Germany’s Logistics Sector: Transcending the “German Angst” and Conquering the Next Five Decades

Physics still apply for Germany

This is an interesting statement to make about the country that produced the likes of Einstein, Plank and Hertz. But it comes as no surprise to most people that time only moves in one direction and that’s forward.Looking at less obvious ideas, Einstein’s theory of special relativity revealed, among other things, that events that happen at the same time for one observer could happen at different times for another.Could it be that this idea also applies to the current German way of thinking and doing things? Could it be a sort of socio-economic special relativity?Of course not.And this idea would probably make you feel a bit funny to think it but it makes for an interesting introduction. But the fact remains that Germany is increasingly lagging behind hugely important market trends in the area of digitalisation.An example revealed by a Reuters investigation piece is the family engineering firm Zemmler Sibenlagen where until March 2018 still generated piles of paperwork and hours of manual checks for processing arriving goods.Their digitalisation efforts have paid off. Later that year, using a specially designed tablet, they managed to cut the time needed to only a fraction. Part of the credit, according to the firm’s founder, goes to a government scheme that helped with “taking us through a psychological barrier.”

Ghosts of the past

This “German Angst” was deemed to be surprisingly absent in 2009 by Roger Cohen writing in the Süddeutsche Zeitung magazine, as Germans acted in a carefree manner as the worst economic situation since the Great Depression unfolded. While their mood during the last economic crisis was uncharacteristic, it still greatly influenced business decisions for the next decade. The heightened carefulness of businesses as they navigated the effects of this crisis, coupled with a later exceptional economic growth has brought us to this moment. A moment where everyone begins to feel not just the hints of another economic downturn but an unpreparedness to face an inevitable digital future.The same Reuters article identifies a critical problem to Germany’s digitalisation efforts: a lack of broadband internet network. A representative of the BVMW Mittlestand association of small and mid-size firms stated that she has sometimes been met with laughter when proposing digitalisation to outside firms because poor internet speeds means that “digital business models cannot be implemented, plain and simple.”Through the “Digital Together” government-backed scheme, more Mittelstands have started to make steps into the future of work but it’s still moving slowly. This lack of focus towards digitalisation is also partly fuelled by confidence inspired by consistent economic growth.The thing is, it’s not going to last forever without investing into the future and that’s clearly a highly digital one.In fact, the latest numbers regarding the German economy aren’t great. In the context of mounting world economic tensions and the prospect of a no-deal Brexit, the German economy contracted by 0.1% in the second quarter of 2019. Mounting evidence suggests the third quarter will be no different, bringing with it the prospect of a recession.The logistics sector will clearly be affected by these changes. The question is: will this sector be prepared to thrive under tougher economic conditions?We believe the answer can be yes. But it comes with a number of prerequisites.

1. Mindset change

There’s a good reason the startup scene in Berlin is so vibrant and growing exponentially every year. In part it’s about the Berliners’ different approach than the stereotypical German: more open-minded, adventurous and communicative.While broad characterisations can be helpful to have a general idea about what could be the best approach moving forward, it doesn’t offer a tangible way to implement that into our own lives.Thus, a concrete starting point is to be more aware of the difference between a fixed and a growth mindset. The highly acclaimed researcher and Professor of Psychology at Stanford University, Carol Dweck, has worked to promote this concept.A fixed mindset is represented by the belief that people’s qualities are fixed traits that can’t be changed. In fact, they can and by adopting a growth mindset you’ll be more prepared to tackle the challenges of a digital future with confidence in your abilities to adapt and grow. Inspiring this into your work colleagues and employees would be the next directly linked step.

2. The best time to plant a tree is 50 years ago

The second best time is now.Starting your journey towards digitalisation doesn’t have to be radical (though it should be in some cases). You can plant the seeds today. These could be smaller projects that tackle a very specific business area that has low chances of negatively impacting your core business. Once it’s done, based on an evaluation of impact, you can decide the next areas to focus on.This comes with other challenges, though. Choosing the right technological partner that can help you on this journey can be tough. To address this, you have a number of options:

  • We’ve created a guide that you can use as a starting point for your search. Click here to get it.
  • Join one of the many professional organisations for the Logistics industry and find out about the experience of others. We’re part of the Bundesvereiningung Logistik (BVL). We’ll be joining this year’s Deutscher Logistik-Kongress so we can tell you success stories from the clients we’re helping.
  • Ask around your own network. It might be that others that you know have already started this journey.

The important part is to start now.

3. Acknowledge that the world is changing faster

Once you understand that speed and complexity will be at the core of tomorrow’s business environment, you’ll no longer afford not to invest in digitalisation.Those companies that manage to effectively leverage technology as a competitive advantage are the ones that will thrive. Even today, it’s increasingly difficult to do it in-house. Some of the reasons are the lack of local talent, extremely specialised knowledge in areas such as Machine Learning and AI, Computer Vision, Big Data, Internet of Things, and even organisational culture that is unresponsive to this new way of doing things.Of course, not every business needs to leverage today’s cutting-edge technology in order to see great improvements to their operational excellence. We’ve seen in our work many cases where simple, elegant digital solutions have raised the level of competitiveness of businesses.But it all starts with acknowledging the need to adapt and starting now. Everything else should follow. And with a growth mindset you’ll be able to learn and improve everything. Just how your clients and customers expect.

Let’s talk in Berlin

Our colleague Botond Gagyi, Leiter strategische Partnerschaften, will be present at the Deutscher Logistik-Kongress this year, between the 23rd-25th of October.He’s eager to listen to what have been your experiences around digitalisation and can provide recommendations based on many years of experience working for Technological Partners of German Mittelstand companies.You can find him on Xing or LinkedIn if you’d like to schedule a talk. Or directly call him at: +49(0)170 48 53 770 Sources:

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