Interview with Daniel Balmer, Head of Transport Logistics Genossenschaft Migros Ostschweiz
Genossenschaft Migros Ostschweiz is a long-standing client of leogistics GmbH. Over the course of time, the retail company has already implemented many innovations. In this interview, Daniel Balmer, Head of Transport Logistics Migros Ostschweiz, talks about the special role of transport and site logistics at Migros.
Hello Mr. Balmer, thank you very much for the invitation! Could you please tell our readers briefly where we have met today?
Daniel Balmer (DB): We are in the transport headquarters of Migros Ostschweiz. On the one hand, this is the heart of our transport planning, but on the other hand, this is also where the ready-picked pallets – such as fruit, vegetables and flowers – but also pallets with food and non-food articles are prepared for loading. Dairy, convenience and meat pallets are also loaded at the Gossau site. We transport around 8,800 pallets per day and drive 20,000 kilometers in the region of eastern Switzerland.
How would you describe your role and career at Migros?
DB: I have now been in the profession for 41 years, 37 of them in this company. In the meantime, I have done almost everything you can do in logistics: classically from clerk, to project manager, to line responsibility, and always had very “cool tasks” to solve. For example, as head of intralogistics, I was allowed to introduce the fully automated picking systems. That was the reason why I stayed for 37 years in the end: because it was always very exciting and challenging.
My boss once said: “You are responsible for everything that has wheels. I gulped. When he added: “except for the shopping carts,” I was somewhat reassured. In other words, I had to build up expertise in all the transport networks, develop them digitally and also manage them.
Today, I am responsible for the entire transport logistics. Whenever the individual orders from the stores are combined into a pallet ready for shipment, my organization takes over this pallet, processes it, transports it to the stores and takes back empties. I am also still responsible for the rail business as well as the returnable container management of Migros Ostschweiz. In addition, waste disposal is also part of my responsibility.
Can you still remember how you got in touch with leogistics back then?
DB: We have been working together for a very long time, certainly five years. The first contact was at LogiMAT. We went around the software exhibition hall and rummaged through all the companies: Who offers what we are looking for? Then we were referred to leogistics, a company we didn’t know at the time. And then it happened as follows: You’re looking for a product, but you’re also looking for a provider that fits your own philosophy – in terms of style, approach, or simply in terms of people. Both have to fit. At a trade show, of course, every exhibitor says “We are the best, we have the most interesting product” – that’s natural, we do the same. But for us, it was a matter of finding out where there’s “meat on the bone,” as they say in Switzerland.
To find out, I took the opportunity to go to the leogistics Customer Day in Hamburg in summer 2017. I wasn’t just interested in what André Käber had to say in his presentation, for example. I was interested in talking to other customers during the breaks and asking: “Why do you choose leogistics? What do they do differently than the other providers?” I still have a lot of contacts from back then and we exchange ideas regularly. And then it worked out relatively quickly with leogistics. That’s how the contact came about.
Why did you choose leogistics Yard Management?
DB: The flexibility in process mapping was crucial for us. I have a clear idea of how I want to do “my” business in the future – but not in terms of functionality, but in terms of process. I always think and act from the process, I am a process person.
The process is in the foreground and, in my mind, IT must always adapt to the process. Very rarely, I tried to adapt the process to IT, but that usually went wrong. So I had to find a provider who would develop their software with me, with the features that I see as the basis. With leogistics, I understood that they would do this development together with me. You push each other forward. Some come from the technical side, I develop the process. For that, I needed someone who thinks and acts in the same way.
If we look back to the period when you realized that something was not running perfectly at your company: What challenges were you looking for a solution to?
DB: The challenge at that time was the following: We had a digital gap to plug. The intralogistics, i.e. the processes up to the ramp – we have mapped these digitally very well in SAP EWM. We handled transportation planning via the non-SAP system Cadis.
But in between, i.e. between EWM and Cadis, there was a hole, practically between site logistics and freight forwarding. On the one hand, there are the shippers who produce something, and then there are the forwarders who ship the goods around the world on behalf of the shipper. But the in-between, that didn’t exist! In intralogistics, they say, “That’s the freight forwarder’s job, not our issue.” The freight forwarder says, “Why should I develop software? I have to ship pallets to the stores!” That’s a source of tension. So we kept wondering, how can we close the gap? Finally, leogistics came up with three modules. One is Yard Management for the trucks, then leogistics Rail for all rail traffic, and at the same time we implemented SAP TM freight cost system with leogistics.
Site logistics is very important to Migros, isn’t it?
DB: I have always placed particular emphasis on supply chain visibility. We look at the process from the supplier to the store. We’ve been doing “ultra-fresh” for about 70 years now. I think we understand the business. It’s the people that make the business excellent. They are better than any software at many points because they can still put emotions, feelings and thoughts into it that a machine can’t do.
The stores are the driver here because they have to think about what the customer will buy and they have to offer that in top quality. There are forecasting tools for this, which we introduced very early on and are constantly developing. If the software predicts what the customer will buy tomorrow, then we have to think the whole process backwards from there – a classic PULL process. But because we are in the ultra-fresh business, there are exactly 24 hours between store order, supplier trigger and delivery to the stores. That’s damn short. We have further divided that into two 12-hour slots. So you have to know in 12 hours: “What does the customer want, when do they need it, when can the supplier deliver it? Then you add picking and delivery to the stores.” In this business, there is little room for waste and even less room for idle time. Everything has to be meticulously planned and timed.
And then there is suddenly a black hole in the on-site traffic, where all the threads come together! Obviously, that’s not an option at all. Yard Management is the central hub for all our supply chain planning and has “plugged” or in other words “eliminated” this digital gap.
The store says when it wants an item and in what quantity. On top of that, there’s the transportation time. From then on, the whole process has to be subordinate to that. The yard needs time to make the plans, the intralogistics needs time to stock the carrier, then the pallets have to be produced right on loading time, then the supplier has to place the goods receipt. That leaves you with damn little time.
Do you need a central operator control station in your process to coordinate all this on the factory floor?
DB: No, we don’t have a control station for the yard. The planning dictates what and when we transport to the stores. It dictates what gate you have to go to and what type of trailer you need. The system used to provide for a specific trailer. Then the on-site transport department had to search for the exact location of the trailer. Today, the system says, “At this gate, I need a trailer with 33 pallets at 11 p.m.” The leogistics Yard Management then takes over checking which trailer is available. But if the on-site transport department takes another suitable one, it doesn’t matter at all. And that is the big advantage.
We have implemented a dispatch center as the heart of the solution in the background, so to speak – but it works automatically! There is a shift supervisor who has overall responsibility. This person works himself, but has a second tablet and can manage certain jobs from there. But usually he doesn’t do that, because the system assigns the orders automatically. So the people work almost on the same level with the same responsibility and all have to manage the loading wave together.
How important was the human factor in the project?
DB: When you work in an operation that is busy around the clock almost 365 days a year, you always have departures, interfaces, vacation replacements, and above all shift changes, etc. That’s where information gets lost, that’s where it becomes inefficient, that’s where you can’t find the trailers or you put the wrong ones. Software is simply better because it has one big advantage: it doesn’t forget.
We wanted to simplify the process. Whenever new people joined, it became difficult. Or when shifts changed. An enormous amount of resources and time were lost. In addition, for a while we had problems finding people for on-site transport. I asked myself why that was, and realized that the problem was the increasing complexity in the yard.
That means drivers today feel more comfortable with their work orders on a tablet and work through them?
DB: Exactly, but it’s also the case that people know what the next job is, but they can do something different! There’s just one commitment: if they do something differently, they have to “tell” the system. That was a feature we developed together with leogistics:
With Yard Management, it’s like a navigation system: if I don’t know my way around, I’ll just follow the system’s suggestion. In this way, the system gives me security and I get to my destination! However, if you know better from a lot of experience, then do it that way, you just have to let the system know. This combination is what makes the software successful for us. These are clever functions and thus bring added value.
Thank you very much for the great interview, Mr. Balmer!