How DB Schenker's supply chain transformation fared against COVID-19 disruptions

Profile picture for user jreed By Jon Reed September 25, 2020
Summary:
When the COVID-19 pandemic hit, DB Schenker's global supply chain transformation was well underway. So how did they fare? Did predictive models hold up to the pandemic stress test? Infor customer DB Schenker told me the full story.

DB Schenker's Joachim Schaut
(DB Schenker's Joachim Schaut - video chat)

When I last checked in on DB Schenker at Inforum 2019, they were knee-deep in a global supply chain transformation - drawing on Infor technologies like Infor Nexus and Predictive ETA.

Well, since then, a whole lot has happened. Developments none of us predicted. Those developments placed unprecedented stress on global supply chains. So how has DB Schenker fared?

After Inforum 2020 wrapped up, I got the video update from DB Schenker's Joachim Schaut, Vice President, Intercontinental Supply Chain Solutions at DB Schenker.

The scope of DB Schenker puts Infor Nexus to the test. Headquartered in Essen, Germany, DB Schenker employs more than 90,000 workers globally. DB Schenker is considered one of the world's largest logistics providers.

Supply chain transformation versus the COVID-19 disruption - what happened?

One day you're transforming your supply chain. The next day you're converting to stringent work-from-home protocols. As Schaut told me, it was challenges piled on top of challenges:

To run a global logistics service provider basically from home is a challenge in itself. We had 60-70,000 people working from home, and it went well everywhere. But I think we are here to talk about the supply chain challenges of our customers.

For DB Schenker's customers, the impact is what you'd expect. Nothing stayed the same; It was one of two directions. Schaut:

We had two different cases. One where there was a complete decline in demand. Fashion, apparel, footwear, all this stuff declined. Then we had others who were more in the [essential] consumer goods sector, who really had peaks in their shipping volumes.

Those two customer groups had radically different needs for DB Schenker. For the first group, help with canceling orders and cost-cutting was urgent:

It was important to react immediately - to have visibility down to the SKU level, down to the purchase order level - to basically stop the supply coming out of China. This was of utmost essence. We had customers where the majority of the shops had been closed due to lockdowns in several countries. There is a difference if you still have two weeks of arriving cargo, or if you can stop it immediately.

Schaut told me without DB Schenker's supply chain transformation efforts, they might not have been able to help those customers in the same way.

They saved a lot of money with solutions, and keeping it at origin, or delaying it in transit and so on, because we had the visibility on the item level. Without us, those companies would not have this in-depth visibility - and not all on one platform. They would have needed ten days, maybe two weeks, to get all the information. Then you still have two weeks of arriving containers and your shops are full, which leads to warehousing solutions at destination - the most expensive thing you can do.

So this was one thing that really paid off our initiatives towards a more integrated supply chain approach.

As for the second customer group - the ones with a surge in demand - that was a different supply chain crisis. Schaut:

The second one was the opposite. Carriers had planks sailing all over the place, equipment was not at the right place in the world. So it was really a challenge to get goods moving - especially if you have more demand than normal. Those customers we supported basically with our physical network around the globe. But also with technology - Predictive ETA was a big topic there, to have all documentation ready, to avoid a delay in the supply chain.

Predictive supply chain models - did COVID-19 make them irrelevant?

Not to mention a benefit to the end consumer - scrambling for toilet paper and other lockdown supplies. One issue I am obsessing about: how much did pre-COVID transformation efforts give customers an edge?

Naturally, software vendors insist these pre-COVID digital moves have paid off, but they have a pretty big stake in that pitch. However, the customers I have spoken with told me the same - with the caveat that the transformations in play were about people, process and business models, perhaps even more so than the tech the vendors provided.

Schaut told me: this is the case with DB Schenker was well. However, there is a caveat we need to acknowledge. The supply chain visibility on Infor's platform has been crucial, but: the predictive models have been challenged by pandemic conditions - conditions we all lacked data sets for. Here's how Schaut explained this to me:

We need to distinguish two phases from my point of view. A predictive model like Predictive ETA also depends on data. So on day one of the pandemic, an algorithm cannot really help you. So there you need to have this full visibility, and you need to sit down and make concrete decisions - without the help of too much technology.

But now we are in what Schaut considers the second phase of the pandemic economy. Here, predictive engines can help:

In the second phase, we said, "Okay, this is the new normal, or the new standard shipping patterns," then it really helped. As mentioned, last year, we had been working on some pilots. Now ETA is integrated into our standard offering for customers - into the purchase order management area, where we have applied it for a lot of customers, and quite successfully.

We see a difference between this Predictive ETA and the [standard] ETAs. We really feel the difference now. It's working pretty well, I would say.

As we contend with the so-called new normal, the machine learning engine is catching up:

The technology is super important. But the boots on the ground to execute supply chain decisions are just as important. I think we talked about this in New Orleans as well. This is when technology and supply chain execution comes together - and this is what we want to do.

When I asked Schaut where Predictive ETA is having the most impact, he said it's about the focus on the final destination:

Just to clarify: the Predictive ETA solution, which we jointly have in place with Infor. It's Predictive ETA at final destination. A lot of the issues are with the last port, so we go all the way to the final destination, because we jointly think that in normal days - let's assume we have a stable environment, more or less. We think that the last mile offers some challenges which lead to heavy delays, where you can still impact the lead time significantly.

This is why for Predictive ETA, the final destination is so important. And it helped us to connect sales better to supply chain data at the customer side.

Avoiding lost sales with precision on inbound shipments? A needed win for all sides, right when that win is needed most.

The wrap - award time

The supply chain pursuits of Schaut and team have not gone unnoticed. In fact, DB Schenker won the Infor Customer Excellence Award for 2020. I put Schaut on the spot: why does he think they won? Schaut told me:

We have a real global partnership with Infor, and it is across business units... So for example, we went live with a new warehouse in Singapore - a new contract logistics facility concentrating on e-commerce topics, which is where we also partnered on the software piece with Infor.

Schaut says their fifteen-year Infor partnership helped his team square off against the biggest challenge this year has brought: supply chain resilience. That means helping customers reduce dependencies on any one supplier or location - without stocking up on costly warehouse inventory.

While predictive models were undeniably challenged this time around, Schaut is hopeful that DB Schenker can apply these lessons on supply chain resilience to future geopolitical shifts, where companies may feel a need to pull out of certain countries - or perhaps be required to do so quickly, based on government mandates. For companies not as far along on their supply chain makeovers, Schaut advises: managing the culture change is really the key to making the tech changes stick.

What does Schaut need from Infor? He's looking for Infor to continue doubling down on their next-gen supply chain investments. The partnership is strong, but continued technical innovation is expected. The same goes for DB Schenker internally. Schaut says DB Schenker projects like the Red Lion warehouse keep him inspired, despite the adversity:

There's a lot of bad news around the world, people getting unemployed and job cuts all over the place. I'm pleased to work for a company that despite the pandemic, we also need to save money, but we still invest in this future technology - and it is 250 additional jobs which have been put on the table.

End note - this article focused on the transformation story and use of Infor within Schaut's Intercontinental Supply Chain (ISC) business within DB Schenker, which uses Infor WMS, Infor Nexus, and Infor CloudSuite Industrial (see: DB Schenker bags Infor Customer Excellence Award 2020). Other divisions of DB Schenker utilize other Infor and Infor CloudSuite products. Schaut is not part of the group running the DB Schenker's Singapore-based "Red Lion" warehouse-of-the-future. That article is for another time.

Image credit - Screen shot of DB Schenker's Joachim Schaut during the video chat by Jon Reed.

Disclosure - Infor is a diginomica premier partner.