Logistics Innovation Lessons From DHL’s Innovation Officer
I am tomorrow, or some future day, what I establish today.
I am today what I established yesterday or some previous day.
– James Joyce
Innovators see the world differently. And innovation, technology and logistics are more intertwined than ever. But real progress isn’t always so apparent in freight forwarding.
When we heard Joeri Kuik, VP at DHL Global Forwarding, Global Head of DHL Lead Logistics Partner and Chief Innovation Officer, get up at the eft 3PL Summit in Venlo and say that the biggest logistics technology innovation in the last century was the shipping container, we had to hear how DHL is planning on changing that.
So we sat with Mr. Kuik to hear how the world’s most famous yellow and red logistics provider take on logistics technology today and tomorrow.
“YOU NEED TO DIFFERENTIATE.
YOU NEED TO DO SOMETHING.”
Mr. Joeri Kuik
Global Head of DHL Lead Logistics Partner, Chief Innovation Officer
DHL Global Forwarding
#1 INSPIRATION NEEDS PLANNING
As much as we all hope for a flash of brilliance, DHL isn’t gambling its future on hairbrain ideas. “We saw challenges but didn’t have the right answers”, says Mr. Kuik. So Deutsche Post CEO Frank Appel created the innovation unit, which researches megatrends, micro-trends, partner performance and customers, and also has the resources to devise and implement new ideas. When you see incredible videos of augmented reality in warehouses, it’s the result of careful planning, not a stroke of brilliance.
#2 INNOVATION NEEDS STRUCTURE AND TIME
The group uses something called an “Innovation Cycle” to devise ideas and get it out into the real world. Here’s how it goes:
- Ideas are derived either top-down or bottom-up, within or outside of the innovation unit.
- A core concept is written and presented to a product development board. The concept is evaluated based on several criteria, including business proposition, required personnel and financial resources, lead time and more.
- A proof of concept is initiated following a second review, which explores whether it actually solves a problem, and whether there is commercial value.
- The idea is brought to marketing. DHL’s patience is key here as well, as the handoff process to the business takes 2-3 years. Large tech venture capital companies invest hundreds of millions in companies without a guarantee of immediate payback. Similarly, DHL doesn’t necessarily expect profitability from ideas for up to five years.
#3 TECHNOLOGY AS A DIFFERENTIATOR
Citing DHL’s top position in the air freight market with a mere 12% market share, Kuik says that forwarders are constantly being challenged – “It’s a commodity business and easy to enter. All you need is a few computers, some smart guys, a little money. And start”. The solution for larger forwarders? “More than ever, technology innovation is entering logistics”. According to Kuik, providers with better data infrastructure, better information sharing and better technology solutions can drive more value for shippers, reduce costs and increase reliability.
#4 MOVING INFORMATION BETTER
“Everyone has their own information system, their own information … and we know information is important. So we keep it to ourselves” but in the future, Kuik says, information needs to move better, whether between forwarders and shippers or even between the actual goods themselves. Envisioning data-laden RFIDs on pallets, Kuik sees a future where each pallet contains information on where it needs to go and constantly optimizes its own path. “It won’t use a workflow system to be routed, it simply says I’m here and what the most optimal solution is to go there.”
#5 THE VOLATILITY BATTLE
As production cycles shorten and more production is outsourced, shippers become more vulnerable to supply chain problems. Kuik is the first to admit that 3PLs need to improve on reliability to stand out in an asset-light, commoditized market. “The reliability we offer in the 3PL market today is not enough”. Instead, shippers need to focus on “optimized cycle time and lower variation [which will] automatically drop costs, improve flexibility and enhance utilization.”
#6 BIG CHANGE IS AHEAD
- Deutsche Post expects huge changes in logistics (see DP’s “Logistics 2050” paper for some incredible scenarios”). Kuik singled out these six areas as key areas for advancement in the near future:
- Low-cost sensor technology
- Crowd logistics
- 3D Printing
- Augmented reality
- Autonomous logistics
- Big data
If there is one lesson here, it’s that change doesn’t just happen; it’s pushed through by innovators who know that they need to challenge the status quo and reconnect the dots to make logistics better. Being a disruptive logistics startup, it’s great to see that some large logistics corporations also take innovation as seriously as we do.
Interested in reading more about DHL’s research? Check out Delivering Tomorrow.