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Digital Supply Chain Europe: Challenges and solutions

How can e-commerce use digital and data management to improve access to goods? This was the focus of the afternoon session of the Digital Summit of ICT Spring 2021, which took place on September 14th. An impressive roster of experts shared their vision for the future of the “Digital Supply Chain” and discussed the biggest challenges of the supply chain and logistics sector.

The Master of Ceremonies for the afternoon session, Carla Rosen-Vacher (Outreach Communication Officer, Université de Luxembourg), opened with appreciation for the cutting-edge companies that make up the rich digital ecosystem in Luxembourg. This was followed by an introductory talk by Daniel Liebermann (Director Supply Chain 4.0, Ministry of the Economy), in which he stressed the importance of open dialogue platforms, such as ICT Spring, for addressing new challenges in the supply chain sector. Referencing the COVID-19 boost in e-commerce, Liebermann said, “This trend is here to stay…Today we need to look forward and plan together.”

The first topic, “Corporate Renewable Energy Sourcing”, was presented by Nils Löhndorf (Associate Professor, Université de Luxembourg). He spoke of the need for long-term models that can establish a fair price for renewable power purchase agreements. His work in developing such models allowed him to reach two main conclusions: that fundamental price models are essential for pricing renewables, and that automation will be the key to opening new business opportunities for energy procurement.

A case study on Sri Lanka’s innovation capabilities, and what they can teach us about developing enterprise software of the future, was outlined by Bas de Vos (Vice President, IFS Labs). IFS Labs has collaborated with the country of Sri Lanka since 1997 to develop solutions for enterprise asset management. He said the country has the education system, IT infrastructure, and customer focus in its culture necessary to support complex tech initiatives. The future of the industry will lie in consistently providing moments of service for customers, de Vos said, because “Customers are expecting better service from suppliers than ever before.” The trick is to get the best ideas “out of our heads and into the product”, he summarized, allowing companies to deliver innovation in the right way, at the right time.

“Sustainable Logistics in 2030+” was the focus of the next presentation by Andrea Faast (Head of the Traffic and Infrastructure Politic Department, Chamber of Commerce Vienna). Joining remotely from Austria, Faast discussed the pilot project she lead in her region to solve conflicts regarding traffic reduction, CO2 emissions, and consensual logistics, among others. Their action plan included the development of an online guide to accompany Viennese entrepreneurs through the process of changing combustion vehicles to e-vehicles, which also featured an overview of charging locations. She said dynamic and challenging goals like these—necessary to tackling climate change—“will demand the transformation of the logistics sector.”

Arnaud Lambert (Director of the Digital Innovation Hub, Luxinnovation) kicked off the second half of the afternoon with a talk on “The Emergence of Digital Platforms in Supply Chain 4.0”. He highlighted the interconnectedness of the digital ecosystem in the new era of supply chain, what he called Supply Chain 4.0. The COVID-19 pandemic helped to encourage this trend by furthering the need for people centricity, location independence, and resilient delivery. “The shock to the supply chain was so big that it pointed out the importance of resilience,” he said. “It accelerated the relevance of marketplaces.” The marketplaces of Supply Chain 4.0 will be founded in two key characteristics—Arnaud added—virtualization and collaboration.

Martin Szugat (Founder and Managing Director, Datentreiber) and Andreas Kleine (Global Head of CRM/Sales Applications, Kuehne + Nagel Management AG) then teamed up to discuss “How to Create a Data Value Chain for the Supply Chain”. Their conclusion? “You have to start by introducing the data mindset,” Szugat said. Though it’s relevant for all companies, this advice is particularly important in supply chain, he said. “Data analytics projects fail because there is no data culture—they don’t know how to use the data.” Kleine agreed that a robust data architecture needs systems and models, but also people who have the right skills. “It’s important to get everyone on the same level of knowledge,” he said. Start small, Kleine concluded, and take it from there.

An understanding of how to embrace AI was brought forth by Ernesto Rodríguez (photo) (Co-Founder & COO, Tryolabs), who attempted to demystify the technical challenge with a case study from Tryolabs. The company was tasked by their transportation client, CFL, to forecast parking space occupancy in train stations one hour and one day in advance. The first step is to ask how the data—what Rodríguez called the “fuel” of this process—would be collected and stored. Then, he said, pick the right problem. “Find a problem that’s not too difficult, but that is valuable, that people are on board with working on.” Next, pick the right metric, and finally “connect the business goal with the engineering problem.” The CFL project was a success, Rodríguez said, because all of these components were at their fingertips.

Ocean transportation and enforcing two way commitments through digital performance tracking was then tackled by Jeremy Haycock (Managing Director Europe, NYSHEX), who said that “the shipping industry is creaking under the demand…many would argue that there is little that can be done, but there are things that can be done.” Changing the way agreements are made is the first step forward, the expert said. As managing director of the European branch of the New York Shipping Exchange, Haycock said he’s seen agreements between shipping partners that aren’t worth the paper they’re printed on. “Lack of reliable contracts means logistics managers cannot forecast and manage supply chains efficiently.” According to Haycock, the key to keeping conveyors moving, shelves fully stocked, and people employed is to make these agreements mean something. “Contracts must be binding and there must be consequences when they are not kept.” With this will come “trust, integrity, and the ability for all parties to forecast,” he concluded.

Last mile delivery and surpassing customer expectations through driver motivation was the next line of thinking presented by Dr. Benedikt Stolze (Founder & CEO, Urbify). What he and his team discovered the hard way at Urbify is that, “Software does not deliver parcels!” He described the people that do the hard work of last mile delivery as “urban heroes” who are responsible for creating good and bad customer experiences. Unfortunately, these workers are not treated as heroes, Stolze said. They have unpredictable working routines, are often asked to do the impossible, and have been placed at the wrong end of an extreme power imbalance. “We have to see that there’s a breaking point,” he said. That breaking point is leading to a huge driver shortage. He highlighted some of the ways they have been trying to address this at Urbify—making software driver centric and providing drivers with an incentive program. When drivers get deliveries done on time, for example, they are given a personal score and a profile that shows which types of deliveries a driver excels in. “There’s no transparency like that in the entire industry,” he said.

Marianne Hoffmann (Project Manager, Directorate General Industry, New Technologies and Research, Ministry of the Economy) then kicked off a round table discussion with Stolze, Davor Sertic (Chair of Transport, Chamber of Commerce Vienna), Benny Mantin (Professor and the Director of the Luxembourg Centre for Logistics and Supply Chain Management) and Jacques Lorang (CEO, Luxcaddy), asking the experts how the industry can sustainably meet the surge in e-commerce.  Mantin explained that COVID-19 sparked a major disruption when all customers migrated their demand to online stores. “Customers are developing a certain degree of expectations,” he said, and those expectations will also include more sustainable delivery practices. Davor spoke of a pilot project supported by the Chamber of Commerce Vienna which tried to reduce the volume of traffic without sacrificing price and quality of the deliveries. He said the company succeeded, but only after a period of experimentation. “Most of the companies are not thinking forward, but are thinking day to day—which is a big challenge.”

Lorang’s company, Luxcaddy, is looking ahead, with a plan next year to implement an AI system to solve for the “traveling salesman” problem. “Only with optimized logistics can we make this business model profitable,” he said. Stolze agreed that it will require innovative thinking to make deliveries more sustainable in the future, with deep questions like, “How are we going to redesign cities and develop vehicle concepts that will be the drivers of sustainable transport in the future?”

The afternoon of the summit’s first day concluded with start-up pitches, presented virtually. These started with Wayne Fan (Chief Strategy Officer, Frontier.cool) who explained Frontier, a collaboration SAAS for the fashion industry which translates physical material into digital designs. Joice Ribeiro (Chief Operating Officer, Optimum Supply) pitched Optimum Supply’s ability to maximize value and transparency in supplier selection. Next was Steve Kim (Director, ValueLinkU), who described ValueLinkU’s platform that offers integrated international logistics expertise. David Weisman (CartaSense Co-founder & Active Chairman) pitched CartaSense’s connected logistics, which provides a unique tracking solution based on exclusive sensor data.  And the final pitch was an in-person presentation by Armin Neises (CEO, WAVES), who described Waves, which uses digitization and the power of cloud technology to give full transparency on carbon emissions.

Article by Johanna Sorrentino