Supply Chain Gets in Shape for The Digital Future

The system supplier is getting ready for the digital future by founding its own start-ups and developing its own disruptive processes.

Industry, economy, and society are in the midst of digital transformation. It is a fact that it is inevitable since customers do not want to do without the plus in comfort they have become used to in many areas. But what are the consequences? Above all, many of the boundaries between industries so far known are losing importance, and that is precisely where the future challenges lie. The questions that arise are: Who is driving transformation, and will the suppliers of today be those of tomorrow? At any rate, BEUMER Group is getting in shape for the digital future.

Logistics is one of the industries where the influence of digital transformation is particularly strong since digital logistics renders substantial benefits in costs, transparency, and speed. The smart integration of digital technologies can especially make intralogistics more efficient and environmentally safe. The ever-growing online commerce is driving this process. The degree of networking, automation, and system integration increases along with the progressive development of goods flows in e-commerce and the topic of returns involved in it. Today's supply chains are consistently organized and interlinked – from the sources of raw material up to the delivery of products to the customer's front door and beyond, up to returns, disposal, and recycling.

As a system supplier, BEUMER Group provides e-commerce companies and logistics centers with high-speed sortation systems. Their capacities can be adapted to the constantly increasing demands of users. "We must constantly improve our products to increase our competitiveness so that our customers can reduce their costs and optimize their processes," explains Dr Christoph Beumer, Chairman and CEO of BEUMER Group based in Beckum, Germany. For this reason, the system supplier has integrated innovation management into his strategy for many years now and applied for nearly 100 patents. For its consistent and multifaceted commitment in this field, BEUMER Group received the Axia Award 2017, which is awarded to medium-sized businesses for their successful and sustainable corporate management. In the age of digital transformation, however, it is not only the improvement of internal processes that counts, but also the development of new business models. It is not merely a matter of optimizing existing concepts. "We have to create something new. Machinery and systems become more efficient and offer ever-increasing speeds," says Dr Beumer.

Setting new trends instead of missing them

The worst-case scenario of any industry is simply missing out on new trends. This may have disastrous consequences for market leaders. One example is analogue photography. Agfa, a German company, succeeded in gaining an excellent reputation in more than 100 years of company history. Agfa developed the first developer fluid for films and the first flash lamp, the first safety film and the first fully automatic camera – but not the first digital camera. This was developed by an engineer of Kodak. His employer, however, kept this innovation unused in a secret drawer for a long time. This soon turned out to be a fatal mistake: In the 1990s, competitors such as Apple, Casio and Canon introduced the first digital cameras for large-scale use onto the market and swept aside the two most successful photographic companies world-wide up to that date. Those who do not face up to digital transformation in time, will be the losers.

"The mechanical engineering and intralogistics industries may suffer the same fate as regards 3D print technology. If it becomes possible to produce a steel girder using this technology in the future, this will revolutionize the entire sector," predicts Dr Beumer. A completely new kind of warehousing might emerge. Instead of keeping a large stock of spare parts at any time, items would only be printed on demand. The time and number of items could be precisely controlled and expensive ordering processes would be eliminated. "We send the drawings of the spare part to our subsidiaries in Thailand or Brazil, our colleagues print the component via 3D printing and we do not need to transport it by ship across the ocean for weeks," says Dr Beumer.

Augmented reality saves travel time and costs

It will neither be necessary to send qualified service technicians overseas for weeks. The following scenario is quite conceivable: The responsible employees on site are equipped with 3D glasses. They focus on the object with their mobile device. Through auto-ID characteristics on the logistic element, e.g. a conveyor, and an app specially developed for this purpose, information on this element can be displayed, such as circuit diagrams, maintenance instructions or pin assignments. The required data is displayed on the live image of the camera of the device. The technicians look at the defective part and can immediately call up all related manuals or goods in stock. Every process step is displayed. In the event of very complex processes, they could, for example, call a colleague at the company location and solve the problem together with them via live stream.

BEUMER Group already uses tablets successfully at several airports that operate its baggage handling systems. This includes Singapore Changi Airport. As one of the main hubs for Southeast Asia, this airport is known to be very progressive and passenger-friendly. The baggage handling system was developed and integrated by BEUMER Group. The system supplier is exclusively responsible for ensuring trouble-free operation, optimum maintenance and therefore the long-term coordination of the baggage handling systems. The Customer Support employees provide 24/7 operation at the baggage control rooms and necessary preventive maintenance to ensure continuous system availability and best performance.

Actively shaping progress instead of trying to keep up with it

You cannot stop progress. The question is who is driving it. Similar to the automotive industry, which is challenged by electric mobility and deals with the issue of who is going to develop and manufacture the vehicles and, above all, the drives in future, the intralogistics companies will soon be challenged by competitors who are not only from their own sector. Today they are Apple, Google and Facebook, also in this sector – and, in the case of BEUMER Group, even Spotify. The system supplier's product range does not include music, but its sortation systems were used for sorting or distributing CDs for the music industry. With the streaming services becoming more popular and CD production and sales significantly decreasing, this industry no longer needs sortation systems. "This was only a small niche sector, but it may also happen with any other of our industries," fears Dr Beumer. "With our systems, we equip the baggage handling area of airports all over the world. However, there are service providers who pick up the baggage at the front door and take it directly to the destination. Passengers no longer have to take care themselves." The so-called 'Unicorn Club', i.e. start-ups whose assessed potential corresponds to billions, is steadily growing. Should suppliers like BEUMER Group wait until they are swept aside by these developments?

Developing disruptive models from within

Certainly not. As a family business, BEUMER Group has a responsibility for its employees and customers. This is why the system supplier responds to these major changes and opted for fostering disruptive ideas by founding its own start-ups: "We have two spin-off companies which we have started to complement our existing innovation department," explains Dr Beumer. "They develop so-called minimum viable products, that is, prototypes that feature minimum equipment, whose market potential is checked until they have reached market readiness."

The BEUMER start-up BG.evolution is located in Dortmund in the immediate vicinity of the innovation center Digital.Hub Logistics. Here, companies and researchers work together to design the logistics for digital business models. Developments include, for example, an app enabling users to keep an eye on the current status of the machinery connected to their system via their smart phones or tablets.

Furthermore, BG.challenge was founded in Berlin. Here, the focus is on developing new business models which may disrupt existing business models from outside. BG.challenge offers start-up support for young entrepreneurs. "This helps us get ready for the future and puts us in a great position for the digital age," says Dr Beumer.

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