“Logistics is sexy. It's a cool industry to work in. The same goes for innovation - it's also very sexy. You just have to find a way to make it happen. Don't give up. It sometimes takes some time and patience.”
In this episode, we are joined by Dr. Kerstin Höfle, Vice President R&D and Product Management at Körber Supply Chain. Together with her team, Kerstin is responsible for the automation portfolio, driving knowledge creation and implementing new technologies and solution approaches at Körber Supply Chain.
Among other things, we dive into the topic of sustainability: What does sustainability mean for the logistics industry? Where does it come into play? Why are collaborations so important to successfully implement this topic? And what is it about the special challenge of the "last mile"? We also address the question of how attractive the logistics industry is perceived to be today and what needs to be done to bring the right talent on board. Curious to find out more? Then tune in.
Below you will find the full transcript for the episode.
Conquering sustainability in the supply chain
Chris: Hi, and welcome back to Innovation Rockstars. My name is Chris Mühlroth, and in this episode, I am excited to welcome Dr. Kerstin Höfle from the global Körber Supply Chain. As Vice President of R&D and product management, Kerstin is responsible for the product portfolio and its future viability. Very interesting. And I'm very much looking forward to this conversation. Thanks a lot for joining.
Kerstin: Thanks for having me, Chris. I am excited to be here with you today.
Chris: All right. As always, let’s start with a short 60 seconds introduction sprint about you, your career, and your current role at Körber supply chain. For the next 60 seconds, the stage is all yours. Let's go!
Kerstin: Yeah, thank you so much. Yeah, I work at Körber Supply Chain in the business area of automation. So to make it very short and simple, we are a globally acting system integrator for intralogistics solutions. And we have our own portfolio of software and hardware, and that's what I'm basically responsible for in my role. I'm in charge of our metrics organization for R&D and product management. And of course, that is what we are talking about today; innovation is an integral part of it. So a little bit to myself, logistics has a kind of red line across my CV. So the first touchpoint I had was at the University of Bremen, where I studied economics and engineering. Then I moved to Switzerland and did my Ph.D. at the chair of logistics management in St. Gallen. And then, I joined the industry. I joined Swisslog in 2014. I stayed there for four years before I joined Körber in 2018. And that's now where I am, so I know the industry pretty well. I will say I'm looking forward to discussing a little bit with you on innovation today.
Chris: That's great. So logistics from many different angles. Sounds interesting. Okay, next, I will give you three sentence starters, and I would like you to complete those sentence starters. Number one: To me, sustainability means…
Kerstin: It means a lot these days. It's definitely a topic we will not come around, and we may not come around in the future, and it will also shape innovation in all areas, not only in my area; it's not only about the product, it will occur everywhere, but of course, especially relevant for me how it will shape the development of new products and solutions of our customers.
Chris: All right. And this is kind of connected to sentence starter number two: “Innovation is…”
Kerstin: Not easy! Especially if we plan for it. But of course, it's a joy if we make it or if it just happens, right? And it's more than talking about new products, or services. So innovation is really a big field. So it's not an easy answer within one sentence.
Chris: Yeah, I 100% agree. It's great that you gave this answer. All right. Finally, number three: One thing that really annoys me is…
Kerstin: First thing that comes into my mind when you ask me this, even though I might be incorrect, is that if we are not questioning what we are doing. This is really, really important, especially if we talk about innovation, right? We have to ask what we are doing, and I think it limits innovativeness if we are not constantly questioning things and also ourselves.
“We have to ask what we are doing, and I think it limits innovativeness if we are not constantly questioning things and also ourselves.”
Chris: Yeah, that's interesting. Just a few weeks ago, I watched an interesting video on YouTube. And one thing in that video stated that one of the hardest things in innovation is to say “no” and stop doing something. I guess it’s easy to start new things, projects and so on but harder to control or see its futility, if necessary. Would you agree?
Kerstin: Yes. Because we admit failure, and you can read it everywhere, that's part of an innovation culture also, right? We have a failure culture. But still, I think it's not that easy to say no, and let a topic go even if it might be a very passionate topic, right? That's usually what innovation is about and how it happens because someone has a passion for something or an idea. And that's something I fully agree with.
Trends and sustainability in global supply chain
Chris: So now let's start talking about recent trends, logistics, and maybe global supply chains. I'd be interested to understand from your point of view; what would you say about the health of our global supply chains today? I know it's kind of a loaded question.
Kerstin: Yeah. It is a big question, but I don't think that I even have to convey a personal opinion here, because everybody these days can observe that our global supply chains are not healthy, right? We can even feel in our private lives that global supply chains are not fit when we talk about traveling. We talk about the delivery of things right, and of course, this hits the industry much more if we talk about the availability of chips or electronic products, steel, aluminum, sometimes even wood bar; of course, also the availability of the transportation mode, for example. So see, traffic is delayed, and the harbors are running full. So it is an entirely new situation nobody had expected it that way.
Chris: Right. Yeah, that's kind of true. And you have pressure on this side, right? At the same time, there is also a lot of change going on, and obviously, the speed of change is accelerating. There are new technologies enabling sustainability, as we discussed before, and this is going to increase; then you know, you have topics such as energy efficiency and cold chains, or there are trends I just read on your website on dark warehouses, for example, right? So warehouses without lights and without people, paper-free warehouses and so on. So if you were to look at what's happening right now, what are some of the hottest trends on your radar?
Kerstin: Yeah, I think you already named a few and everything is developing around sustainability and energy efficiency. That's a super hot topic. We could have observed this energy efficiency, green warehousing a couple of years back; actually, when I started with the industry, that was around 2014 and was already a hot topic, but nobody was willing to pay in at that day. But now, unfortunately, given the global crisis and the rise in energy prices, this has become a hot topic, a real topic. And I also think the awareness and society about sustainability topics have another dimension right now. So this is driving a lot, and I think we will drive innovation, as I said in the beginning, a lot in the future. What is also a big trend or, let's say, a driver is a labor shortage. And this is actually what is driving automation a lot. Right? It's not that we want to replace human workers; there are simply no workers we can find for warehouses or even producing companies. So this is driving automation, not only in intralogistics, but I would say in all kinds of industries. And from a pure technology perspective it’s everything around artificial intelligence and machine learning. I mean, it's been a buzzword, we could already say a few years, but I think we're getting there, finding relevant use cases. So these ideas are the significant trends and drivers.
“Automation is definitely one of the trends impacting logistics. It's not that we want to replace human workers; there are simply no workers we can find for warehouses or even producing companies.”
Chris: I think so too. That's with most of the emerging technologies until you reach a plateau of productivity. It just takes some time. And before that, there is a lot of uncertainty or doubt or thought fear, uncertainty, and doubt right, later on, you have some fear of missing out, and in between, you have a peak of inflated expectations. So it's kind of always the same thing. And specifically in the sustainability area, my feeling, at least, is that sustainability initiatives have been focused on the manufacturing side quite a bit. But now, obviously, the spotlight is also on, as you said before, warehouse transportation energy efficiency in those areas. So do you have an idea of how sustainability should be addressed in those areas going forward?
Kerstin: I think what is key, and I believe this is not the awareness that has already been created in the industry, is that sustainability initiatives have to focus on the entire supply chain. You said okay, maybe it started a bit with manufacturing, of course, and if we look at the energy consumption in manufacturing also when we produce products, yes, that's relevant, and also our products that are used with the customers consume a certain amount of energy. So the energy consumption of whatever is always relevant. But of course, it's to optimize your entire supply chain, e.g., how to measure greenhouse gas emissions across the entire supply chain. So there are a lot of initiatives ongoing on the greenhouse gas protocol. And, of course, this is also something we're taking into consideration, how to measure and how to aggregate it basically because we will also want to avoid double counting. And also the question of how can we show that we make an impact because I think that's making the difference? It's not just like doing one report after the other. It's because we want to make the world a better place to live in the end…
Chris: …which is a large mission. So you have kind of many pressure points, right? You have the emerging technologies, the trends that are going on, the desperate need for more sustainability, more energy efficiency, and all that stuff. So obviously, supply chain challenges have become increasingly more complex. Of course, you have even more, you know, suppliers and distribution channels and ways how to transport stuff. Then you have rising consumer expectations, specifically on sustainability also, packaging, regarding the end consumer, and so on. So, what do you think, given where logistics are today: do you think that's enough to be ready for tomorrow? Or, if you say no, what do we most urgently need to innovate? I mean, we have to start somewhere, right?
“An area where we urgently need innovation to happen is the last mile because there are changed expectations from the end consumer. And we have enormous challenges on the final mile delivery.”
Kerstin: Exactly. And I think yes, of course, it depends on who you're talking to. But you mentioned an interesting stakeholder, and that's the end consumer. And I think the awareness of the end consumer has changed dramatically, because in the past, so let us talk about 20 years ago, how often did you get a parcel at home? Rarely - right? So you were not really in touch with logistics and supply chains. And now, with the crisis, you have a very different kind of awareness. So I think one area where we really need to innovate is the last mile because the expectations of the end consumer have changed. And we have huge challenges and delivery in the last mile, right? I mean, it's not like you get a parcel delivered once a day, but you have five different service providers ringing your doorbell, right? And then you have the congestion in city centers. So a lot of people are discussing these issues of last-mile logistics or urban logistics, you name it. But I think that's where the potential is and where we don't have THE one solution, but we have a lot of cool ideas, but they're all kind of isolated like little islands, and I'm looking forward to seeing the big picture, and some kind of initiative to move this forward. But I think it will also be a different kind of stakeholder group, like an ecosystem because no one is going to be able to solve this on their own.
Chris: That's interesting because, at the same time, we also have a similar last part discussion in passenger transportation. And at least these days in 2022, you can see all these e-scooters in the city - maybe broken or still perfectly working fine on standing and lying down on the streets. I have seen a lot of drunk people using them all the time after 2 am or something - well, that's under discussion - but it's the same discussion on last-mile transportation, right? So how do you get from the main railway station to your destination or home? And, interestingly, logistics is kind of discussing this at the same time, which makes a lot of sense because that's something that has not been too prominent in the past, but it's urgent right now.
Kerstin: Yeah, and I think that was an excellent example of innovation in passenger transportation. I mean, when did it start with these e-scooters… a year before Corona? And when using it, we had to install like five different apps for five different types of e-scooters. But in the end, the end consumer just wants to have a proper kind of transportation. Just recently, I visited Hamburg and the city of Hamburg or the public transportation organization of Hamburg; they have released an app where you can control all means of transportation with only that one app. Meaning taxis, public transportation, e-scooters, and so on. So obviously, someone is orchestrating what is happening. I think that could be something like an ecosystem for the last mile. Just someone who is orchestrating all the parcel delivery companies, which nobody is doing so far.
Chris: Interesting. Okay. And then now, before we dive deeper into some, you know, more innovation talk in logistics, what I would love to do, Kerstin, is actually to play a quick game. The game is called "Either-Or." I'll give you two options, and you'll tell me which one you'll go for and why. Number one: What would you say that in a few years from now, we'll have those dark warehouses or that warehouses will never be ready to operate without any humans, and why?
Kerstin: Even though I work for an automation company, I think warehouses will never be ready to automate 100% without humans. Why? I think we could compare it maybe with a limit of a function in math, right? So we're always getting closer and closer and closer, but I don't believe that we will be there 100%, but very close in some areas.
Chris: So there is no black or white. Okay, interesting. Okay, number two: What do you enjoy more? Summertime or wintertime, and why?
Kerstin: Ah, that's not an easy one. There are so many great aspects of both. But I would say the summer… just the snow is missing because I love the mountains. So just for skiing, the rest of the winter with all the icy streets, I would not miss.
Chris: And finally, number three: What do you think is more effective for innovation? Is it either a market pull or is it a technology push?
Kerstin: Effective for innovation is probably a technology push. But if I have a realistic picture of it and look at our industry and our geographical market, I would say it's a market pull. If I look on, what's happening, and how are we capable of innovating? The market is a bit crazy if you look at the tech market and the investments of standards and startups. But that's mainly in the US or China, where you have this considerable risk capital, which is different in Europe. So there's kind of a risk averseness on the markets we're acting it, or at least in Europe. So what is realistic in the logistics industry… I think its market has pulled, unfortunately - at least if you are aiming for REAL innovation. I was just listening to another podcast this morning, and they did a catch-up of the LogiMat (International Trade Show for Intralogistics Solutions and Process Management) where they were also sayings that they currently don’t see the real innovation in logistics or the next big thing, and I think that's true. But if the next big thing were to happen, it would be a technology push. But it's challenging to really search for.
Exploring the role of innovation in logistics
Chris: And it's very capital intensive, as you already said, right? This is an ongoing debate, at least for maybe a few decades not even in the technology space, but in business, to be honest. You know what, what's right for really driving the next big wave of innovation or significant innovation. And historically, it's often been connected to technology. I mean, you had the internet on the computers, and nobody was asking for the internet. Nobody was asking for things like that and which turned out to be great technology. Nobody was asking for artificial intelligence. Nobody was asking per se for a smartphone, for example, right? So things happened, and great technology emerged. But then, it took many years to grind it into something useful for the masses. So this is an interesting debate. So you would rather opt for a technology push if we say the next big wave for innovation. Do I get this right?
Kerstin: Yes, I'm totally with you. I mean, of course, many companies are striving for the next big thing, but I think that is the real challenge that I don't know how to plan for, right? I mean, otherwise, there will be a billionaire already. That will also be pretty cool.
Chris: Yeah, that would be interesting (laughter). So how do you keep eyes and ears open, you know, for understanding at least what's happening on the market, for example, concerning the market pull, or even then new technologies or new applications? For technologies, how do you cover that aspect?
Kerstin: I think that's pretty hands-on. What is super important is that we have to stay in touch with the market and the customers. I mean we were just talking about the market pull, and that's what it's all about, right? What do our customers need and the end? We are solving problems no matter what kind of problems, right, and then technology is the enabler, so if we understand the problem, we're searching for the right technologies. And then, of course, we use the traditional way: we read, we do research, and we use social media, there are a lot of very great trend reports. We do podcasts like today, and there are a lot of cool podcast sessions you can listen to. So there’s almost too much information already on the market, but this is how we do it. Yeah. But I think the most important thing is to be very close to the market, the customer, and their actual problems.
“It is very important to stay in touch with the market and with our customers to know what they ultimately want. We solve problems - whatever they may be. And technology is the enabler. So if we understand the problem, we'll look for the right technologies.”
Chris: So, stay involved and also stay engaged in the different communities and networks, you would say? So that's, I guess, a good recommendation. And did the way how you do this changes post and prior to COVID? Did something change concerning innovation management or how you keep ears and eyes open in order to identify new needs or new technologies?
Kerstin: Well, of course, the way of interacting, especially with the customer, had to change because we were not allowed to travel anymore. But I would say that the foundation of close customer relations did not change. We all experienced that when working remotely which works pretty well, right? So I would not say that it fundamentally changed. Maybe it became even more prominent. And therefore, everybody became more aware of how important it is to stay close to the customer. And that it takes maybe a different approach to doing it the digital way.
Chris: Fully, I agree. And how does this now connect to your innovation management or your technology and innovation management process at Körber Supply Chan? Can you maybe describe what it looks like, what elements are vital to it, and how this connects to identifying emerging needs and emerging technologies?
“It's our job to be internally connected and to make sure that we can bring together all these different sources that are available to us. You can have super structured processes, but at the end of the day it's about person-to-person communication.”
Kerstin: Well, if you look at what the innovation management process looks like at Körber, I have to admit that it's not that structured. Of course, it depends on what we mean by innovation, doesn't it? If we talk about market pull, then it's pretty simple. Obviously, sales are closest to the market and closest to the customer. So it's our job to be internally networked and to make sure that we can bring together all these different sources that are available to us from sales colleagues, but of course, also from colleagues across the company who see or hear something interesting. I think that's the big challenge, to bring that together. And I mean, you can have super structured processes, but at the end of the day, it's about person-to-person communication. Just call the people or make them aware please contact me if you see something right. I think that's very crucial to it. And then I mean, there are these traditional processes, how this kind of funnel processes, how you prioritize specific trends and translate them into new products and ideas. Of course, we can call it innovation if we want. I call it product development. Nowadays, everyone is asking for digital solutions, like “Here is the data”, but then there is the question, “What do we do with the data?”. So you need someone with a really great idea. And then it is super important to get it back and link it back to the organization. Because in the end, we have to sell mature products to our customers that are safe, reliable, and secure.
Chris: Yeah. And there is this expectation, of course, right, especially for your clients. Okay. And how is that with partners? Do you regularly involve partners along the supply chain? Did you already open up doing open innovation? How do you manage that?
“There are so many new companies coming out with new features or new cool stuff. How could we do all that ourselves? So identifying the most promising ideas and partnering is definitely the way forward for me, and that's what we've started to do in my department.”
Kerstin: I think it's becoming more and more important because what we were talking about earlier, sustainability or the last mile, we're not just looking at one part of the supply chain. Basically, we can talk about an ecosystem. A strong vision of Körber is the ecosystem approach. Not only in terms of our current offering and really bundling it into an ecosystem like a one-stop shop approach. I also think in terms of new product development or innovation that we cannot have everything in-house. We were just talking about this - how the technology market is evolving - and there are so many new companies coming out with new features or new cool stuff. How could we do all that ourselves? So identifying the most promising ideas and partnering is definitely the way forward for me, and that's what we've started to do in my department.
Chris: Do you have any team members explicitly delegated to that task? Or is this something everybody is picking up depending on where he or she is getting the information from?
Kerstin: A couple of years back, we started with a kind of scouting approach. We were very dedicated to a specific technology or concrete industry, but it was like a disconnected tool, I would say, because you need a problem to solve, right? As I said earlier, it's like, we see a challenge or problem that we want to solve, and then we are looking for the right technology that could help Körber solving that problem. So it's rather that we have a challenge and a task first, and then the teams working on this are watching out for whom or what might fit.
Chris: Yeah, that's super interesting. And just before, you said, “It's oftentimes a one-on-one communication”. Kind of like “Call me if you find something interesting”. So how does this work with the number of employees you actually have? Are there any good ways, based on your experience how to drive collaboration or at least transparency for this very early, let’s call it “nuggets of gold” or something even, in the innovation process?
Kerstin: Well, that's my personal experience, not only at Körber but also in my previous jobs. It's not too formal, and it's not too process-driven because it's like you said: If you think about the number of employees, you need a former process because how do you manage all that correctly? But it's not like you have these 1000 calls every day, right? Of course, you could take a very proactive approach and say, "Okay, this is our challenge. Send us all your ideas", and you might get a lot. But if you just have it on the basis of "Here we are, if you have an idea, you can call", and there are even board members in the Körber Group who offer that - then you really think twice about calling. So I think it's much easier if you don't over-formalize the process.
Chris: Totally agree. Because if you need to wait until a decision board comes together, maybe once a quarter to discuss something that needs to be approved prior to passing any gate to whatsoever. So that can actually slow things down quite a bit, right?
Kerstin: Totally. And I think it's very hard to find the right balance, because of course in a company you should follow a certain structure, but you have to allow that kind of freedom. And sometimes, even I feel like, "I'm working in a corporation, and I've got to be super formal and process-driven". But why? Who defined that it has to be that way?
Chris: Exactly. Just humans have to find it's one redefining it. Absolutely. And what is your perspective on talent? I mean, you know, logistics is at the heart of the economy, correct? It’s the engine and the connection that brings stuff from A to B, that makes many things happen in a globalized world. And a lot of cool stuff is happening. You shared some interesting insights, technologies, trends, and projects or innovations that are to come up soon. I also had a great discussion with DB Schenker on what they're doing. So there are quite a few things happening, and for a long time, it was just insanely attractive for especially tech talent to join the large tech companies right. So how does talent acquisition work at Körber? Do you know a good in-stream on new talent? Is it challenging? Are they even interested in logistics these days? What is your perspective?
Kerstin: Yes, unfortunately, the industry has not been very sexy in the past, right? I think the recent developments are helping a little bit, that there is an awareness of the industry. I mean, how would you know? When I left school, I knew nothing about logistics because we were not in touch with it, right? At least not on a personal or private basis. So there's a different awareness of the industry as such, and I think that's what leaders need to do: promote the industry and show that it's sexy and there's lots of cool new technology. So I think there are a lot of jobs for tech talent, too, right? Especially if we look at everything around data analytics and data science. There's so much that we can optimize. So I think this is going in the right direction. But as I said, leaders need to show the way a little bit and be brave and support young talent through podcasts like this and raise awareness. And I think the industry is really changing. I've been in the industry for a couple of years now. So basically 15 years in academia, and a lot has changed. When I started and went to the first logistics conferences when I was a student, it was so conservative and antiquated - it still is sometimes - but a lot has changed. And we can see it! There is a new young generation - I mean, we have this cool podcast now, right? If you think back just five years. No way. So I think it's becoming a really attractive industry.
“What leaders have to do is: promote the industry and show that it is sexy and there's a lot of cool new technology. So I think also for tech talents there are a lot of jobs. Especially if we look at everything around data analytics and data science.”
Chris: That's great to hear. So now let's imagine there is kind of an ambitious and driven student about to enter the real world, right? So coming from academia now, there is as said a lot of ambition, a lot of energy. What advice would you give to him or her, and what advice should he or she ignore?
Kerstin: Yeah. Let's start with my advice. You said getting close to the industry, and I would even go one step further. Get close to operations. Especially if you finish kind of general management studies, you often end up in a very super interesting strategy job or so. All right - so did I. But then, at least from the business perspective, you are sometimes kind of disconnected. There is still another real word in the industry, right? Who's making sales? Who is earning the money? The strategy is not earning the money…firsthand at least. And so also to make a step aside and really get to know the business, right? So I've chosen the difficult way, I would say, but I made it, and I can definitely advise being very close to operations to really understand and then to decide which way to go. And the second part of your question, which advice to ignore? I think there's no advice to ignore. Because I mean, everybody who's giving you advice as an idea behind. So you should at least think about what he or she meant with it. And then you can say, okay, not relevant to me, but at least make up your mind around it. Right, but there's not the one and only one where I would say “That was a shitty advice”. So every piece of advice brought me one step further in the end. Even though I disagree with some of them, they made me think and say, “Okay, if I disagree, how would I do it differently?”.
The future of Körber Supply Chain
Chris: That's fair and a very interesting perspective. And with that, we are already near the end of this episode. So Kerstin, let's try to summarize everything we had: Trends, sustainability, innovation in logistics, and so on. What would be the three key takeaways that you would want listeners to take away from this episode?
Kerstin: So first, logistics are sexy. It's a cool industry to work for. So is innovation. That’s the second one. It’s also very sexy. You just need to find a way to realize it. Just don't give up; it takes some time and patience sometimes. And collaboration also across company borders. So we have this ecosystem talk, and in my opinion, it will be key in the future, especially in innovation.
Chris: Okay. Thank you. Let's look a bit ahead. What can we expect from you shortly?
Kerstin: So if we stay with the business context, you can expect me to promote and talk about this industry. Raising awareness and bringing people together. And that is also what we do at Körber: We bring people together to develop great ideas. Because for that you need a good team. And I think that's also what we really stand for. And that will help us to bring even more cool solutions to the market soon.
Chris: Okay, that's great. And then, finally, I also need to ask you this signature question. When you reflect on your professional career, what would you say was your most significant Innovation Rockstar moment so far?
Kerstin: It was just recently when I realized that I have a team that is capable of innovating despite or even because of a missing process, right? So we could just recently prove that we can handle innovation and get something to market with a very hands-on-driven approach, and that was basically the most successful one.
Chris: Most successful one even! Wow! Alright, that's an awesome rockstar moment. Well, congratulations on this. And with this, we wrap up this episode already. Kerstin, it was a pleasure to listen to you. Thank you very much for being my guest.
Kerstin: Chris, thank you so much. It was a great pleasure too.
Chris: Alright, and to everybody listening or watching, if you liked the show, then leave us a rating or a review and share the podcast if you want to. And if you want to get in touch, simply send us a message at info@innovationrockstars.show. That's it. Thanks for your time, and see you in the next episode. Take care and bye-bye.
About the authors
Dr. Christian Mühlroth is the host of the Innovation Rockstars podcast and CEO of ITONICS. Dr. Kerstin Höfle is Vice President R&D and Product Management at Körber Supply Chain.
The Innovation Rockstars podcast is a production of ITONICS, provider of the world’s leading Operating System for Innovation. Do you also have an inspiring story to tell about innovation, foresight, strategy or growth? Then shoot us a note!
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