Mohan Murti

How Germany gets its logistics right

Mohan Murti | Updated on March 12, 2018 Published on September 19, 2011

Germany is a logistician's marvel. Rightly famous for its engineering brilliance, the country is where the world finds innovative brass-tacks solutions to satisfy its logistics needs.

This is where machinery gets its logic, where technical skill is combined with a quest for methodical efficiency. These virtues characterise German engineering across-the-board.

Logistics is one of the key pilasters of Germany's competitiveness, paving the way for added industrial value, the movement of goods and cooperation between companies. German logistics industry occupies the third position in the country's GDP — weighing just behind its international trade and the automotive sector.

The logistics sector employs about three million people and has an annual turnover of €200 billion, representing approximately 7 per cent of the gross domestic product.

The logistics sector also displays far-above-average growth. Around €15 billion is invested in logistics annually in Germany.

The European logistics market totals approximately €600 billion, and Germany has a massive 30 per cent market share. German logistics service providers enjoy a lofty international reputation. The German creativity, flexibility and know-how in the improvement of value-added processes are appreciated throughout the world.

German innovations in logistics — especially in telematics and navigation — are considered world-class.

There are several scientific institutes in Germany working on logistics innovations of the future. And, many universities and centres of excellence offer training and advance training programmes in logistics.

Engineering Intelligence

With a substantial volume of goods transported by road in India, traffic congestion is growing. But its costs due to delays are underestimated because official statistics do not take into account the intangible benefits of the remedial measures used to maintain supply-chain reliability.

In this context, numerous lessons can be learnt from the European, especially the German, experience. Aside from having a unique and the finest infrastructure in Europe, Germany also has the transportation infrastructure to exploit it.

The sheer density of the country's highway network is twice the EU average. And, conditions are constantly being improved. Through 2015, the German Government aims to spend an average of €15 billion a year on transportation infrastructure.

Altogether, Germany's highways, railways and inland waterways cover nearly 60,000 km. The German rail network alone encompasses 40,327 km. The country's inland waterways provide 7,450 km of navigable territory. And Germany's legendary road network covers 12,000 km.

Freight Villages

To maximise the efficiency of Germany's distribution infrastructure, Government agencies in cooperation with the logistics industry have set up “freight villages”. Known as GVZ or Güterverkehrszentren in German, these cargo support centres act as regional nodes with optimal access to long-haul networks and local delivery points. They also provide essential services such as Customs clearance, security and vehicle maintenance.

Speech-based picking

In many European warehouses of modern companies, picking from paper-based lists is history. Today, speech-based picking (Pick by Voice) is relied upon by those responsible for logistics centres.

With the introduction of this innovative technology, warehouse efficiency has increased dramatically. The complete process takes place in a continual speech input and output dialogue, which requires the employee to confirm every step with the system. Dealing with paper-based lists is rapidly becoming obsolete in Europe.

The demands being placed on European logisticians today are highest speed, highest reliability and highest quality. In the process, demand for time-critical express services such as international overnight shipment is rising.

Tracking system

For instance, in the European cut-flower business, freshness is everything. How long a load of flowers sits on the dock before being delivered to a cooled storage area can determine how much those flowers can fetch on the auction floor.

For that reason, radio frequency identification reader antennae installed at strategic locations are used to track carts, or trolleys, as they travel between the receiving dock and storage areas.

The system not only tracks the location of the trolleys, but also how long it takes the trolleys to get from the dock to a climate-controlled storage area.

Image-based Readers

In Europe, e-commerce is growing. The high volume and frequency of orders placed over the Internet, combined with a multitude of available products from retailers, have made automated scanning at logistics centres inevitable.

Most European retail distribution centres have meticulous stock control, which includes careful management of purchasing, shipping and warehouse inventory.

In all of Europe, it is logistics that underpins all global trade. By logistics, I'm referring to the art and science of moving something exactly to where it is needed at the time it needs to be there.

In the end, logistics done well means that sellers more efficiently connect with buyers. And, that means more profitability and growth opportunities.

With 8-9 per cent growth rates in India, the logistics requirements don't differ too markedly from logistics anywhere else in the world.

It is obvious that only with the political will can India create the infrastructure and logistics networks that can connect the 1.1 billion consumers to speed up the processes and reduce transaction costs.

(The author is former Europe Director, CII and lives in Cologne, Germany. >blfeedback@ thehindu.co.in)

Published on September 19, 2011
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