Window on the future of logistics

By Elizabeth Kelleher

The Future Logistics Living Lab opened recently at Sydney’s Australian Technology Park. As a joint venture of National ICT Australia (NICTA), SAP and Europe’s largest application-oriented research firm, Fraunhofer, it provides new perspectives on how logistics could transform over time.

The Australian transport and logistics industry is worth more than $150 billion and represents in excess of 14 per cent of Australia’s Gross Domestic Product. As such, an efficient and effective logistics sector is vital to the economy.

Transportation inefficiency and rising costs are the two key logistics management challenges the Australian transport industry faces on a day-to-day basis. One contributing factor is that many road freight trips managed
by manufacturers’ logistics functions or their transport partners leave room for improvement, leading to half-empty outbound and/or empty return truck movements over long distances. Technology may provide the answer to address these issues.

Dedicated to addressing challenges such as rising fuel costs, road congestion, carbon emissions and safety, the Future Logistics Living Lab will provide a physical platform for industry and researchers to work together in a cost-efficient and low-risk manner to accelerate the development of innovative technologies that will provide transport and logistics solutions for the future. Technologies developed and displayed in the lab will be targeted at business processes in transportation management, warehouse management, supply chain event management and global trade services, with opportunities to address pain points such as inefficiencies around interfaces, lack of standardisation, and fragmented visibility of end-to-end transportation processes, including reverse logistics management.

Alongside the three key partners, Victoria University and the University of New South Wales are also involved in the project, together with industry partners Linfox, Hamburg Sud, Casella Wines, Ericsson, GS1 Australia, Gamma Solutions, Google, Tradegate and XAct Solutions.

These industry partnerships provide the strength of the Living Lab concept in driving practical, technology-based solutions, according to Tim Ebbeck, president and managing director, SAP Australia and New Zealand.  
“The Future Logistics Living Lab will enable SAP to innovate hand-in-hand with industry and research to solve real-world problems,” Ebbeck said.

The 200 square-metre lab space, which comprises a demonstration space, event and seminar room and a working area, was officially opened during NICTA’s annual IT project and research festival, Techfest. It will allow
participants to showcase ‘hands-on’ prototypes to key customers and stakeholders from government and other research organisations.

An important feature of the Future Logistics Living Lab is its interactive demonstration stations which step visitors through supply chain scenarios, including one that depicts the repeated wine shipment between the bottling station of a winery in Australia and an overseas importer that supplies the wine to a hotel chain, derived from a real-life process.

Industry partner Casella Wines, a family-owned and operated winery in Griffith, NSW, plans to use supply chain modelling such as this to maintain its position at the forefront of the Australian wine industry in both domestic and export markets.

Speaking at the launch, Linfox Logistics CEO Michael Byrne said Linfox, an SAP partner since 1999, planned to use the lab to help it stay ahead of its competitors.  “We can’t run our business without sophisticated IT systems,”
he said. “I look at things like this lab to help us learn more from different people and gain different experiences from the community. That’s the only way we are going to stay in business. We won’t survive unless we innovate and change nearly every day.”

He said a pressure point for the company is the speed to deployment of IT systems. “Where we would deploy things in nine months such as an inventory linked to an iPad in trucks, our customers such as Coles need those projects done in four months,” he said.

Till Dengel, head of SAP AG’s industry business unit, transport and logistics, said the living lab was both a ‘test bed’ for solutions and a space where researchers could work with industry to drive innovations forward.

Living Lab research projects will target emerging challenges in logistics, and results will be commercialised by the participants leading to new products, processes and services in logistics that will have a positive impact on the competitive positioning of Australia’s businesses. The efficiency, visibility, traceability and sustainability of goods along the multimodal end-to-end supply chain will be a key focus, as will interoperability, standardisation and removing constraints on export and trade.

XAct Solutions, which specialises in transforming supply chains, including physical infrastructure, transport, logistics and distribution operations, hopes to bring a real- world focus to collaborative efforts between Living Lab participants.

“By collaborating with the Future Logistics Living Lab, XAct Solutions plans to utilise thebest-in-class capabilities of the participants in the lab to formulate innovative solutions to some of the real-world supply chain challenges we see in the market,” said Peter Ramsay, principal, XAct Solutions. “In particular, we see the advanced optimisation capabilities that NICTA is developing as supporting the next level of efficiency improvements in Australian companies’ logistics operations.”

The current agreement between Living Lab co-founders SAP, NICTA and raunhofer runs for three years, with the expectation that they will continue this collaborative initiative after this period.

“Ultimately we want industry to adopt technologies developed by the Living Lab and for industry to be able to quantify benefits gained from those technologies,” said SAP, NICTA and Fraunhofer in a joint statement. “We hope that industry will recognise the value of the lab by demonstrating a willingness to fund Living Lab projects and thereby providing the Lab with a means to grow.”

For more information about the Future Logistics Living Lab, and to view its operations through webcams, videos and interactive media, visit

 This article was first published in Inside SAP March/April 2011.

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