11 Sep INTERVIEW: PROF. J.C. Fransoo – DINALOG
Interview with J.C. Fransoo, Professor of Operations Management and Logistics
Professor J.C. Fransoo is Professor of Operations Management and Logistics in the School of Industrial Engineering at Eindhoven University of Technology. In 2009 he co-founded Dinalog (the Dutch Institute for Advanced Logistics), which aims to make the Netherlands the best logistics centre in the world by 2020. Holland FinTech talked with Professor Fransoo about the challenges involved in meeting this goal.
- Logistics is one of the most important sectors in the Netherlands, worth 55 billion euros a year and providing 813,000 jobs. What would you say are the main challenges it faces to remain competitive in Europe and globally?
Competition in Europe is the main driver, as logistics is regionally bound as a function. Actually, competition in terms of the logistics industry is mostly with Belgium and Germany. What is critical is that the infrastructure remains up to date. Especially the ICT infrastructure need to develop faster, both in terms of hardware (fiber) and software (open access to data). Further, what is critical is the labor force. Logistics is rapidly becoming, like many other sectors, a high-tech business and tech talent is very scarce and needs to be enticed to join an exciting career in logistics.
- One of Dinalog’s focus areas is supply chain finance. How do supply chain finances in the Netherlands compare with global practices, both in terms of the technology and the uptake of these kinds of services?
Technology itself is not local, as this is IT. I believe in technologically there are not many limitations. It appears that initially the traditional finance institutions like banks were in the lead – think of ING less than a decade ago.
However, fintechs are faster in developing new services and applications, so in the product offering they are getting in the lead. In terms of update, I think in particular the logistics sector is quite slow. This might be for a good reason, as regular credit is very cheap and service providers may not be inclined to join a solution where they could get locked in.
Especially the top 20-30 or so privately owned logistics service provider in the Netherlands are financially quite healthy and value their (financial) independence. It may actually work if they would start offering this type of supply chain finance service to their suppliers.
In terms of manufacturers, good examples of supply chain finance can be found at a company like ASML that is really strategic in reducing supply risk by deploying supply chain finance mechanisms. Unfortunately many of the other OEMs / consumer good companies are not that strategic and are merely looking at cleaning up their balance sheet. I think this is shortsighted and harmful to the supply chain in the long term.
- What do you think are the most promising digital innovations in supply chain management emerging now? Who do they stand to benefit?
This is probably the one-million-dollar question. There are so many technologies now developing, and many are experimenting with new technologies such as robots, 3D printing, internet of things, artificial intelligence, blockchain, etc. I am not sure which ones are going to make the difference in the supply chain. I do believe that many are over-hyped.
Within the next few years, I believe robotization is going to have the biggest impact, with robots becoming very affordable and very flexible due to technology breakthroughs. This is going to change the configuration of supply chains, both in manufacturing, sourcing, and distribution structures.
- Soon you will leave TU Eindhoven to take up the position of Dean of Research at Kühne Logistics University (KLU) in Hamburg, Germany. What directions do you expect your research to take? Is research on supply chains in Germany similar to that conducted in the Netherlands, or are there a different set of concerns?
Research only has one criterion: global excellence. In that sense, I do not expect a large change in my personal research agenda. I will continue to target relevant topics with big impact in the region (the Netherlands or Germany being more or less the same), such as my recent work on demurrage and detention, and on risk management in chemical supply chains.
Further, I will continue to strengthen and further develop my research activities with global impact, like my work on sustainability in supply chains (including the risks associated with the upcoming global water crisis) and on nanoretailing (small mom and pop stores in developing economies) and nanofarming (smallholder farmers’ access to markets), to make also a large social and societal impact in other parts of the world.
- Finally, if you had a research centre with unlimited resources and complete freedom to investigate supply chain issues in Europe, what kind of research agenda would you develop?
If you know such an environment, please let me know, because unfortunately those type of environments don’t exist. Getting research funding and tailoring this to what some policy makers think is important is unfortunately true across the globe.
However, if I would have such an opportunity, I would further extend my research on logistics and supply chains in developing economies. Poorly (academically) understood and poorly (practically) managed supply chain and logistics systems in the developing world have a major impact on slower-than-needed economic growth and on very unequal wealth distribution. For instance, the poorest people pay more for their food than the middle class because of poor logistics in many countries.
Of course your question refers to Europe, but I am convinced this has a major impact on Europe, as the social consequences of this leads to effects like the migration crises that we have been seeing in Europe.
We need to make countries and economic systems in Africa more competitive to be able to continue our comfortable way of life in Europe, and good logistics is a key part of the answer. This is academically interesting because the supply chain and logistics systems in developing countries are fundamentally different (and more complex) than the systems we have in Europe. This requires extensive research work.