Digitalisation is at the top of the agenda for SMEs
The digital transformation of business and society is one of today’s key challenges. It has long been recognised by politicians and major industry that digitalisation is necessary to ensure the international competitiveness of individual companies, as well as of the entire German economy. Recent studies show that digitalisation has now also reached medium-sized companies – not only as a strategy theory, but increasingly also as operational practice. For many German companies, digitalisation offers the opportunity not only to maintain their own market share, but also to expand it. That being said, a recent study conducted by IUBH demonstrates that German logistics companies still often lack a clear line on the matter.
The IUBH University of Applied Sciences study on “Transport & Logistics – Digital Transformation LDL 2019”, conducted under the direction of Prof. Dr. Hubert Vogl, examines the progress of digitalisation strategies among logistics service providers (LDL). To this end, interviews with 35 managers from the logistics and transport sector were carried out and evaluated between October and December 2019. The qualitative study focused on two questions: how far have German small and medium-sized logistics service providers gone in the digitalisation process, and how are they tackling this sensitive yet highly dynamic transformation process? Is the procedure primarily characterised by piecemeal or reactive action, or is it guided and supported by systematic and strategy-oriented maturity development?
There tends to be a lack of clear strategy
As with companies in many sectors, digital transformation is now at the top of the agenda for logistics service providers. They are working intensively to optimise their processes, products and services through the use of digital technologies. However, the majority of the logistics companies surveyed still needed to take action on the systematic, holistic and strategy-oriented approach. Fewer than half of them are pursuing a holistic digitalisation strategy, and only around one in three actively approach their customers in order to convey the added value of their digital ideas and solutions. When it comes to setting priorities, significant differences between transport and logistics service providers can only be seen in a few exceptional cases, both facing similar challenges.
The digital transformation is in full swing
Digitalisation has not only arrived at German logistics companies, but is also being actively promoted both in the transport as well as in the contract and supply-chain sectors. Logistics service providers have recognised that to do this, they must break free from an external determination that has manifested itself over many decades, and instead to focus solely on the implementation of customer specifications. The paradigm of the zero-error philosophy, which has so far prevailed in logistical value-added processes due to the requirements of quality management, also makes it difficult for LDL to undertake the cultural change that is necessary for successful digital transformation and the positive handling of errors.
The challenge is not simply digitalisation in itself
For their part, customers are often still uncertain about their strategic direction. First of all, they have to deal with the digital transformation and the associated challenges themselves. As a result, entire business models are put to the test and have to be readjusted. In addition, important branches of industry such as the German automotive industry are facing a large-scale structural change: output volumes are falling, with a consequent drop-off in the utilisation of logistics service providers. On the other hand, online trade, package deliveries and freight transport have been growing steadily for years and demand innovative and agile logistics and transport solutions.
Logistics service providers need to both differentiate themselves and self-determine
Both innovative capacity and agility require a high degree of self-determination, proactivity and a clear strategic orientation. But self-determination has to be learned – especially by logistics companies in times of digitalisation. Both managers and employees not only have to learn new cultural techniques, but also have to expand their professional skills and competencies. Establishing maturity-oriented change management can support and even accelerate the digital transformation process of small and medium-sized LDLs. This is a process can also help to expedite the journey towards self-determination.