The 4th International Seville Conference on Future-Oriented Technology Analysis (FTA)
12 & 13 May 2011
Competitiveness Monitor: An integrated foresight platform for the German leading-edge cluster in logistics
Heiko von der Gracht*, Philipp Ecken*, Christoph Markmann*, Inga-Lena Darkow*, Gianluca De Lorenzis‡, Eckard Foltin†, David Hartmann†, Nadine Helfenbein‡, Michael Münnich§, Christopher Stillings†
* Center for Futures Studies and Knowledge Management, EBS Business School, Germany ()
†Bayer MaterialScience AG, Germany
‡dilotec GmbH, Germany
§BrainNet Supply Management Consultants GmbH, Germany
Keywords:Strategic Planning, Foresight, Information Technology, Logistics, Mobility
Summary
In June 2010 the German Federal Ministry of Education and Research launched Germany’s biggest research initiativein the area of logistics and supply chain management. Overall 130 companies and 11 research institutes and universities participate in a cluster ofmore than 30 joint research projects in order to shape a sustainable future for the region, the logistics industry and beyond. In our paper we will present the current concept of the joint research project Competitiveness Monitor (CoMo), its context within the overall cluster idea, its planned architecture, and its expected contribution to the cluster, the foresight field, and its community.[1]As one of the joint research projects,CoMocontributes to validity and reliabilityof foresight activities by digitally combining quantitative and qualitative forecasting methods. Furthermore, the CoMoaims to enhance cooperation in a multi-stakeholder environment– such as the cluster –through a fully integrated web-based platformthat utilizes (cluster)knowledge and users’ opinions and expertise. The CoMo platformwill link this knowledge with the idea of an analytical management toolbox supportingdecision makers from business, academia and government institutions.
To achieve this, the CoMowill combine three foresight tools in a single IT-based futures platform. This platform integrates user specific information from (1) a holistic Trend Database (TDB), (2) a collaborative Prediction Market application, and (3) an individual Future Workshop (“Zukunftswerkstatt”) application. The platformthus contributes to three major challenges that are frequently discussed in the context of future-oriented decision making environments:
First, the CoMoarchitecture is able to generate a holistic picture of the future as it combines qualitative and quantitative futures knowledge in a single Trend Database using the idea of linked data. Moreover, this knowledge can be used in online-based process-controlled Future Workshops that offer guidance in qualitative foresight methods (e.g. road mapping / backcasting, scenario and strategy building) as well as quantitative analyses (e.g. trend extrapolation, datamining). This approach guides and teaches users and thus decreases uncertainty in decision making through the combination of multiple foresight methods based on holistic information. In addition, there will be self-learning teaching material provided on the CoMo platform that widens the value-generating focus to decision makers that are non-experts in foresight (e.g. small and medium sized companies (SME)).
Second, the CoMowill utilize the knowledge and behaviour of its users, generating a vivid learning and social environment. Defined groups of users can collaborate in Prediction Markets, i.e. betting on the outcome of future events in a virtual market that combines wisdom of the crowds with market efficiency. Furthermore, the CoMo uses the idea of co-creation in that users can create and evaluate information in the Trend Database. Users will be incentivised through the idea of lead-users and social media and thus generate and share a vivid and contemporary information basis. As a result the CoMoarchitecture combines expert opinion from scientific resources with real-time user knowledge yielding the ability for comparisons and thus a more careful examination of the future.
Finally, the CoMoarchitecture will offer an individual decision making environment which increases information value and ease of use to the user. Users can interactively individualize their FuturesPlatform according to their interests by e.g. planned applications such as saving trend favourites, displaying related information or following a certain Prediction Market. Moreover, users may collaborate in and set up individual Future Workshops for defined topics, outcomes and user groups. Therefore, the CoMowill offer a convenient, efficient, and creative web-based environment that creates individual value using a participatory approach.
1Introduction
The ‘EffizienzCluster LogistikRuhr’, synonym for leading-edge cluster in logistics and supply chain management (SCM) in the German Ruhr area (larger Rhine-Ruhr metropolitan region of more than 12 million people in North Rhine-Westphalia), aims like all leading-edge clusters to boost innovation and economic growth in Germany by bridging the gap between science and industry (BMBF 2010). Through strategic partnerships between researchinstitutions, companies, and other stakeholders, research results with innovative potential relevant for future developments are fostered. Though clusters are regional concentrations within Germany, they contribute in finding new ways to growth and employment that gear not only Germany’s but the European Union’s economy towards greater sustainability (see e.g. Schütte 2010). Precisely, this is what the leading-edge cluster on logistics and supply chain management incorporates.
The global aspire of the EffizienzCluster LogistikRuhr is to secure tomorrow’s individuality, in the sense of mobility and distribution, with 75% of today’s resources. To achieve this, the cluster aims at the joint innovation capacity of scientific institutions and diverse companies, including many small and medium size enterprises, technology-oriented developers, software developers, and service providers, and many more. In their work they address the conflict between future individuality (i.e. the demand side) and resource scarcity (i.e. the supply side). Complexity of this natural antilogy is reduced through building seven key themes (“Leitthemen”) to which the research projects contribute. In sum, within five years time frame started June 2010 the leading-edge cluster aims to develop more than 100 concrete innovations with an estimated market potential of two billion Euros, generating approximately 4,000 jobs (ten Hompel 2010).
A rigorous factor to sustainable success of the cluster, particularly to sustainable success of the ambitious innovations for logistics and mobility, is the stakeholders’ ability to make robust future-oriented decisions.The increasing depth of added values from logistics activities challenges companies acrossall industries. Simultaneously, globally changing economic and social conditions generate opportunities and threats for long-term value creation. More than ever logistics and valuechain management has become an important factor in strategic planning and decision making(Yeung 2008; Qi, Boyer et al. 2009). Consequently, the ability to make robust, valid and sustainable future-oriented decisions increasingly becomes a key competitive advantage for today’s companies and regions. While all innovations in the EffizienzCluster ultimately result in competitive advantages, the CoMoinnovation especially intends to increase foresight potential and future robustness in decision making within the cluster.The integration of three foresight tools into a future-oriented IT platform where academia, business, and politics co-operate will ensure a sustainable competitive advantage for all stakeholders in the leading-edge cluster on logistics and supply chain management.
The remainder of this paper is organized as follows. We first describe the leading-edge cluster Logistics and discuss its aims. Subsequently, we derive the challenges of foresight and future-oriented technology analysis in logistics, and thus for the cluster as a whole. Finally, we present the so far developed CoMoconcept to address such challenges and highlight its importance for the cluster and beyond.
2The leading-edge cluster in logistics
Logistics has developed from its role to deliver the right things at the right time to deciding how the right things get there in the right time(ECM 2010). Acknowledging this, logisticsis what determines efficiency of moving goods, people and information. Thus, assuming the future need for increasing resource efficiency with increasing demand for goods and mobility, it is the duty of logisticiansto develop products, ideas, and innovations that meet this antilogy. Precisely, this is what the EffizienzCluster LogistikRuhr aims at. It is Germany’s largest research initiativein the area of logistics and mobility so far. Supported by the German Federal Ministry for Education and Research, more than 130 stakeholders from academia and business participate in order to tackle the three central challenges: (1) efficient management of resources, (2) secure urban supply, and (3) facilitation of individuality in mobility. A detailed description of these challenges is stated in the following (translated from ECM 2010, source of pictures):
(1) Manageresources efficiently
The limited absorption capacity of ecosystems and the increasing scarcity of resources require a change in economy and society. Solutions have to be developed to design supply chain processes sustainable. Such solutions include full recovery of raw materials in terms of circular flow economies and integrated evaluation systems to design procurement, production, and logistics resource- and energy-efficient. In addition, energy prices and their influence on global transport as well as availability of certain raw materials and their sound procurement increasingly become global competitive factors. Depending on industry and location, costs of logistics are estimated to have a 10 to 15% impact on final product prices. Thus, a major competitive advantage can be achieved through efficiency striving in supply chains. This becomes even more relevant assuming rising future resource scarcity.
(2) Secure urban supply
Urban systems contribute to improving human living conditions; they are engines of growth and centres of productivity. However, urbanization also involves social, economic and environmental risks such as large and rather undirected land use, supply and disposal through overloaded infrastructure, high consumption of resources, noise, and air pollution. Metropolitan areas, as centres of economic development and individual mobility, are especially subject to increases in passenger and freight transport. By year 2030, 60% of the world population will be living in urban areas and by 2020 car traffic will have increased by 20%, truck traffic by 34%, and rail transport by 55% in Germany(ECM 2010). All these are challenges for improving supply chain activities. In addition, demographic trends, such as ageing, lead to new mobility needs and an increasing demand for completely new goods and services. This leads to enormous challenges for intelligent supply of highly dense and complex areas. Elements of new supply chain and mobility strategies for sustainable urban development include new mobility concepts, management of the dynamic complexity of different transport modes in a confined space, more efficient use of infrastructure, flexible combination of individual supply systems, improved networks in cities, and optimized supply and disposal, including modern"Reverse Logistics" (i.e. circular flow economy, urban mining).
(3) Facilitate individuality
In light of the described changes, sustaining and developing individualized life styles in a globalized society is the most fundamental and most demanding challenge. The pluralistic society calls for development in a context of unprecedented diversity of different lifestyles. This translates in rapidly changing consumer behaviour demanding customized products, information, and services as well as in differentiation of markets, in increasing customer orientation, in changes in leisure activities, and in growing demands for individual mobility needs. It is the fundamental task of supply chain management to create the framework for these needs.
Clearly, the conflict between facilitating individualism and efficiency is complex to resolve. Especially, since the leading-edge cluster aims to enable future individualism with 75% of today’s resources. For achieving this target, joint research projects, each comprising strategic partnerships between business and academia, will develop vital principles, methods, or technologies. In order to reduce complexity each joint research project belongs to one of seven key themes (Leitthemen). These guiding topics represent the central innovation schemes enabling the ambitious target of the cluster. Figure 1 illustrates the seven key themes and their strategic position in relation to the three identified challenges.
Figure 1: Guiding topics and central challenges (Source: ECM 2010)
As illustrated, different guiding topics have different strategic roles in targeting the three central challenges. For this paper we focus on the guiding topic ‘Activation of Cluster Potentials’ as this is where the CoMo belongs and contributes to.
The guiding topic Activation of Cluster Potentials makes use of the unique construct that the cluster itself represents. The combination of business, research, education, politics and administration allows sharing of complementary resources and thus reduces "friction losses" from e.g.lack of coordination, bureaucracy, etc. The pooling of complementary resources frees stakeholders to concentrate on core competencies while implicit competitive knowledge is shared within the cluster. Although cooperation improves efficiency and mitigates the conflict of implementing ecologically and economically sustainable innovations, it requires coordination and future-oriented information and goes far beyond market relations or basic communication platforms. This is where the guiding topic Activation of Cluster Potentialscontributes. Research in this guiding topic provides stakeholders in the cluster with future-relevant knowledge and innovative tools that enable robust, valid and sustainable future-oriented decision making. Hereby, interactive co-operation and co-creation on global and specific future topics creates a shared wisdom in the cluster. The CoMoforesight tool box builds the strategic competence that is needed to use this shared wisdom, i.e. to activate cluster potentials sustainably. Future-relevant knowledge related to manufacturing and services and their interplay with supply chain management is created and conveyed. Particularly, futures knowledge is build around the three central challenges of the cluster and supportscluster stakeholders in evaluating new strategies, processes, and technologies in light of these challenges.
3The need for futures orientation in logistics
In the general public, logistics is still often reduced to transport, handling, and storage. This is, however, solely an antiquated point of view. During the past 50 years, logistics has undergone several development steps and evolved from individually managed, product-flow related activities to an integrated set of processes managed across multiple echelons of a supply chain (Ballou 2007). The Council of Supply Chain Management Professionals (2011) sees logistics management as “part of supply chain management that plans, implements, and controls the efficient, effective forward and reverses flow and storage of goods, services and related information between the point of origin and the point of consumption in order to meet customers' requirements”. In the scope of global sourcing, production, and distribution, logistics has reached high strategic importance for companies today. Many logistics decisions involve large investments and have far-reaching influences on the course of a company. In times of increased outsourcing, expanding global operations, and heightened need for logistics customer service, it is actually often the basis for a company’s competitive strategy today(Yeung 2008; Qi, Boyer et al. 2009). These developments have led to a paradigm change of the logistics understanding from a functional to a top management concernmaking strategic logistics planning essential to ensure sustainable competitiveness(Gunasekaran, Lai et al. 2008; von der Gracht 2008).
The future of the logistics industry is characterised by many upcoming challenges and opportunities(Beamon 2008; Ruske, Kauschke et al. 2009; Ruske, Kauschke et al. 2010a; Ruske, Kauschke et al. 2010b). While the logistics market is expected to grow further, its business has become more volatile and uncertain. This can primarily be traced back to the increased competition in the industry. The trend towards globalisation has steadily increased with the effect that supply chains have become longer and more complex(Meixell and Gargeya 2005; Jain and Benyoucef 2008; Bhatnagar and Teo 2009). In addition, many new competitors enter the global scene. This development is even intensified by the gradual reduction in barriers of trade. Moreover, the customer expectations have changed insofar as they demand quicker response times and more convenient offers. Today, companies have to be responsive in their structure as well as their processes in order to adapt quickly to current market demands(Gunasekaran, Lai et al. 2008). Due to the Internet and other media, customers have the opportunity to compare prices, quality, and services easily. The tolerance level for poor quality in products and services is thus very low. In most cases it is not sufficient any more to offer a specific product or service in the right quality, to the right costs, and within the right time. It is rather the added value offered to the customer that leads to differentiation and competitive advantages(Dominic, Goh et al. 2010 ). Logistics services have emerged as an opportunity to offer such added value. But, as with most other services, demands and complexity have increased(Jain and Benyoucef 2008; Bhatnagar and Teo 2009; Briggs, Landry et al. 2010).Moreover, the logistics business is highly technology-dominated. Advancements in information and communication technology, such as Radio Frequency Identification (RFID) or satellite technology, are currently revolutionising logistics processes. Logistics nowadays means acting in complex networks of independent, but interdependent organisations (Jain and Benyoucef 2008; Bhatnagar and Teo 2009). Intelligent solutions of information and communication technology (ICT) are an essential operation, control, and support instrument of such worldwide networks. Companies have to pay increased attention not to fall behind in technological standards in these times. Information and goods flows have to be synchronised on a global level, leading to high complexity in the system. To manage these systems efficiently is one of the major challenges for the logistics service industry.
The interplay between trends and developments described above leads to the turbulent environment logistics managers are facing today. The highdegrees of complexity and dynamism in the external (logistics) environment drive the uncertainty faced by managers (Duncan 1972). The dynamism of markets and the related uncertainty frequently causes organizations to adapt strategic directions and rethink their planning practices(Courtney, Kirkland et al. 1997). Uncertainty also means that logistics managers face greater risks in their business. The number of players in global logistics networks has risen, leading to more interfaces and intermodal operations. At the same time global logistics means longer distances, more handling processes, longer demurrage, and more complex administrative processes (Jung and Nowitzky 2006). In addition, international logistics service providers face greater risks, since they operate in foreign, often highly competitive markets. All these additional activities make supply chains more vulnerable.