Collaborative Logistics - Why logistics comes last in digitization

Frederic Krahforst

Founder & Managing Director of TradeLink


  1. Complexity as an obstacle to digitization
  2. Working together in partnership: #collaborativelogistics
  3. Practical example: the furniture industry
  4. Demonstrable measurable success

Automation in Sites, efficient transport utilization, complete transparency through IoT tracking across all transports, through to digital, paperless coordination around all deliveries. We in the logistics industry all have a clear picture of how logistics is evolving with digitalization.

But the reality still looks different: Logistics is the industry laggard in terms of digitization. The digitization index of the German Federal Ministry of Economics and Climate Protection even shows that digitization in the logistics industry has been declining since 2020. So despite the precise vision of the future, we are heading in the wrong direction, toward "analogization".

Watch now: The digital future of our logistics - #collaborativelogistics

E-mail, telephone and fax still account for 80 percent of the coordination methods relating to deliveries. The other 20 percent is made up of various digitization measures, and new processes are meeting with a great deal of resistance from delivery partners such as suppliers and carriers. As a result, we are encountering dissatisfied personnel across the board in the industry. No wonder, because the staff has to pay for the inefficient processes in the form of overtime and chaotic processes in day-to-day business.

So we know exactly where we need to start. And yet our industry is the furthest away from the goal of digitization. The question arises as to why this is so.

A comparison with other sectors clearly shows how far logistics is lagging behind in terms of digitization. (Source: Digitization Index 2021, Federal Ministry for Economic Affairs and Climate Protection)

Complexity as an obstacle to digitization

Without a doubt, logistics is one of the most complex corporate functions. On average, it has to reconcile 120 different supply partners. These include the company's own customers, suppliers, its own or third-party freight forwarders, and even 3 PLs. But that's not all, because logistics also has important interfaces within the company with purchasing, production, sales and, of course, supply chain management and transport management.  

So if we want to integrate a new, digital process , we have to consider all these stakeholders in the process. This is not new. In the past, problems were analyzed, identified and then formulated into requirements for supply partners and all stakeholders #topdown.

The result was the implementation of a new tool, which created new hurdles rather than incentives for the supply partners. This one-sided optimization meets with resistance from all partners, after all, behind them in turn is a network of an average of 120 companies.

Because we in logistics are dependent on all our partners and larger digitization projects do not work alone, we are currently bringing up the rear in digitization. The goal is moving further and further away.

The good news, there is a solution.

Working in partnership: #collborativelogistics

Together, we should establish simple, digital processes that offer added value for all links in the supply chain. This is the only way we can master digitization. In our experience, this type of genuine collaboration promises not only the highest rate of adaptation of a new process, but also maximum effectiveness overall. We call this Collaborative Logistics.

At TradeLink, we embody this collaborative approach and have created the simplest and most effective form of delivery coordination around truck deliveries. As a TradeLink customer, staff and logistics real estate productivity is increased by up to 30 percent, while at the same time your employee satisfaction increases.

For our customers, this means full transparency and visibility over all goods movements right through to procurement. In this way, we reduce the costs for manual reconciliation, waiting times, demurrage, and overtime by over 90 percent.  

For our customers' delivery partners, collaborative collaboration means maximum simplicity, i.e. software that is accepted by all delivery partners due to its collaborative approach and intuitive handling and also creates added value for you. Delivery partners benefit with access to delivery information and status, and all sides reduce their administrative overhead through effective automation.

Practical example: the furniture industry

The fragmented furniture industry in the German-speaking region generates an estimated 20 billion euros in sales per year, consists of approximately 8000 companies from production and trade, and moves around 10 million truck deliveries annually.

The complexity within logistics is illustrated by the example of Steinpol, an exclusive furniture manufacturer for upholstered furniture with 8 production sites and around 3000 employees. As a supplier, Steinpol's logistics team announced makes almost 5000 deliveries a month to its customers at its own outbound . 80 percent of these deliveries are coordinated by e-mail. In addition, Steinpol has to use more than 20 notification portals for its customers, some of which are specially designed by the customers.  

For Steinpol, this situation means highly complex route optimization with up to 120 minutes of processing time for a single delivery reconciliation. This type of manual, one-way delivery coordination currently ties up a team of 20 people. Let's be honest with ourselves: Steinpol is the perfect example of shifting the problems of an inefficient delivery process from the customer to their delivery partner.

Steinpol is one of the suppliers of our customer Hofmeister, who invited all 130 suppliers to TradeLink within a very short time and now actively uses the tool for announcement and collaboration. The fascinating thing about this example is that Steinpol, as a supplier, proactively raised its voice about how easy and valuable a partnership exchange via TradeLink is.

That's how logistics manager Jürgen Höwner approached us on behalf of his team:

"With TradeLink, Avis-process is so easy & transparent. We would like all our customers to work with TradeLink" - Jürgen Höwner, Logistics Manager Steinpol

On the other hand, TradeLink customer Hofmeister is happy because he has convinced all suppliers and carriers in no time and has digitized and automated his delivery coordination:

"It's a super win-win situation. Simple coordination, less downtime and much better logistics control" - Sezer Özkökkaya, Logistics Manager Hofmeister.

So you can see that #collaborativelogistics offers added value for all sides, resulting in a high level of acceptance in the transport network.  

Demonstrable measurable success

Still not convinced? McKinsey & Company recently conducted a study. It contrasted companies that continuously improve their coordination processes in partnership and measured them against companies that rely on island solutions. Companies that take the partnership approach are typically 10 percent more profitable.

Especially in times of cost savings, there is no more exciting and topical subject than profitability. So instead of bringing up the topic of cost increases in the upcoming year-end meetings, you can use them to talk about process optimization that increases added value for all sides. Why not call it Collaborative Logistics?

About the author

Frederic Krahforst is an entrepreneur and has been fascinated by the daily challenges in logistics since 2019. Since then, he has been developing TradeLink, a radical new platform for supply chain collaboration. Previously, he founded companies in anti-money laundering, AI and user rights management, led the data strategy at ProSiebenSat.1 Media SE and started his career in banking. He studied business administration, artificial intelligence and information security.



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