connection via continental Europe was established through collaboration with a German rail operator that provided priority rights on the German railways. Where rail is usually considered slow and inflexible compared to road transport, this solution worked because of the collaborative relationship, electronic surveillance through GPS, and constant telephone connection to the locomotive driver. Also, a system of temperature surveillance was established so that it became safe to transport fresh goods through a long distance.
Surprisingly, the time needed for the railway solution was shorter than for road transport.
Rail transport is more sustainable than road transport and further reduces congestion on roads thereby limiting its impacts on sensitive European nature. BringFrigo´s estimation of the reduction in CO2 emissions of this connection is 1.200 tons in 2007 and 2.600 tons in 2008 (Bring presentation for the EFFIE award, 2010).
This particular innovation case emphasises the environmental issue over economics; at least the solution is not cheaper than the more traditional road transport solution.
BringFrigo looks for opportunities to expand individual solutions to as many customers as possible and preferably to a ‘standardise’ service. Bring seeks to have environmental friendly logistics as part of their brand.
Bring has an overall goal of reducing CO2 emissions by 30 per cent by 2015. This is partly done by establishing close connections to individual customers in BringFrigo. The initial “setting the stage” phase is not formalised, as the company fear that this will restrict the necessary creativity. Customers presenting their challenges or problems mostly create ideas for innovative solutions. Sustainability is not a prominent topic at this time due to the economic crisis; however, the company anticipates that this will change in the future. As the current economic situation makes business highly volatile, innovation is not something that can be planned as the situation may change from day to day. “Clue gathering” is taking place on an on-going basis through telephone, mailings, and not at least, personal meetings every other month. Sometimes information through channels external to the relationship is obtained. In the “negotiation, clarifying, and reflection”
phase, sustainability is often not an issue brought forward by the customer. BringFrigo on the other hand is eager to do so because of its formal strategy that emphasises environmental sustainability. It is, however, a challenge to make employees aware of environmental sustainability polices. BringFrigo sees a trade-off between economic and environmental sustainability where priority is most often given to the first mentioned.
“Inter-organizational learning” is taking place specifically in relation to big customers.
Learning in general is considered important for developing future business both in relation to large and small customers.
Increased truck loads with Itella Logistics A/S (EFFIE runner-up 2010)
Itella Logistics A/S is a logistics service company with a presence in Finland, the Baltic States, Russia, Norway, Sweden, and Denmark. The services offered are customised logistics and supply chain solutions including contract logistics (www.itella.dk/logistics).
The company is owned by the Finnish Post (TT).
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The specific case in action is a customer relationship with a packaging company in Denmark. Itella offered a 100 per cent tailormade solution including national transport, warehousing at two facilities, and an IT system controlling the flow of goods and communication between LSP and customer. Itella posted employees at the customer´s facilities in order to secure efficient integration of the flows, so that the two parties together could find the best possible solutions exploiting the knowledge of both companies. Together they developed solutions that increased truck load utilisation, thereby reducing CO2 emissions. The expectation is that future innovative logistics solutions will emerge out of this close collaboration (Danmarks Transport-Tidende, 2009, week 49).
Itella Logistics as being a part of a state-owned company must adhere to regulations on sustainability, and these requirements are communicated via their website. Sustaianability is, according to Tveit et al (2011), considered as a prerequisite for doing business in the future, however, at present environmental sustainability is not the most prominent theme or order qualifier in daily business. Not at least due to the economic crisis, as economic sustainability is at the forefront of customer relations and sales. The postion of the firm is that the basic precondition for both environmental and social sustainability is economic sustainability. If that is not present, nothing else is. At the time of the interviews in the spring of 2011, sustaianbility was not integrated in the innovation setup of the company, as they were not yet ready to formalise such processes.
The innovation process of Itella largely followed the logistics innovation process model.
Setting the stage for logistics innovation is, for Itella, the creation of trust between themselves and the customer. In Itella’s understanding this is crucial due to the character of logistics as a service that cannot be evaluated before purchase. Customer clue gathering is done by informal conversations, but Itella employees are trained in asking the right questions to the customer. So despite the informal character of much of the dialogue with customer, the process is not random. More formal meetings with important customers are also arranged and information from networks and written public sources is also gathered. When the stage of negotiation, clarification and reflection is reached, data analysis of customer data forms the basis of such processes. Sometimes customers put specific problems forward or ask for specific solutions to problems. Internal discussions, negotiations, and analysis of the problem, which might turn out to be a different one than anticipated by the customer, is an important part of this stage. These three stages are all preparation for implementing a new customer contract and are considered to be the foundation of a successful relation. Inter-organizational learning is the outcome of a good relationship and this close interaction with customers is highly valuable to Itella and is also important for future innovations. Itella also spend time in considering how new and innovative solutions emerging out of one relationship can be dispersed into others.
Generally, the process of developing new customised solutions together with the customer is, despite the informal character of the relationship, quite formalised. As environmental sustainability is not at the forefront of the agenda in negotiating new
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solutions with customers at present, we consider the Itella leadership to be contributor regarding sustainability.
“Harmonica curtain” trailers for load size flexibility at Freja Transport & Logistics (EFFIE winner 2011)
Freja Transport & Logistics is a Danish company with representation in Denmark, Norway, Sweden, and Finland. The company offers transportation and logistics services, preferably as a strategic partner customising services to individual customers.
Environmental responsibility and advanced IT solutions for integrating solutions are their primary competitive focus areas.
This case is about Freja, regarding their transportation of broad steel plates over several years to Sweden and Germany for their customer, Dansteel (Danmarks Transport-Tidende, 2011, 7). The unique problem with this contract was that the trailers had to be open due to the oversized nature of the goods being transported. Due to the open trailers, it was very difficult to obtain return goods from the destination country, which made both the price and environmental impact of the transport very high. In 2009, Freja became aware of a trailer with a harmonica curtain. With this curtain, the trailer could be open or closed depending on the size of the goods. This meant that return goods could now be loaded on the trailers after bringing the steel plates to their destination. Empty truckloads were thereby reduced by 20 per cent. Freja provides this customer (and others) with a customer specific CO2 emission report that makes it possible for them to measure performance improvements.
When Freja became aware of this opportunity, they informed their customer and thereby deliberately made it possible for them to let their competitors know about it and embed it in the upcoming tender. Freja did however, win the tender and continued their long-term relationship with Dansteel. The consequences of this new solution were that it now became possible for Dansteel to expand their markets to Poland, France, and Benelux.
Freja had to reduce their prices, but at the same time they expanded their business with this particular customer through this innovation.
Sustainability is highly prioritised at Freja; apart from the customer specific emission reports, Freja has been ISO 14001 certified since 2000. For Freja, environmental sustainability is to a high degree a question of reducing CO2 emissions, and the optimisation of truckloads in order to minimise empty spaces, is the most important way to do so. Further, Freja´s new IT fleet system makes it possible to improve optimisation of truck loads. Freja sets new goals for truckload optimisation every year and emphasises optimisation of economic and environmental sustainability at the same time.
Embarking on innovation processes, Freja does not always set up goals in the “setting the stage” phase, but an open-minded dialogue with employees, especially those close to customers, about creating new and innovative solutions for them and potentially the supply chain, is an on-going process. Management challenges the employees in their approach and encourages them to listen to the customers to find new collaborative
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solutions; the process is, at this stage, not formalised, and management´s position is that innovation cannot be taught. “Customer clues” are gathered in on-going dialogue with customers and with the larger ones, there are strategic meetings every year with the purpose of evaluating where the partners can discuss new initiatives, tools, and processes.
Most attention is given to customers who themselves see the value in innovation.
“Negotiation, clarifying and reflecting activities” consists of analysing data in collaboration with customers. Freja highlights trust and confidence as critical in this part of the process. Freja tries to push for environmental concern in new solutions; innovations do, however, not always lead to improved environmental sustainability but in many cases they do. Freja also emphasises “inter-organisational learning” as well as intra-organisation learning from these innovation processes, and has overall a developmental oriented approach to their processes. Interaction with big customers or niche customers with a high level of complexity is a source for creating new solutions that also applies and benefits smaller customers.