Having been involved at the business-end of logistic giant DB Schenker for 2 decades, Heiner Murmann took the plunge in the autumn of September 2017 – setting up his own company in the form of Orkestra SCS, which provides supply chain technology and services including real-time visibility tools, consultancy and 4PL-management.
Fast-forward to the summer of 2021, Heiner now finds himself with the priceless experience of working in a startup as well as one of the world’s largest logistics companies.
Naturally, this makes Heiner a fascinating person to quiz about the current climate in what is the fast-evolving world of logistics and supply chain.
Fresh from his keynote speech at last month’s Alcott Global Movers & Makers conference, we sat down with Heiner to discuss a wide-variety of topics including AI, generating forecasts, sustainability, consultancy, data sharing, change management as well as mergers and acquisitions.
During your keynote speech at the recent Alcott Global Movers & Makers event, you provided insights into how modern tech and human abilities can be merged to improve the fitness of supply chains. In recent times, there has been a lot of focus on digitalisation, automation and AI – all of which arguably reduce human input to an extent. However, the world’s supply chain still relies on countless human interactions and is influenced by an economy shaped by people. What kind of a role do you foresee skilled personnel having in the supply chains of the future?
It’s a great question. From my perspective, supply chain management and logistics management has been, and always will be, a people business to a certain degree. You need people to make everything happen.
Supply Chain Management is, in a large number of companies, not optimized, and to some extent, even ineffective, because a significant share of people don’t have the tools that are necessary to do their jobs effectively.
Much of the time and the resources are consumed by low-value and repetitive administrative or reactive ‘firefighting’ tasks. In my mind, if you give people the right tools and build up the required capabilities to shift from a reactive to a proactive operating model and mindset, people become much more efficient, much more effective and they will have greater success and fulfillment at work.
With the right technology and mindset, companies can focus their efforts and energy on strategy and planning – proactive steps to improve their supply chain practices in a systematic and sustainable way.
Deploying the right technology to digitialize, automate and optimize the supply chain is absolutely mandatory for companies to succeed in the future. However, you will still need people at the core of everything. And the people need to develop different skills and a digital mindset that embraces technology and is comfortable with complexity, uncertainty, and change.
If it wasn’t already true beforehand, the pandemic soon elevated digital supply chain tools from a ‘nice to have’ to a ‘must have’. Now it’s arguably a case of not just having those tools, but having the best one. In what way does your technology and services stand out from your competitors?
From the onset our goal was to build a comprehensive platform that integrates the entire ecosystem and covers supply chains end-to-end paired with services to optimize the “game” and not just individual “plays”. Therefore, we look at our customers’ supply chains holistically, starting with our customers' purchase orders and optimizing shipping and delivery processes all the way to store shelves.
So it’s a true end-to-end approach that brings tremendous value to customers. Many of the solutions that have been on the market for some time or that have emerged in recent years go very deep into a certain area of the supply chain and optimize this area.
But this is also where the risk lies: If the actual problem lies elsewhere in the supply chain, you will have little or no benefit from the tool. Our approach really looks at the supply chain from end-to-end. And with our real-world experience, we ensure that our customers get the most out of the technology to unlock real business value.
It is stated on your website that the Orkestra SCS platform “predicts the unforeseen”. Could you perhaps elaborate on what you mean by this, and how your technology makes such predictions possible?
We’re trying to achieve this by leveraging the huge amount of data that we’re collecting for our customers. We’re linking that data with external sources, which allows us to improve levers including mode optimization and on time and in full delivery reliability. Our customers are able to eliminate excess capacity and improve labour planning, thereby optimizing overall supply chain efficiency and cost.
Besides supply chain visibility, another service you offer concerns the calculation of emissions as well as carbon offsetting activities. How do you go about this, and how can the emission reductions be tracked?
There’s a few ways we can achieve emissions reductions for our customers.
Foremost, we focus on prevention of carbon emissions. Overall network optimization will reduce our customers carbon footprint by, for example, eliminating waste of underutilized containers and trucks or avoiding unnecessary trips.
Secondly, the unavoidable carbon footprint can be offset. With data generated on our platform we are able to very accurately assess our customers footprint with generally accepted formulas and methods. We’re then offsetting that with approved partners that have very rigorous and auditable processes. Thanks to the technology, it is possible to track that promised trees have actually been planted.
Overall sustainability for us is a rigorous process from the beginning to the end, and it very much includes prevention at the core.
Supply chain consulting is another part of Orkestra SCS’ business. The process of carrying out consultations naturally allows companies such as yourselves to observe business trends and traits across multiple industries. What are some of the most common issues companies come to you with?
In our model, consultancy is the first customer engagement. We promise that our technology and pays for itself, by at least a multiple of three times. Consulting allows us to deeply understand our customers, their supply chains, their challenges, pain points and goals. Together we create a baseline and realistic path to achieve their targets through deployment of technology and digital capabilities.
I am most surprised that in most cases the improvement potential is significant. Most companies' supply chain challenges revolved around two things. One is the inability to achieve their promise to their customers to deliver on time and in full. The second is around costs, they are spending more than necessary due to an overall lack of optimization.
Our customers are looking for us to help create a holistic framework to drive performance. For us, deploying technology is fundamental to make improvement sustainable.
In the last few years, a number of partnerships have been struck between tech startups and supply chain giants. In light of this, how do you anticipate the market looking in the future? Do you believe that younger, more nimble companies will still operate in this space, or shall we have more consolidation as mergers and acquisitions become more commonplace?
It’s an interesting question.
There is a lot of M&A activity going on both on the tech and logistics service providers side. We’ve seen this now with E2open and project44, as well as DSV, who’ve continued to roll up, which has brought them into the top 3 globally.
In my view, there are two reasons for this. One is that there’s an enormous amount of venture capital in the market, which drives a lot of consolidation as well as effort to implement solutions that are much deeper and much wider than they would be able to do on their own. The risk, of course, is that acquisitions and the subsequent integration challenges are a serious distraction that get companies off course.
Overall, I believe that digitization represents an enormous opportunity to asset operators, including NVO’s, carriers and port operators to drive efficiency and to take a commanding position in a digitized ecosystem that operates far more efficiently than an analogue one. The good news is that most players have embarked on serious digitalization journeys.
Once these assets are digitally “lit up”, platforms like Orkestra SCS can really leverage and utilize those assets in a highly agile way to drive cost savings and performance improvements for shippers.
In essence, the entire ecosystem of logistics and supply chain is evolving as a result of technological capabilities. This journey, I believe, will continue for years to come.
Do you think that we’ll see increased data sharing and co-opetition in the future? Or shall those with a competitive advantage regarding data hold the process back?
In general I think that the players that have an advantage will want to maximize that for their benefit. The possession of data and insight is naturally a significant advantage and we would expect that companies will not want to give that up without a benefit to them.
However, if you look at the beginnings of shipping, sharing of capacity has been around for well over a hundred years. So when sharing benefits participants comparatively equally, there is cooperation even among competitors.
Looking at data sharing models in the supply chain, there are a number of examples. One of the most recent very prominent cases is Maersk and IBM establishing a neutral blockchain ecosystem that could benefit everyone participating.
You have experience working with logistics companies large and small. Do you get the impression that some of the major players may be embracing digitalisation at a slower pace due to groupthink?
Well, while it’s easy to talk about change, it’s very difficult to make it happen.
The operational footprint of many established players is significant. To embark on a digitalization journey is a massive undertaking. You have to deal with thousands of people’s habits and preferences that are difficult to change. In addition, thousands of customer and supplier relationships are impacted.
To change large organizations is never easy and will take some time. And by just deploying technology, the change will not happen. The organization needs to learn how to use the technology and new skills need to be developed. And here is where the opportunity of startups are that not solely offers technology but also services to manage the change. They can start without habits and unwieldy legacy technology and can create the right culture and deploy the required capabilities and skills to fully leverage modern technology.
Finally, what does the near future have in store for Orkestra SCS?
We will continue to work on people, culture and technology. Tech drives no value without the creative, collaborative and innovative people.
We want to continue our strong growth with a clear focus on North America and Central Europe. Our customers value our holistic approach combining supply chain technology with advanced skills. We are always looking for the right customers who are willing, ready and able to digitialize their supply chain in order to achieve the best possible performance at the lowest costs.
Photo credit: Orkestra SCS