I interviewed Axel Herzhauser who discussed Innovation and Changes in Supply Chain.
Can you first provide a brief background of yourself?
Yeah, thank you, Dustin. My name is Axel Herzhauser. I've been in the supply chain industry for close to 20 years. Actually, I started my career back in 2008. Prior to that I was [inaudible 0:00:25] educated also in Germany and for a short while also in the United States. I started my career with a company called TransAm which is [inaudible 0:00:33] Group back in Germany around over land transportation and also contract logistics. Moved then into [inaudible 0:00:42], worked for Exel. Nowadays that would be DHL. I was there in the trade lane development, more on air freight and ocean freight, to be called Forward Logistics, moved by a German called Logwin into the Asian fashion consumer retail business to CVA in Hong Kong where I was overlooking the markets for Hong Kong, South China, and Taiwan. And later, I moved into Singapore, worked for companies like Ingram Micro where I heading their 3PL supply chain business. And in my latest role, also with Teleplan International. Teleplan is a reverse logistics after-market service provider, a bit of a niche product and a niche industry in the supply chain that we’ll be touching on a bit later on here.
My first question is can you talk about reverse logistics and the circular economy?
Yes, I sure can. And that's certainly a topic that I spend quite a bit of my time on at the moment or I have over the last few years. Reverse logistics is certainly a piece of the overall end-to-end supply chain which a lot of companies very often ignore. So when you go and google basically the supply chain, the reverse piece of very often neglected. Sometimes it's not mentioned. But in my point of view, it's a piece of the supply chain that is of extreme importance.
What we do at Teleplan now is basically look into products, basically, that have been sold, that have been in the consumer's hand, know what happens, basically, when these products reach the end of their lifecycle overall.
It's a very, very big topic overall where basically I think 10, 20 years back, companies were talking about recycling. I think it was a very big topic. But now it's really about supply chain sustainability of how is the circular economy taking this forward. Given a lot of the environmental regulations in, I would say, more mature markets like North America and Central and Western Europe, things have been set up by regulators, by governments, whereas in Asia, you only see this in a few markets. You see, unfortunately, I think, in Asia nowadays, still more than 20% of any products, basically, that are at the end of the lifecycle that go into landfill. That's an extremely high number whereas my understanding is that in Europe and North America, that is less than 4%.
There are great opportunities in this area overall simply because we have Asia basically still being the manufacturing hub of the world. We're looking into markets like China and India and also partly Southeast Asia. I think shortages of raw materials are certainly a challenge that we're facing right now.
As part of the circular economy, I think there should be a concept on how end-of-lifecycle products will be broken down into its raw materials for the actual reuse of raw materials overall. So what this means is, if you look into electronics, for example, Dustin, you want to look into harvesting precious metals, reusing them instead of basically putting them in the landfill. The actually reuse of precious metals — and we're talking here gold, silver. We're talking copper, basically. Everything that's needed in electronic manufacturing can be won out of this process of reverse logistics rather than basically looking into new sources overall.
It has a positive impact on the cost side because I think it's just simply a lot cheaper using harvested products that have been reused before. And most importantly, I think it's also a very positive impact on the environment which Asia is becoming more and more conscious about.
What about recent developments around blockchain?
Different topic but also an extremely exciting topic, I would say. So I think we've been reading a lot about blockchain, and the world has seen a lot about bitcoin. I don't want to talk about bitcoin in general, but if we look at what's happening around blockchain, I think this is going to, in my point of view, revolutionize the supply chain industry, not only supply chain by also, I would say, several other industries and markets.
Blockchain technology basically allows us now to replace middle men by implementing peer-to-peer systems. It increases processing speed and reduces cost overall.
What does that mean? It creates an information flow that is faster in the supply chain nowadays, and I think it also means that a number of players in the industry would probably have to rethink and reposition themselves as they're right now currently just a middle man. I'm looking into companies that are in freight forwarding, and I'm not saying that these companies will not be needed anymore. But these companies will have to adapt and will basically have to rethink their processes on where they're going to play within that supply chain.
A lot of the work that's being done there is basically very administrative, and I think there is documentation as one example. There is still nowadays in the supply chain, there is way too much paper that is being used and handled. So the digitalization of the supply chain has probably not enhanced as much as it should have and probably also as much as it has in other industries, maybe in finance, banking, and insurance.
We deal with a lot of paper that's very labor intensive, which makes the supply chain overall a rather expensive process. Blockchain technology is something that can really help to enhance this, standardize a certain process, create, basically, a data with very high integrity that can be basically allow us to move the digitalization of the supply chain a lot faster overall.
Do you have any final recommendations on this topic?
The final recommendation in my point of view is basically to get up to speed around these recent developments. We hear a lot about factors that are changing, the overall end-to-end supply chain. I talked about reverse logistics at the very beginning. I think it's a topic that I think a lot of companies and not only logistics providers, supply chain providers, but also many factors, retailers, it's a topic that everybody needs to look into.
When it comes to blockchain overall, I think it's certainly a topic that is being discussed at this point. If you go to forums, if you go to events, I think it's a topic that's very high on the agenda. But I think there is only very few people who actually really understand what blockchain is all about and what kind of impact blockchain is going to have on business nowadays and how it's going to transform the business on each and every company. We see more and more companies coming up basically creating platforms for companies as a solution overall. These companies, in my point of view, will have the opportunity to disrupt the supply chain industry, to some extent. And I think my recommendation would be really get up to speed, understand what this is about, and most importantly, understand what this actually means for your business and how, in your business, you can add value in the overall process. And I think there is room for everybody, but I think neglecting the topic is something which is not very wise to do.
Thanks, for sharing today, Axel.
Thank you very much, Dustin. Much appreciated.
About Axel Herzhauser
VP Commercial - Asia Pacific at Teleplan International