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“We need to rethink our optimisation principles”

Prof Johannes Fottner worked as an engineer in the economy for many years, before he accepted the Chair of Materials Handling, Material Flow and Logistics at the Technical University of Munich in 2016. In his research, he examines the technical and process-related aspects of logistics and supply chains in particular. The coronavirus crisis has revealed major deficits in supply chain management, Johannes Fottner explains in an interview. But, he says, the current situation is opening up plenty of opportunities – for the economy as well as for science.

 

What insights can you draw from the coronavirus crisis from a supply chain perspective?

We are undoubtedly experiencing an absolute state of emergency which no-one saw coming. Nonetheless, it’s important to note that – in the full knowledge that the greatest risk in supply chain management is the collapse of supply chains – the only optimisation goals in recent years were to reduce costs and inventories. We urgently need to consider whether such a fragile supply chain should really be our objective in all sectors – especially for pharmaceutical and medical products. Or alternatively, whether we can still ensure supply chains for strategically important goods.

Do we need to rethink globalisation?

This doesn’t mean that we have to entirely forego global sourcing or even roll back globalisation, but rather we should develop solutions to how regional basic supplies and strategic global distribution can interlink in a hybrid system. However, it does mean that we really ought to think about the experience of recent weeks and whether our approaches and optimisation principles are suitable for a system of distribution that is not only economically efficient, but also stable and robust.

What does Germany need for a robust economy?

In my opinion, the current crisis shows us that we are actually in a relatively good position – particularly economically speaking – compared to other countries. Areas that we could potentially improve are the prioritised optimisation goals I already mentioned. In recent years, we have been intensely focused on issues of “cost reduction” and “inventory reduction”. This was – and continues to be – absolutely right and appropriate in terms of (economically necessary) international competitiveness, albeit combined with a stronger focus on robustness. This can be implemented technically, organisationally or in terms of processes. But also for internationally procured, critical resources such as basic materials for pharmaceuticals, certain amounts of inventory also provide much-needed security. In other words, we primarily need a kind of hybrid system with different sources and inventory to fulfil this requirement for robustness.

What role does digitalisation play in this context?

Use of technology in everyday life can also help with automated processes in order to continue working with less at-risk staff in case of emergency. The robotics field is undoubtedly hugely important in this respect, especially in logistics. It’s also important to note here that the goal should not be a pure rationalisation and elimination of human labour, but an economically practical system with a high degree of robustness.

What contribution can science make in times of crisis like these?

Science has the task of identifying novel approaches and examining them for feasibility. Indeed, this can include technologies like modern robotic systems that act autonomously. But also processes and organisational forms are innovative and have to be intensively tested before implementation. Particularly in times of crisis, simulations can support swift, yet reasonably safeguarded implementation – and even make this possible in the first place.

Just like industry, science undoubtedly accepted the almost laboratory-like, perfect conditions that the global market had in recent decades, as a generally applicable framework. As has been shown, this is not always the case. As scientists, we can also help here by quickly responding and analysing the effects in the sense of lessons learned and correct for this.

The post “We need to rethink our optimisation principles” appeared first on Technical University of Munich – School of Management.

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