Sustainable Supply Chain

Marcell Vollmer on Innovating Supply Chain Management for a Sustainable Future

May 22, 2023 Tom Raftery / Marcell Vollmer Season 1 Episode 320
Sustainable Supply Chain
Marcell Vollmer on Innovating Supply Chain Management for a Sustainable Future
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Show Notes Transcript

Hello everyone, welcome to another exciting episode of the Digital Supply Chain podcast. In this episode, we dive deep into the future of supply chains with the brilliant Marcell Vollmer, CEO of Prospitalia Group.

We explore a host of topics, from the role of artificial intelligence (AI) and machine learning (ML) in enhancing supply chain processes, to how autonomous vehicles and drones might be key players in the logistics and supply chain space. We discuss about real-life applications of these technologies and how they've been tested around the world in places like California, Pittsburgh, and Phoenix.

We touch on sustainability issues as well, especially how the electrification of transportation impacts our climate and our supply chains. Get ready to learn how the trend of electrifying transport, including drones and electric trucks, is a promising step towards cleaner air, less noise pollution, and reduced climate emissions.

Marcell shares insightful perspectives on globalization and the necessity to distribute manufacturing while maintaining strong international connections. We delve into the inevitable reality of a world post-oil, and how renewable energies like solar and wind power may shape our supply chains.

You won't want to miss our exchange on potential future technologies that could impact supply chains, like blockchain, and the path to a more sustainable, efficient, and interconnected world of commerce.

We wrapped up our conversation with Marcell's views on how we need to prepare the world for significant change and how supply chains will be central to this transformation.

I hope you enjoy this enlightening conversation as much as I did. Don't forget to connect with Marcell on LinkedIn or via his Twitter handle @MVollmer1. As always, let's keep the conversation going about building sustainab

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Marcell Vollmer:

Global trade will continue to grow, but we will also see on the other side, it will be shift a little bit, uh, looking into how to regionalize, how to have also, many suppliers, or dual supplier strategy at least to ensure that the dependency is not too high in the case of a crisis, which can happen every time

Tom Raftery:

Good morning, good afternoon, or good evening, wherever you are in the world. This is the Digital Supply Chain podcast, the number one podcast focusing on the digitization of supply chain, and I'm your host, Tom Raftery. Hi everyone, and welcome to episode 320 of the Digital Supply Chain podcast. My name is Tom Raftery and I'm excited to be here with you today sharing the latest insights and trends in supply chain. Before we kick off today's show, I want to take a moment to express my gratitude to all of our amazing supporters. Your support has been instrumental in keeping this podcast going, and I'm truly grateful to each and every one of you. If you're not already a supporter, I'd like to encourage you to consider joining our community of like-minded individuals who are passionate about supply chain. Supporting the podcast is easy and affordable. With options starting as low as just three euros or dollars a month, which is less than the cost of a cup of coffee, but your support will make a huge difference in keeping the show going strong. To become a supporter, simply click on the support link in the show notes of this or any episode. Or simply visit tiny url.com/dsc pod. Now with me on the show today, I have my special guest, Marcell. Marcell, welcome back to the podcast. You've been on the podcast before, but it's been a while. So how have you been and what are you up to?

Marcell Vollmer:

Hi Tom, and hello everyone. It's a great pleasure being back here. And yeah, indeed it has been a while, but you see all what's happened in between. So we had a pandemic, uh, we have war in Europe in the meantime, so yes, a lot happening also, uh, right, right now, but, but great being back here and thanks for having me.

Tom Raftery:

And give a quick introduction, Marcell, for people who may not, may not have come across you before, who are you and what do you do?

Marcell Vollmer:

My name is Marcell Vollmer and uh, I'm currently CEO at a private equity, owned Coop in the, healthcare procurement, um, business. Before that, I was, um, uh, 15 years at DHL and 14 years at SAP as the longest time. And that, by the way, I also where the gray hair, comes from. I was also, um, um, Chief Procurement Officer at SAP looked really into, everything related to what SAP is purchasing. Moving on also integrating, some acquisitions like Ariba, Fieldglass, Concur. I did this before on the DHL side as well as when SAP really started with Business Objects and Sybase, I was integration lead. And I moved on then, um, as Chief Operating Officer after my own as C P O, integrating the acquired companies in the cloud business group, as well as also then helping clients to define their IT strategy in the best way by becoming a Chief Digital Officer, which was, and, uh, um, fantastic opportunity to, uh, progress my, my career. I decided to leave in 2019 SAP, to join a startup, uh, Celonis market leader for process analytics, process mining. And, um, continued as partner outline and director at at BCG previous to my, current role. And my focus was all the time basically looking, into, the reorganization, restructuring, leading in-house consulting organizations, as well as also helping clients, um, with, a special focus on procurement supply chain.

Tom Raftery:

Okay. Okay. And you know, as you've mentioned, since you have been on there, we've, we've had some interesting times between pandemics and wars in Europe and these kind of things. How have, in your mind, how have they impacted supply chains?

Marcell Vollmer:

Oh I think it was really um by the way, just one single ship, uh, the Ever Given. The ship which got stuck in the Suez Canal, can bring the global trade between Europe and Asia to a standstill. It continued in the pandemic when Shanghai was closed and by that also significant impact on global supply chains. And now, since more than one year, we see we have a war here in Europe, the Ukraine-Russian Russian War, and by that also we learned, wow. Um, We have huge impact, on energy cost, impacting now our production processes, manufacturing. On the other side also, we, we learned a lot about logistics, uh, what is needed and how we can also become more resilient because if we are so fragile on, on the supply chain side, basically we are very much dependent also on a small number of suppliers. And if they are in a different, um, In a different place in the world, like in Asia, then it, can be tough um mm-hmm when one harbour in Shanghai gets closed, and by that you are no longer getting new supplies. And of course you have customers you need to continue your business. You need to run your operations. And therefore, this also opened a little bit the eyes about, uh, what we need to do on risk management. It opens the eyes also on how we basically need to define our supply base. I will not say, by the way, is that globalization is definitely not. Out of the 100 trillion, what we have as global G D P, that is roughly the number last year. And about, 20% is global trade. What we, what we have. And I'm very confident. And also, uh, the latest studies I have seen BCG, for example, confirming that global trade will continue to grow, but we will also see on the other side, it will be shift a little bit, uh, looking into how to regionalize, how to have also, many suppliers, um, or dual supplier strategy at least to ensure that the dependency is not too high in the case of a crisis, which can happen every time. We know the Black Swan events or we have seen what this means, and basically by that, uh, we really need to become more resilient and need to be a little bit more diverse also on the structure, how we set up our supply chains in the future. That's what I have learned. What I see also what clients are doing when I talk to them.

Tom Raftery:

Yeah, moving very much from having been supply chains where, you know, it's, it's kind of linear into supply webs. I want to think where, you know, it's more of a, an ecosystem of suppliers rather than individual suppliers in individual places.

Marcell Vollmer:

Yes. Ab absolutely. Um, I couldn't agree more on, On your assessment and basically that's also, what, drives a lot of discussions right now, um, on supply chain management as well as procurement logistics on how to really define this and how to really prepare best, uh, for the future. Recent study, from CEOs um, Um, is confirming that, that basically now the two priorities are, which is not a big surprise, it's number one is gross. Number two is also the margins, the profit, what the company needs to do. And basically both is impacting directly, uh, supply chain and procurement.

Tom Raftery:

Yeah, yeah, yeah. In terms of future trends, I mean, what implications do you see this having for supply chains as we, as we move forward?

Marcell Vollmer:

So I definitely see on the one side that the digitalization, is still continuing and, and more investments in technology are on its way. Um, Of course we could now use all the buzzwords with ai, machine learning, uh, ChatGPT and and so on. When you look at supply chain management, I think it is, it is absolutely important that you have realtime data and realtime information about the where are your products, and what is currently happening with all the logistics, the inbound logistics, what you get from your suppliers, as well as outbound, what you deliver to your customers. You need to master the data and you definitely need to have full transparency on, on, on that. By that we see that, 5G technology RfID, automated warehouse solutions, all of that is definitely and currently an investment area what, what I see right now. But there's much more, I mentioned the risk management, the resilience, what, what is important, by the way it's directly linked onto the one side, also to the data. On the other side, it is also to think or rethink about the strategy. How do you really want do your category management? Who are other suppliers you wanna do business with? Uh, on the one side, of course, it's a cost side, which is key. But there's another element, and I would like to add this to risk management, as number three, which is sustainability. We see that CO2 is becoming a price, and by that also, you need to think about, what is it exactly what it costs you. By considering that the CO2 price will increase, in the future. And this is also another aspect by, by rethinking a little bit the approach, on how to best define your supply base and looking into the risk management, looking into the realtime data, what you need, but also looking in into the CO2 footprint. And the reason for that is pretty simple. It is on the one side regulation, so, you need to stick to that Supply Chain Act is one example, but they are much more regulations currently on its way or already mandatory, um, in Europe. And by that also they have a certain global, implication. On the other side, and I think it's equally important, is, uh, that the customers are asking more and more, to get information about what's really the CO2 footprint, what is really the sustainability, um, what you as a company are trying to ensure that you also take care of the planet. I'm a strong believer that there's only one planet and we need to take care of it. And by that also we need to be, um, we need, to look into the way how we use the resources and, um, to ensure that as the Overshoot Day, we all know basically the resources we are taking from Earth compared to what Earth is creating or producing within year, that, that we re-balance this by also considering that, um, lot of countries are not as developed as, as the first world countries. And by that there's also, um, a certain development need. And it is really a challenge to, to balance all of that. I, I don't wanna. Uh, go too much into politics, but basically also in supply chain. You simply need to include this in your strategic thinking and the way how you wanna define it. So digitalization, the risk management, resilience, and sustainability are the top three priorities. What, what I see, right now, and, uh, happy to discuss this, with you. Tom, what, what's your perspective on that? Uh, if I may turn it out and ask you a question on that.

Tom Raftery:

Sure, sure. Yeah. No, it's, it's interesting that you asked, because I gave a keynote recently on the five major trends in supply chain, and one of the things that I specifically left out as a trend was digitization. And I left it out not because I don't think it's important, but because I think it is ubiquitous, it is everywhere. So I had five trends listed, but digitization was part of each of those five. It didn't need to be its own in its own point because every one of the other points required companies to digitize so that they could be part of it. AI was one of them, for example, but you need to have digitized to be able to, you know, roll out AI or take advantage of AI. You know, another one was climate and sustainability. Same thing. You cannot be reporting your emissions or measuring your emissions unless you have digitized your processes in, in order to allow you to enable to do that. It was, it was an interesting exercise because it, you know, almost all the decks you see looking and talking about the future of supply chain. Specifically say digitization. But I say that's a given at this point. And you know, because it's part of everything else. And, uh,

Marcell Vollmer:

Tom I, sorry.

Tom Raftery:

No, no. Go on.

Marcell Vollmer:

I, I have a little bit to, to laugh, um, right now because I'm, I'm working in healthcare industry and of course you are a futurist and, um, I couldn't agree more on what you're saying, that let's no longer talk about digitalization. It needs to be part of everything, what we are doing. So I couldn't agree more on the overall statement. I got grounded by joining the healthcare industry by really learning and not about how hospitals, I mean for example, now the relationship with suppliers. And I can tell you. Uh, the Telefax machine, um, sold the same form or Generation Z. This is where you write paper and something on it, and basically machine making a picture out of that and transferring this to another place. It's not a picture with an iPhone. It's a much different technology going by land line, on a, on a phone. Um, this is really a standard way in processing purchase orders. And, and, and when you think about that, um, so. I would love to, uh, follow your vision and, and your vision maybe apart about, hey, digitalization, everything needs to be now really part of your dna. I couldn't agree more this the need and this will be the future. But on the other side, um, when you are really realistic and there's lots of industries, what I learned also in my own as partner director at BCG when I had a chance to talk to, uh, hundreds of clients. Um, so, um, not everyone is already on that level. Still have a need now, uh, transitioning their ERP systems, introducing certain technologies. And by the way, we're also building all the interfaces and mining the different technologies and really brings us in one way for the company in a setup that they really can operate it and hopefully also that it generates value ads. So, uh, just to add this, uh, and, and sorry, I didn't want to interrupt you Tom.

Tom Raftery:

No, no, no, no. It's fine. It's fine. Just giving, giving me reality check. That's good. Much appreciated. Not everyone is as far ahead as I am in my thinking, so Fine. Fine.. In, in terms of the, the climate and sustainability, I did say as well that obviously you need to have digital processes to, to measure and report your, your carbon footprint. Uh, as well though, you need to be able to look at the carbon footprint of your suppliers because, and we, we talked about this in the prep for this call. It's the, the majority of your emissions aren't from your own processes, but they're from your suppliers. Um, you know, anywhere from, depending on the industry, anywhere from 50 to 90% of your carbon footprint typically comes from your supply chain. So, You, you, you know, we're, we're gonna start to see a world where people are interrogating their suppliers and saying, what's the carbon footprint implications for me of using your service or purchasing your products, or whatever it might be. And so this is going to become ubiquitous, as you rightly said, down to regulations, down to, customer demands. But, Particularly reg regulations. I mean, we have lots of regulations now coming out about the requirements to report carbon footprints, and you're gonna start to see a lot of organizations, mandated from their suppliers that their suppliers and, and a lot of purchase decisions made, not just on the financial implications of the purchase, but also the CO2 implications. And even the two are now combined because as you rightly said, there's a tax or there's a price now on carbon, which is going up. It had been, you know, pretty low and pretty flat for a long time. But in the last two, three years, it's started to really increase. Um, which is, which is I think is a good thing. People are starting to finally pay for the pollution that it causes. Uh, the other thing that's happening here in Europe is the rollout of the carbon border adjustment mechanism. The carbon border tax as it's colloquially known. And that means that, you know, goods that are coming into Europe from outside, if they don't have a carbon price on them, will have a carbon price put on them before they come into Europe to kind of level the playing field. For European companies who have to pay that carbon price so that they, they're not com they're not on an uneven playing field with people from, or with companies who are operating outside of Europe. So that's gonna be a big one as well for organizations to watch out for. And it means, it, I think it's fair for particularly for European companies that this happens and also that that money is ring fenced and goes into sustainability projects.

Marcell Vollmer:

Awesome. Thanks for sharing, Tom. That's really, really insightful and um, definitely also requires a lot of data, what you need to get from your suppliers. You mentioned the carbon footprint. How do you really get the data? It's not only the logistics, where your goods come from also suppliers of your suppliers and their suppliers. What goes into the products and where, where does raw material come from? Where is the production taking place? And, and, and that's really something also where you need to define ways. How do you really measure that? How do you really ensure that you have at the end, a fair, calculation about what is now the co2, what is in your products? And also when you, when you wanna define measures to reduce your CO2 footprint, what is exactly what you, what you can attack, um, and, and also how can you really prove that this is something, um, where you create impact and hopefully reduce, the emissions, what you, create by new production as well as including new distribution, new logistics.

Tom Raftery:

Hmm. Yeah. Yeah. Uh, there's a lot of hype as well, Marcell, at the moment around AI. Is that breaking into the healthcare sector as well, or not yet? Are you still using faxes or the equivalent for ai?

Marcell Vollmer:

Oh, I think we need to be fair on the healthcare side and, um, everything stays, what I said about the purchasing process, uh, the connect with supply chain, and yes, the fax machines are still reality right now. On the other side. And that's a good thing because we are all human beings and we might need, um, help, uh, from, from, uh, doctor at a certain point in time. Hopefully not. But um, um, when we get it, we definitely wanna ensure that latest technology is used. And by that it is also great seeing that the advancement of artificial intelligence, machine learning, robotics is really very far already. Breast cancer probably is, or the recognition of breast cancer is probably one of the best examples where machine learning algorithm can do this in a better ways than a doctor can do it based on the millions of examples, what the machines have access to getting the pictures and really, being very certain identifying. And of course it is only to support basically what the doctor does. It has not to replace a doctor. It's to augment. So therefore, I like more of the term also bionic to integrate the technology sides, the machines, with us as, as humans. And of course, a doctor is a great example because there are so many data points what you simply can't analyze by yourself anymore and therefore artificial intelligence I think is very much in use in the healthcare industry. Another great example is also Da Vinci. This is robotics. What you, can use for an intervention. So basically during a surgery an expert on that, a professional with most experience could be on the other side of the world and do an intervention, in an OR on the other side, by basically, using the, the machine and the robotics he has access to. And, this is another great example where we see what the technology can do. There's much more when you go for medical trials and really, uh, the pharmaceutical products, by the way, the covid. Um, vaccination is a great example also. How fast technology can really help us to get a vaccination. I think it is absolutely record time what happened. Yeah, so basically about one year, um, after the outbreak of Covid that we had access to, to vaccination. I would never have expected that, uh, Biontech, by the way, one of the German companies is, uh, very fine that Pfizer, uh, they, they globally distributed it, but they, they are more, um, companies out there. But, but great example also, um, how to use the technology and how um, we, as people can, can benefit from, from that. So that's the good news we have. The technology side on the one side, um, on the other side, uh, I think for the internal processes, there are still a catch up, what needs to be done. It hopefully will be done in the near future as that fax machines are no longer needed.

Tom Raftery:

Yeah. Yeah, yeah, yeah. Good, good, good. And I mean, we're seeing a lot as well in the kind of autonomy space. Autonomous vehicles, not so much on highways, but for example, in the likes of ports, in places where, and in mines as well, places where you've bounded geographies, where it's easy for autonomous vehicles to get around. In warehouses is another place where you have little autonomous robots going around. And I saw a fascinating one where, there are drones being used for deliveries in, I wanna think it was Rwanda. There's a company called Zipline and they are doing drone deliveries. They have two bases in Rwanda, and they're doing deliveries of medical equipment and supplies to remote hospitals all over the country. And the two bases they have, they're able to cover the entire country with the, the drones and the drones are fully autonomous. And they take off about one every minute or one every 90 seconds, and they're flying and dropping deliveries to all these different hospitals throughout the country. It's absolutely fascinating. There's a great video about it on, on YouTube. Zipline is the name of the country now, the company. That's a special use case. But they're now the same company are now looking at using similar type drones for delivering goods in more industrialized countries. Like, I mean, you are in Germany, I'm in Spain, the us, places like that. So it's gonna be interesting to see if, if that becomes a reality. There's obviously challenges to making deliveries with drones, but it's, they've already proven their, their, their use case in Rwanda with the medical supplies to hospitals. So that's something that could very well be something coming down the line as well, no?

Marcell Vollmer:

Absolutely, and, and I think drones are a great example and Africa probably is also a great place where we have seen, by the way, lots of innovations. The mobile business, for example, Africa skipped the, the computers, um, and, and went right away to, to mobile. And I think, uh, Uh, when you look on, on the density in, in lots of rural areas in, in Africa, uh, drones might be a great way also in providing, everything what is needed, in a short time. I think we see lots of examples already, and you mentioned warehouses. By the way, even, even hospitals have autonomous, carts uh, to provide the supply between the warehouse and the OR's, and that's something under the ground, what you see very often. Containers, basically, going from, from, from the warehouse to the OR and the other way around, which is already helping. And, and, and definitely there's no other traffic. Uh, People can walk by there, but basically, um, they clearly ask, um, to, to stay on the side, um, in a, in a marked area. So not to interfere with the autonomous vehicles. And that's probably also a great way where we will see the drones on the one side, what you mentioned with Rwanda, autonomous cars underground, without any traffic where you really can, can see the benefits using the technology and also where you don't have the complexity either way. What happens when you now, uh, combine autonomous vehicles, for example, with human drivers and, uh, we all know not everyone is, um, always rational. And of course, uh, not every machine can can identify everything, um, exactly at this point in time, even after millions of kilometers. And kind of funny seeing the Google cars, um, in California driving around or in Pittsburgh where you have also Uber, uh, testing. And Arizona is another place, Phoenix, uh, where you seize the autonomous vehicles already tested. I see, that's definitely great use cases and we will see much more of that to really help us also to ensure that supplies needed, get everywhere where they are needed in time. And, um, I look forward to that. I'm not sure if drones will become a reality in crowded cities like New York or even here. I'm in Frankfort, Germany right now. I doubt a little bit that we will see all the drone traffic here, to do this. But definitely we need to, um, and we need to have different ways by also not getting every, um, every package delivered separately. Sometimes I get three packages a day, um, which doesn't make any sense. And on the logistic side is definitely not the most sustainable way in, in doing it, either.

Tom Raftery:

Yeah. Yeah, yeah, yeah, yeah. Absolutely. And I mean, we are alluding to it and dancing around it, but another trend we're seeing as well is the whole electrification of transportation, because all these drones, they're electric. A lot of the, Uh, little robots that are going around in factories and hospitals. They're electric as well. They're, they're not using internal combustion engines. So the whole shift to the electrification of transportation, it hits on climate and sustainability and it hits on, um, uh, Well, it's mostly on climate and sustainability I guess, but it's a big trend as well we're starting to see it's, it's happening in road transport. It's here in most rail. Uh, it's starting to happen in aviation and it's going to happen. It's, it's happening in some shipping as well, but long term, it's going to happen in shipping as well. So almost all transportation is gonna shift to electric and long haul trucks, as well as another one with the launch of the Tesla Semi. Man, have a couple of them. Volvo, have a couple of electric trucks as well. So, you know, and, and that's, that's for long haul, but also for local deliveries as well. We're gonna start to see almost all haulage go to electrification and, and or electric. And that's gonna make a huge difference in terms of A) air quality, B), noise pollution, and C) reduction in climate emissions. So all good news there, I think.

Marcell Vollmer:

Awesome. I couldn't agree more because the end, we are running out of oil, um, in the, in the future and therefore how to best replace it. I think electric vehicles create way doing that and hopefully also using renewables energies, um, in the future to ensure that we really can, use sunlight, solar, wind, power up, uh, water, geothermic, uh, whatever probably the also fusion in, um, might become a reality, so we will see. And um, we definitely need to prepare the world for, for change. And supply chain will be heavily impacted by that because, um, as I mentioned, uh, globalization will not come to stop. I think it makes definitely sense also to distribute manufacturing. Um, and ensures that we are very well connected. Even, you know, we have some challenges. We see trade wars from time to time coming. But at the end we need also to think about was Three's best way, connecting also different countries and, um, electric vehicles, um, are definitely one way to do it. Um, to ensure, that we reduce, the the emissions, and also prepare ourselves for the time after oil.

Tom Raftery:

Yeah. Yeah. Yeah. We're coming towards the end of the podcast now, Marcel, is there any question I haven't asked that you wish I had or any topic we've not touched on that you think it's important for people to be aware of?

Marcell Vollmer:

Oh, Tom, it's so great, uh, talking with you and I think we could, uh, definitely go for much more topics now. Uh, we didn't touch blockchain for example. What will the future be on that? Things like that. But I think. Um, we should leave it at, at this point in time and probably we have a chance in the future to connect. I definitely love talking with you and hopefully have a chance also to go a little bit deeper on the one or the other element with in supply chain sustainability because we most have the same passion for, for these topics. And, uh, no thanks really for having me in this, um, uh, for this podcast. Much appreciated.

Tom Raftery:

Thanks, Marcel. And if people would like to know more about yourself or any of the topics we touched on today, where would you have me direct them?

Marcell Vollmer:

So best is to reach out on LinkedIn, um, Marcell Vollmer, as well as on my Twitter handle @MVollmer1. That's my Twitter handle. And yeah, looking forward, also staying in touch with you. And feel free to follow me and, uh, as much as I can. I definitely also comment and, uh, respond to any queries, what I, what I get. I definitely love connecting with people and also exchanging some sorts because this is at the end what makes us stronger and where we also can ensure that we get new ideas from.

Tom Raftery:

Fantastic. Great. Marcell, that's been amazing. Thanks a million for coming on the podcast today.

Marcell Vollmer:

You're very welcome, Tom. Was a great pleasure as always.

Tom Raftery:

Okay, we've come to the end of the show. Thanks everyone for listening. If you'd like to know more about digital supply chains, simply drop me an email to TomRaftery@outlook.com If you like the show, please don't forget to click Follow on it in your podcast application of choice to be sure to get new episodes as soon as they're published Also, please don't forget to rate and review the podcast. It really does help new people to find a show. Thanks, catch you all next time.

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