No Industry 4.0 without Logistics 4.0

A specialist conference organised by the "Club of Logistics" analysed the effects of networking the value creation stages on the business models of the manufacturing and logistics industry

The high-calibre conference hosted by the Club of Logistics in Bremen on 10/11 November 2014 focused on the future prospects arising from the ongoing digitalisation of all aspects of economic and social life. It became clear that logistics has a prominent role to play in this process of complete networking of all information and communication systems.

The motto of the symposium was: "Industry 4.0=Logistics 4.0". Under the moderation of publicist Dieter Schnaas, experts from science and industry analysed the importance of the logistics industry in the implementation of the Industry 4.0 initiative launched by the German government in keynote speeches and several panel discussions.

Evolution of technology, revolution of business models

In their keynote speeches, Prof Dr August-Wilhelm Scheer, Managing Director of the Scheer Group in Saarbrücken, and Dieter Schweer, Member of the Executive Board of the BDI, outlined the current status and medium-term development of Industry 4.0 technologies and their influence on business models in manufacturing and logistics. They unanimously emphasised that Industry 4.0 is not about the large-scale development of new technologies, but about the integration and networking of existing and evolutionary approaches. It was not the technical aspects of the change in the value chain that represented a revolution, but its application within completely new business models, which would also completely reshape the role of the industries involved: It will no longer be the manufacturers of material goods (such as the "sheet metal benders" of the automotive industry) who call the shots, but the software manufacturers who are in possession of customer data and have access to the end customer.

Industry 4.0 is transforming the economic landscape

In the panel discussion "How is Industry 4.0 changing our economy?", Dr Reinhard Geissbauer from PricewaterhouseCoopers (PwC), Martin Hofer, CEO of Wassermann Unternehmensberatung, and economist Prof Dr Hans-Georg Kemper (University of Stuttgart) discussed the specific impact of the Industry 4.0 agenda on companies.

The panel agreed that the main topic addressed by the umbrella term Industry 4.0, namely the digitalisation of all key company processes in manufacturing and logistics, can provide an enormous boost to efficiency and productivity. According to a PwC/VDMA study, companies in the mechanical engineering, automotive and process industries, for example, expect digitalisation technologies to reduce costs by 2 to 3 percent per year. They also forecast an annual increase in turnover of 4 per cent through the production of new digitalised products and services. According to the unanimous opinion, the logistics industry will benefit in particular from digitalisation, as the new business models and manufacturing processes require intensive integration and networking of all logistics elements.

Logistics as a driver and beneficiary of Industry 4.0

Prof. Dr Michael Henke, Director of the Fraunhofer Institute for Material Flow and Logistics IML, Sabine Hucke, Managing Director of the German Logistics Association (BVL), Prof. Dr Thorsten Schmidt, Director of the Institute for Technical Logistics and Work Systems at TU Dresden, and Prof. Dr Klaus-Dieter Thoben, Managing Director of the Bremen Institute for Production and Logistics BIBA, then discussed the topic of "Industry 4.0 promotes Logistics 4.0".

The panel emphasised the pioneering role of logistics in the implementation of the Industry 4.0 strategy. Many of the digitalisation requirements for Industry 4.0, which most manufacturing companies and groups are not yet able to meet across the board, are already part of everyday life in modern logistics companies, such as the use of RFID systems. In addition, the degree of networking in logistics is extremely high due to the interfaces with manufacturing companies and suppliers on the one hand and customers on the other.

According to the experts, it will be even more important in future for logistics providers to be able to offer additional and new services by utilising the wealth of information (e.g. on material flow details in manufacturing companies) and using big data software.

Getting started in small steps

"How can logistics companies prepare for change?" was the title of the third panel discussion, which featured Prof Dr Julia C. Bendul from Jacobs University Bremen, Prof Dr Michael Feindt, Partner at Blue Yonder GmbH, Prof Dr Otto Jockel, President of the Neuss University of Applied Sciences for International Business, Dr Marcus Schreibauer from Hogan Lovells International and Jan Westerbarkey, Managing Director Technology at Westaflexwerk GmbH.

The experts on the panel noted that the term Industry 4.0 often causes a lack of understanding, unease or even fear of failure, particularly in medium-sized companies. In addition to a lack of information, this is also due to the concept being overloaded with overly ambitious and grandiose visions. However, it makes perfect sense for companies to consider which elements of the digitalisation options could be suitable for implementation - whereby the benefits in the form of measurable increases in efficiency must be guaranteed. After all, Industry 4.0 is not an end in itself. Firstly, there are still numerous conventional ways of increasing efficiency on this side of the concept.

A viable way for logistics companies to enter the digitalisation strategy and thereby increase efficiency as well as develop new business models is to approach innovative customers and partners and work with them to implement individual projects and test their benefits. In addition to a quick ROI, this benefit could also consist of increased customer satisfaction and loyalty.

Politics stayed outside

Peter H. Voß, Managing Director of the Club of Logistics, was highly satisfied with the usefulness of the event: "The experts from industry and science have achieved something that you hardly ever get otherwise: on the one hand, they have concretised and made transparent the many aspects of the difficult and, thanks to a lot of political overload, overly complicated topic of Industry 4.0. On the other hand, the very concrete significance of the topic for the day-to-day business of companies was emphasised and linked to concrete instructions for action. I can only regret that not a single invited political representative was prepared to take part in the congress. Here in Bremen, there would have been an opportunity to confront the cloudy political wisdom with reality. But that doesn't seem to be the intention."

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