It is our pleasure to introduce to you Transmetrics’ latest Advisory Board member Nils Wemhoener, a former Senior Vice President Operations Overland for Kuehne + Nagel AG. Mr. Wemhoener is a Logistics and Supply Chain Management professional with an innovative mindset and over 15 years of T&L and Consultancy experience. In this interview conducted by Transmetrics’ Co-Founder and CCO Anna Shaposhnikova, Mr. Wemhoener talks about his industry experience and shares his views on innovation and digital transformation in the logistics sector as well as his motivation to join us at Transmetrics.
Anna Shaposhnikova (A.S.): Welcome, Nils. Thank you for taking the time and giving our readers the chance to get to know you better. You have previously worked both in the field of business consulting for McKinsey and later for AlixPartners, as well as in the logistics sector for Kuehne + Nagel. Why did you decide to join the Transmetrics advisory board?
“It is obviously a very exciting time to work in the logistics industry and experience the ongoing digital transformation creating new opportunities for our businesses. Working with Transmetrics is part of this digital journey.”
Nils Wemhoener (N.W.): During my work life I have had the chance to work with both the IT and the logistics industries, and I am equally passionate about these two. I have always had a sweet spot for data; I already worked on data analytics and predictive algorithms studies at the University of Berkeley in the 1990s. Therefore, for me, it is a personal “back to the roots”. At the same time, it is obviously a very exciting time to work in the logistics industry and experience the ongoing digital transformation creating new opportunities for our businesses. Working with Transmetrics is part of this digital journey. I also believe that the interaction between my daily job and another innovative team like Transmetrics is not just great fun but also a wonderful learning experience for both sides.
A.S.: Thank you very much and needless to say, we are honored to have you joining Transmetrics Advisory Board. Speaking of opportunities and learning, how do you think the logistics industry transformed in the last 3 years?
N.W.: Undoubtedly the sector is changing. However, the beginning of the so-called transformation is slow and I notice a lot of reluctance among many logistics companies. One reason for that reluctance is that the logistics sector is a long-established industry with deep-rooted enterprises. Processes are manual and paper-based. Traditional companies are working on new IT systems now, they are trying to find new digital ways of working – but the speed of change is still slow. Apart from the structural change, there is a learning process required: many new players have entered the industry, started in a niche – and only then discovered how complex our industry actually is. Still, investors poured a lot of money into logistics, there was a big wave of investments during the last two years. It is clear that drastic change will happen over the next few years but it is unclear what will be successful – and who.
A.S.: That’s a very interesting observation. Can you also give us your opinion on the main challenges that the major logistics companies currently face and need to solve?
N.W.: Well, this transformation we just discussed is happening on several levels simultaneously. On the one hand, we observe a technological change. Information Technology has become so large and present, it permeates our work. Thus, the collection of data has gained strongly in significance, in order to stay competitive, processes need to be digitized so data becomes available. The next step and bigger challenge is to actually do something with that data. This requires very specific skillsets.
“The collection of data has gained strongly in significance, in order to stay competitive, processes need to be digitized so data becomes available. The next step and bigger challenge is to actually do something with that data. This requires very specific skill sets.”
On the other hand, we see user behavior slowly changing. New players enter the market and offer self-service solutions. Currently, these solutions cater to customers with basic needs only and cannot compete with comprehensive solutions the established players can offer. However, this will change – new players will discover, shape, and grow new market segments.
At the moment there is no immediately felt pressure to change things, but companies who will not adapt to the changes will get in trouble.
A.S.: Indeed. At Transmetrics, we help companies to enhance and use their data for an optimization and prediction of their logistics business by using smart algorithms and AI. Considering your expertise in data and logistics, could you picture for us which technologies the industry will realistically adopt in the nearest future?
N.W.: Many of the prerequisites for driving these changes are in place: data storage and computing power are cheap, complex algorithms (many of which have been developed already years ago) can now actually be run.
Still, I believe that in the nearest future, adoption will be slow: many players lack data – as mentioned, the industry still works with paper a lot, and the IT systems in use are mostly unconnected; they don’t employ enough people with the mindset and skills required to run a more data-driven business, and they are not currently attractive employers to many of the people with the required skill sets – talent acquisition is one of the key challenges for the near future; and their leadership still isn’t investing seriously enough into digitalizing their business at the core.
To answer your question, the technologies to be adopted first will include data-supported purchasing and customer pricing and network/utilization optimization.
A.S.: To continue our glance into the future and combine it with your personal interest in data and IT, how do you see the logistics sector evolve over the next 10 years and what will be the role of predictive analytics and AI then?
N.W.: This is very hard to tell. Nobody can predict this at the moment. What is sure, though, is that there will be very significant changes.
Through modularized services, standardized interfaces and blockchain technology, interactions between all players in the value chain will become significantly easier. The role of intermediaries is hence going to become more challenging. The simpler parts of their business are at threat of being automated through innovative service providers – there will be tech-enabled “configurators” of logistics elements, while I believe traditional 3PLs will continue to be the provider of choice for more complicated solutions and for larger setups for some time. It will be interesting to see whether the logistics industry will manage to drive this change from within itself or whether new entrants from outside the industry will be the ones changing the industry, as for example in the travel booking space.
“Predictive analytics and AI offer huge benefits when it comes to cost-effective production, better pricing for purchasing and sales as well as more automated customer interfaces. Therefore, I am sure they will have an enormous impact by then.”
“Capacity providers” will become more important in an increasingly disintermediated market. For example, cross-dock operators could offer their services independently, and they would be sold through the “configurators”. The same holds true for carriers. As the market lacks drivers, autonomous driving could start to help solve this issue in the mid-term; in the short-term, the industry needs to use technology to become “sexier” and more attractive to drivers.
Finally, there will be providers of digital services that fuel the ecosystem, such as companies that offer data processing solutions, services for autonomous driving such as super-exact maps or vision technology, connection technologies, and so on.
Predictive analytics and AI offer huge benefits when it comes to cost-effective production, better pricing for purchasing and sales as well as more automated customer interfaces. Therefore, I am sure they will have an enormous impact by then.
A.S.: All very good points. You already mentioned how hard and slow the transformation of the logistics sector will undeniably be. Do you have any advice for the innovators trying to overcome the status quo in the logistics industry?
N.W.: The logistics sector is complex. First of all, know what you want to change and focus on your unique skills. Secondly, start small and build a few success cases. Don’t overpromise, find and focus on the customers that need what you can offer. Thirdly, focus on learning as you go, stay flexible enough to change course if need to develop new technologies and markets (this includes keeping some money in the back pocket). And, of course, a bit of luck is always needed!
A.S.: Thank you very much for this interview, Nils. It was very insightful and we are excited what the future holds.