give early warnings when maintenance is required, thus reducing downtime.
What do robust supply chains mean in terms of sustainability?
Prof. Dr. Ulrich Müller-Steinfahrt: Sustainability always consists of three levels. The balancing of the economic, ecological and social levels is a challenge. This is also shown by the discussion about global supply chains triggered by Corona. It certainly makes sense to align value chains more regionally. It also helps to maintain higher safety stocks in decentralized warehouses and to develop effective strategies for alternative suppliers. For transportation logistics, this means more trips with smaller vehicles over shorter distances. With digital solutions, the highest possible degree of capacity utilization can be achieved. Social sustainability in low-wage countries can also be increased. For example, if you pay attention not only to quality and delivery performance of your suppliers, but also to social standards, from safety conditions in the workplace to fair wages and compliance with the ban on child labor. There are already cloud-based solutions for supplier management that create greater transparency. And I am quite sure that social aspects will become even more important in the future.