Start-ups from the future told

Reading time: approx. 4 minutes
Text: Juliane Gringer
Photos: Prof. Dr. Stefan Iskan / supplychainmachine.com, Shutterstock

“The transport and logistics industry is becoming a process supplier for the economy and society,” says Stefan Iskan, professor of logistics and business informatics at the Ludwigshafen University of Applied Sciences and founder of supplychainmachine.com. In an interview, he explains why medium-sized forwarding companies can therefore rely all the more on their own strengths.

In your opinion, what role do start-ups play in the further development of the transport and logistics industry?
When many a start-up representative of today looks back in the future at the time now, he will say: ‘I burnt my investors’ play money. I didn’t manage to destroy the transport and logistics industry. But my impulses have ensured that an entire industry has looked more intensively at its own processes and catapulted to a completely new level of automation, quality and value creation performance in supply chains. So the way some platform-based start-ups are performing right now reminds me a lot of the arrogant impacts of the US logistics service providers here in Europe many years ago. They also thought that with their US approach they could really show the European “oldschool” forwarders the ropes. Until they had to painfully realise that there are more languages than member states in the EU alone. And today? Today, with a few exceptions, US logistics companies are a marginal phenomenon in Europe. Especially in the pan-European transport market, which they – just like many a start-up – actually wanted to destroy.
So are start-ups more of a stimulus than a threat
We should differentiate what we mean by start-up. Today, start-ups are active in various sub-segments of our logistics. My statement refers to the transport platforms. And this is where the start-up story comes to an end. Many a platform-based start-up becomes an established provider. We will have different platforms with different regional patterns anyway. And we don’t even need to talk about a standard. In Germany’s leading industry alone, the automotive industry, every OEM is doing its own thing. Everyone is building their own Industry 4.0 world. Let’s get back to the start-ups: some will disappear, others will transform into software and tech solution providers, and others will be swallowed up by logistics groups. And many a start-up is already well on the way to committing the typical mistake of logistics corporations
What do you mean by that?
Let’s simply ask ourselves: Why does a platform start-up want to buy an “oldschool” forwarder? Do they need the dispatchers because there is too little automation in the background far away from the front-end world? Do we need the customers? Didn’t they start out to show our “oldschool” forwarders how to do forwarding properly in Europe? The moment a start-up does that, it ends up with its greenfield IT in a brownfield structure and has to deal with the same broken projects as a logistics group. A strategic mistake! But what does this show us? It shows that those who have an internally and externally oriented, integrated platform as well as the corresponding customer structures and assets in the form of real estate, drivers, employees and equipment in the form of trailers and tractor units are the ones who have the upper hand.

»No other industry than our future-oriented logistics sector can look back on such an incredible transformation performance in Germany. I want to encourage our owner-managed SMEs!«

Prof. Dr Stefan Iskan, Professor at the University of Applied Sciences Ludwigshafen and founder of supplychainmachine

Which companies can cope with this?
First and foremost, the owner-managed SMEs with solid financial strength. I would like to encourage them. With all due respect, their complexity is still manageable. Unlike in a logistics group. In the past, corporate groups relied on inorganic growth and their management failed to consistently integrate their system world – and they are no longer catching up. These companies suffer from their outdated IT systems. This is especially true of the pan-European transport networks with their broken, Babylonian multitude of Transport Management Systems (TMS). They see a web portal at the front end as their last chance to get their broken TMS systems to talk to each other. Not to mention the reprehensible 90-day payment terms to their hauliers that you can observe in the market.
So what do you need to remain successful in the future?
Those who sustainably take care of their transport partners, have their cash management under control and have liquidity reserves, who create this incredible integration performance in their internal and external system worlds, who continue to invest in AI in their scheduling and analytics in their data engineering including tender management and software-based simulation, who live a strategically-considered business development and have assets in employees, equipment and real estate, will place themselves at the top of the supply chains. Coupled with a determined process of renewal from within, the consistent separation of blockers and preservers of traditional thinking and structures. Owner-managed SMEs must return to their brutal leadership skills. And they need to bring more industrial know-how into their companies. It is long past time to leave the qualification level of pure transport and logistics training. Logistics service providers today must see themselves as IT firms with connected assets. Not the other way round! Those who bring themselves to this industry level will be able to survive successfully in the future. Successful companies in Europe today are demonstrating that they have long since gone other ways for their bottleneck resources, such as the dispatcher! Doesn’t the change therefore already start with HR and the routing of recruiting?
So what do you need to remain successful in the future?
In an Industry 4.0 world, it will be less and less about substituting transport and logistics service providers. Technology-driven supply chains are also capital-intensive on the part of the customers of transport and logistics service providers. Technology requires completely different amortisation cycles. Accordingly, customers from industry are now looking for high-performance logistics service providers. Service providers who are still able to follow their Industry 4.0 path in terms of “head” and chapter. And it is precisely with these partners that long-term contracts will be entered into. Partners who also develop solutions technologically with them. Our owner-managed SMEs must now dig deep into the supply chains of their customers and dig in. And where capital is simply lacking, you have to cooperate. Managing directors are smart when it comes to optimising their finances. But are they also smart when it comes to finding promising forms of cooperation, right down to the technology structures? Small and medium-sized enterprises have always distinguished themselves by their creativity and their willingness to take entrepreneurial risks and to take responsibility for their employees and society with pleasure.

»Owner-managed SMEs are doers – and we need to get back to that.«

Prof. Dr. Stefan Iskan, University of Applied Sciences Ludwigshafen

Stefan Iskan holds the professorship for Logistics and Business Informatics, in particular Automotive SCM and Digitalisation, at the University of Applied Sciences Ludwigshafen. His professional background includes the Deutsche Bahn Group (DB Schenker, DB Cargo), where he most recently reported directly to the Schenker AG Board of Management for Land Transport. He is also the founder of the start-up supplychainmachine.com. He looks back on 17 years of experience in the logistics and automotive industry. In 2021, his book „Zukunftsbranche Logistik: Zwischen digitaler Industrialisierung und analoger Herausforderung“ was published by Campus Verlag.

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