Leaders in Supply Chain and Logistics

#70: Jochen Göttelmann CIO of Lufthansa Cargo

February 12, 2020 Radu Palamariu Season 1 Episode 70
Leaders in Supply Chain and Logistics
#70: Jochen Göttelmann CIO of Lufthansa Cargo
Show Notes Transcript

Jochen joined Lufthansa as CIO in 2015. Prior to that, he worked as a Head of Business Application Management Investments & Operations Europe Allianz Global Investors for more than 12 years. He also worked in different leadership capacities for Dresdner Bank and Credit Suisse. 

Discover more details here.

Some of the highlights of the episode:

  • The impact of the Coronavirus to Lufthansa Cargo
  • Adopting a dynamic pricing strategy and partners in Asia
  • Developing ecommerce using Heyworld, Lufthansa’s wholly-owned subsidiary
  • The importance of cybersecurity to Lufthansa Cargo
  • How digital transformation helps with employer branding

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Radu Palamariu:   0:00
This episode is brought to you by Amazon Logistics. The delivery service partner program is a new opportunity for business leaders who want to own and operate their own package delivery business. Get access to Amazon's logistics, training and technology, and start building a team of motivated drivers in your community to learn more about becoming an Amazon delivery service partner. Go to logistics that amazon dot com Hello and welcome to the leaders in supply chain Forecast. I am your host. Rod a problem. Are you managing director of elk? It global. Our mission is to connect the supply chain ecosystem by bringing forward the most interesting leaders in the industry and is my pleasure to have with us today. Yorkin got a woman who is the CEO off Lufthansa cargo. Lufthansa Cargo is one of the world's leading companies in the transport of air freight. They focus on airport to airport business and serve around 300 destinations in more than 100 countries with their own fleet of freighters, A CZ well as their average transportation, afraid on an annual basis, is 1.6 million tons. Your conjoined of Tanzania CIO in 2015 and Prior to that he worked as a head of business application management for investments in operations Europe, Italians, global investors for more than 12 years. Prior to that, he also worked in different leadership capacities for Dresdner Bank and Credit Suisse. Your home. Thanks for making the time and great to have you with us today.

Jochen Göttelmann:   1:24
Yeah, thanks a lot. I'm very happy to go through the new you

Radu Palamariu:   1:28
super. So let's maybe let's start with a question that is Ah ah, on everybody's minds. Really? And it's Ah, it's a situation of crisis, which is which is basically created right now in in China. But it's impacted the quite fast globally, which is the Koran coronavirus, a spread. It's having a significant impact on a travel, a significant impact on air cargo into and out of China. Tell us a little bit about how is Lufthansa cargo impacted, and how is it also mitigating this situation?

Jochen Göttelmann:   2:02
Yeah, Corona virus definitely has a severe impact on our one of our most important trade planes from Europe to Thio Fire Station, especially China, especially in these times where the global trait the suffers from advanced likethe e great war between us and China. That's what this comes simply on top of all upset and further slows down a weaker economy. So what we see at the moment, love turns up as ash, whose bellies we've market have completely cancelled their China flights until in the February. Not true when they will be ableto reinstall the connections defends her. Carlos actually also head to adjust the phrase ketchups. We still have some Friday connections to greater China, but of course, with a very, very limited to lower because we also see that the Williams are pretty low as fuel knowthe e major Chinese enterprises have extended theory. You years break by one or two weeks, so it's not only a lack of capacity, but also very, very little demand. Tau transport effort in and out of China

Radu Palamariu:   3:25
It's it's it's quite, um yeah, it's quite on. Um, um, unusual is not the word. The word I think it's quite an extreme situation and not something that it's easy to be prepared for real. It's Ah, A lot of businesses are scrambling for business continuity plans of the moment. And of course, you know, afraid being less there is probably gonna be a significant impact also on ocean freight starting from next week. Since everything is supposed to resume to whatever normal means in this situation, I guess, um, so, yeah, we'll have to see how things pan out, but from larger Lufthansa cargo. As a company perspective, I know that since you've come on a CIA about four years ago, there's been quite a few projects and and quite a few digital transformation initiatives that you've taken and I want to go. Soto ask you in terms off. You know, some of the things that you've managed to achieve in this year's that you're most proud of in this direction of digital izing the, um you know, digitizing the company,

Jochen Göttelmann:   4:30
I would say the highest effort you put at the moment on the idea of neutrals. I just definitely to renovate and modernize our holds. The Elsa I T. Landscape is not only legs seem organization like our new book Convention or Incomes here M system, but it also toe our landscape. Or I keep processes to external party six times platforms. We have a couple of financial tools to directly connect to or major clients. We have a couple off try inventors, also with startups withdrew booking platforms like Caguan like a freight net where we connect to things platforms to make our offer direct applicable. Why has these platforms and maybe the most lighthouse project we launched late last year wasthe e dynamic pricing recorded in 20 trip indirect rate response, which is directly calculated complex algorithm Thio give the spot price which can be booked directly by our clients. So this has been launched December 2, the first test markets, and we are now preparing to club rule out for the rest off until spring 2020. The next big Colette will be around spring 2000 values the completely new eat booking. So our extra book in front of our clients, which we and occurred to developing and, uh, quite violent plan Thio go life around spring

Radu Palamariu:   6:06
Mmm. And specifically for the for the booking system that that uses online sport pricing. I think that there was a couple of pilot markets that you you tested it already. I have here a list of Thailand, Vietnam, north and northeast, India, Beijing, the Middle East, Iran, turkey, and U. S A. Um, can you share with us a little bit off how it went, Some of the challenges that you faced some of the early early wins. We have a lot of listeners that that come from the transportation and also airlines aside that follow us on the Port castle. You know, maybe they can. They can get some ideas from you if they want to do something similar. Yeah, actually,

Jochen Göttelmann:   6:47
the technical called Life was pretty smooth. We had a lot off preparation and testing and expanse, of course before, before you do with such a radical step by radical means that we know only implemented a group. But we completely baby neck with our clients, but also our house sales comics had a slightly different drove from providing price mortal Kansai Ting for the whole service truth, Klein and I was estimated. Change is not a month. The technology behind our votes complex ai ai based algorithm with a 26 or 28 Tector model that it's made the way we interact with our client. All kinds now can book immediately against the spot price, not only against the Senate trait sheets were something completely your over industry. Early profit. We are among the first toe live at that Slovis to our clients. So the first markets are really promising. Received that surprise are really good means, and they are acceptable by the client. They are pretty close to our home, but they won't would have calculated and the major part off the requests and response and inaction we can't know from our clients and partners. It's not so much complaining about price, but more asking what's behind the logics and soupy getting used with a new way they in their boots of Chicago, this re first again, both our clients and also our in house sales colleagues and term. For me, this is a really a perfect example off how neutralization changes the way we interdict amongst each other. It's not replacing a paper or mirko bass pros has, by some 10 bites, changing completely the way we do with each other.

Radu Palamariu:   8:54
I'm just just wondering, I have to ask you this question because usually, and it's like it's across industries, whether it is transportation, aviation, logistics, shipping, whether it's in manufacturing, there is this concern that you know will digitalization well, automation will algorithms replaced people, and I'm just wondering from thinking from your sails from your sales teams perspectives. Did you also get some concerns around that? Did you mitigate that, or how did you You know, how did you get them to embark on this journey of transformation? Because I'm I'm just guessing they might have been some concerns. Also, in that respect, I might be wrong, but I'm just putting it out there because I heard this a lot of on Don't get the same lines in different other industries.

Jochen Göttelmann:   9:36
Hello. You're absolutely right. Um, of course, whenever we don't digitization initiative, there are always confluence. What does it mean to our staff base with a get obsolete proof a country place? I eh? Griffins And indeed that dribble up. Protect that dynamic pricing we do not so much consider as a racial organization or efficiency measure. Thio layoff sales people. It's more toe support them with a better pricing tool so that they can and youth their time capacity. Not so much of that agents, action based business, but more to coincide our clients to do really enter and solutions and give them a better advice off the whole transparent that off. Just checking the price and negotiating by phone looks more say giving fair burg a higher value was our clients and not so much replacing them by by groups. But of course, it also means a lot of change for the whole organization. And this is something we all usually tend to neglect him inthe ee thes kind of protects, and I'm very happy to see that or say his department in totally has started a major change initiative. You call it in Tommy level out, which exactly means bringing the role of the salespeople. One level up. This includes authorization to truth is take the before mention to renovate of booking engine. He mentioned innovation off these here and test um, but also feast enhancements in our business processes and the small post like Tribbles are, but also and connecting more tweaks. Tyler platforms like carnival Mood dolls have changed the way we interact with our partners in clients.

Radu Palamariu:   11:33
Also wanted to bring into the discussion Hey World, which is the wholly owned subsidiary that the Lufthansa cargo has launched, I think somewhere meeting last year with a very dedicated focus on the needs of the e commerce industry, which which I find one in tune with them with the market. Obviously, e commerce is booming. But at the same time, I'd love you to tell us a little bit more about it because it's not a lot of strides that have been done, perhaps in the transportation industry or not enough in terms of the e commerce specifically. So I was curious to find out Howl of tons of cargo is planning to use this subsidiary to, you know, to develop the commerce site.

Jochen Göttelmann:   12:16
Yeah, that was really great question. And this was a one off the initiatives we launched. As you mentioned last year, we tried to find a new opportunity. We have slipped out of the car is a good airport airport carrier to somehow bridge to get between India craters for the door to door business and a two because traditional Carville and yes, we are. And we see a huge continuing growth and the commerce also, it might slow down a little bit currently youto economic crisis. But their growth continues maybe at a slightly slower pace. And there's a lot off demand to live a better solutions to our in many years and tow. We have, um, outlined, uh, made a proposition not for a daughter door business, but, say airport toe warehouse like Notre, we can help make your equal more certain layers to better transport the stark truth, their warehouse. And so it's something between, say, tradition B to B and B to C and really very promising to see a further growth at a very, very high speed. Enter skating up. Now you have. I'm not really sure about the recent numbers, but already last year within a couple of months wasn't health 100,000 transactions, which is a huge number for that form, starting completed in a green field.

Radu Palamariu:   13:57
What I also wanted to ask you was in terms of all this risks, and we spoke about coronavirus. And there's gonna be, you know, in general, the trade, the trade wars have taken a toll last year, and it's not been a great year for the X ray for a market. Anyways, um, can you tell us a little bit? How do you are there some strategies that Lufthansa Carver uses to offset risks or to mitigate risk? Oh, certain partnerships that you do. How do you manage to balance this?

Jochen Göttelmann:   14:25
Yeah, we all know that afraid is very volatile business. And Hess, you are mentioned in the introduction actually drift Undercard 2015 thes four years. I have seen two tremendously create years in 17 4018 assault crisis yet developments extreme over at the prizes and last year older wasn't too good it over. So it's very well attired and one off the answers we have to That business is off course and try to be flexible. And it looked in the car. We're currently in the process off rolling over our freed s. You probably know we still operate a couple off, Um, when there are 11 things which will be renovated and roll overto around you triple sevens the next month We were completely modernize our fleet with gives us a lot more flexibility, and I would be a stuffed in that car would have the extreme advantage in our network that we do not only markets the Ellicott prostitutes off the whole of comes up group accepts this, but you also have a couple of Turin Ventress with other make sure France like in a like a pacific and of course, united. And in addition, we also operate on the feud off or freighters, which boys can be used and relocated to balance the any network which we have swept under. Carlo can't influence too much, so the freighters are in addition capacity, which we completely flicks pecan. Adjust through the needs off market, and second, we try toe Thio, neutralize our processes or business model. But if he can no neutralization for the signoff utilization Petrilli to make us more reliable, more of stable are also a little bit less, um, neighbor intense for our operational business spot. In the end, with all Theis measures, you can't fully white. Um, the impact off d'oh is this environment in which we are operating hands off course. We all have to accept them, accepted our recites our world. Thailand will remain to people that time.

Radu Palamariu:   16:55
Yes, like I'm like the crisis with right now with the coronavirus, I think it's it would have been extremely difficult for anybody to to foresee and and taking two full account the consequences. And even now it's it's It's quite early to tell the full extent in which is going to impact the business in China, in Asia and overall globally, so Hopefully, hopefully not too long before it gets in the control. Um, also what I wanted to ask you. I know that you signed Ah, you have an agreement. A partnership agreement with Tele Port, which is AirAsia's cargo and logistics platform. And for our listeners that are maybe not from Asia. AirAsia is the largest low cost airline in Asia. And then, you know, they have a very big network. So by this partnership with Teleport and Lufthansa cargo, obviously that helps you expand. Expand your network. Is there a certain long term strategy behind this? You know, do you Do you want to focus more on Asia as the region is as opposed to thio to other regions Or, you know, tell us a little bit about the thinking behind?

Jochen Göttelmann:   17:59
Yeah, definitely. Asia is a region like us are the most important her trade. Hence we we have with our business center in the middle of Europe, in the heart of European, Frankfurt and Munich. So off course, with that geographic positioning of both north and planted but also far usedto in China is our most important in business. And as I said before, one of our strength is a huge effect, rolls off flexible network. We operate with Eric Capacities with on freighters, but also with them joint ventures with other airlines. In addition to that, we also tried to anticipate rather more also try to drive the changing of the business smaller with respect, especially to booking rising quotation, maybe also some use later in accounting. So we see a couple off new platforms coming up a little horizon. Some others do, operationally working pretty damsels between the shipper before letter and the Allens. And we tried to partner with as much as we can with them. Why a standardized their faces and our own AP. I frame Burke so we connect to Feast that forms and we even are investing in one off them. Cover one you hope you know which has been founded one and 1/2. You go only and we see here a tremendous growth in their business and the success they have seemed to confirm our strategy not only to invest in our own and they control it stays channels, but also to partner with them additional sales channels to be among the first to get connected and all to deliver more value and quality and better service is to our crimes with these partnerships.

Radu Palamariu:   19:59
And I want to know I want to touch upon a very delicate but at the same time, crucial subject, which is cybersecurity. And the more we live in this digital ecosystems and environments, the more I think you were also sharing in an interview that you're definitely moving away from what dedicated on premise they descended to multi cloud environment. The more cybersecurity is is crucial to the running of the business, really, and we've been some pretty significant breaches in the past. Ah, that is not name them, but in shipping and literally just a couple of days ago, there was a major one announced also for another three people company this side of the world. I wanted to ask you, what are some of the let's say strategies? Points off thinking, And how do you approach the topic of cybersecurity? Lufthansa Cargo.

Jochen Göttelmann:   20:49
Yeah, First of all, the good news for us is we have bean hit heavily so far that use it. It can happen to them tomorrow so nobody can consider himself or his company as really safe and protected. We are very, very effect and it's really strange. Thio See us operating in a product group. Look at the troop level. Who's putting mourn, more focus and energy and budgets to pray, to protect our and whole airline environment and not with the hospital's hour. And the chase is like techniques like hard or like catering on level. We have launched a major program two years ago. We call it Internally shoot program. We have engaged a culprit information security officer, and it is on the agenda off all management meetings now, really, to see where we have the gap we should close. Where should we do? Even better than you're doing currently. And it's getting more and more also on the agenda off the top nation on the level because began, everybody's on their way. We can be hurt, too there tomorrow, as other companies already have bean faced with and the my creation from or on prem data centers to clout certainly will also help us to come to a better, even higher level off security because it's always easier to protect the highly standardized, highly professional extra trouble hyper-scale her operating environment. Then you could do with with a rather small own dedicated on environment. So there's a strategic goal off other crew toe move in the next years from our on printed ascent has to public clouds. We manage with a additional layer by independent party. So if if you get a best protection to our so fair and Rose essence. But technology is only one part off cyber securities, much more about also wells mindset and attitude. And here, if you really love you, change also in people's behaviors. And we also lot off efforts on awareness and training measures not on technology only, but also simply to make people they're about thes story text, like fishing like sea or frauds and author attempts toe to protect us. So people is in the middle of everything and without the right mindset and people protecting where it's basics, like protecting passwords like locking the screen when you leave the desk like not using any known use, be devise, answer on pretty through your can award a lot off that they easier text cast by making people aware of the risks.

Radu Palamariu:   23:51
And since you you brought on the topping of people and I was I was going to ask you, um, you mentioned and I like this a lot in one of the interviews that because of this digital transformation, you believe the discomfort did that There it will move Lufthansa Cargo to be a much more attractive employer, too. Top talent in the tech sector, Andi And you also acknowledge a reality that is very much a SW far as I'm concerned is Whalen and we actually come from the executive search and headhunting part of the business. It is a reality that not a lot of people on, especially young talent, knows much about afraid about about transportation and logistics in general. So I was curious. How do you see all this digital transformation? Also playing a part and potentially helping you with your employer Brand making Lufthansa cargo are more attractive. Employer. Have you done something already? Have you seen some results already? And I'm curious because this is This is definitely something that the whole industry should be working to get to get its brand and his reputation better and more attractive as an employee.

Jochen Göttelmann:   24:55
Yeah, that's perfect measure, especially in these times. So for the war for balance and it's not easy to find the right people. They're there, but they have also a lot of other opportunities. And as you said, Eh, Fred is not a business us. A young man really can see and feel If you fly. You have a touch point with booking with a checking with the experience off the flight UK and do the e commerce. But you hardly have any personal interaction with them with afraid itself. So maybe you have a raft that year. What might be in thes medium container So you see, sometimes putting through the Bennies off Europe plane when you're have taken your seat at the window. But I always say to this industry is so interesting toe people and we have basically all kind of problem. We have used cases really committing, usually kids for all kind off technology with It's a I with its autonomous vehicles, for example, for using for mentioned, our warehouse is probably not flying off the most faithful extricates, whether it's Blockchain toe trust to get trust in the supply chain, whether it's ah, Big Data Imagery Corporation, we have currently couple off experiments with a sad, absent inspectional whales environment to operate more efficiently pillows with editor you and so on. So we're tryingto make thesis really great problems. A little bit more known. Two people enter and one of our activities is that be swift under crewman general. Go out with universities. Go through thes drop Marcus. We try to encourage all of our people toe simply be more active on social media and finally also. And there's also a crater in news to lift hands. Our group. We have two captive. I keep partners with new friends, a group with left hander systems and pedantry solutions. And they India really attractive to young people to work in the L. A. Key business. And they are not so much suffering from applications and recruitments. To be honest, we're still in the car. Do that were closely working together with them. And if they are intolerable, cos it's not so important whether people are on my own payroll or Clifton's industries illusions because in any case we can use their intelligence, their creativity and their competence for our business Again, the diversity of route from that group is a definitely a competitive advantage to be so white fit in business from I t to Corella business so that you always can find her right people. But war for talent is there, and we have to compete with really tech driven companies like the big force. And if somebody really looks for a job as 1/4 as a developer, we might not be the most attractive and three. But we are very fit and be in focus, especially on people combining I t and business skills toe bring our industry forward.

Radu Palamariu:   28:21
I'm just curious and dis prompted into my mind, and I was actually meaning to ask you the beginning. But, you know, but better late than never. Because you had a very interesting trajectory, Johan. Right that you came from the banking site. And in 2000 and 15 you know, you're shifted to Lufthansa. Maybe you can share a little bit your personal, you know, journey. What? What prompted? You won't go too excited about the, you know, the journey of Lufthansa cargo that prompted you to make the shift in in some ways of industry.

Jochen Göttelmann:   28:52
If every person in it it was actually what I just described. There's so many unsolved problems here in the stream. And if you really have a fun working with a T i t for the business take for business. We have so many playing fuse here where you can engage and, um, visualizations liking maybe 20 years behind Alan business and maybe 40 50 years behind the banking is industry. But if you look at banking off financial Selves as one of their corporate action because indeed wth e t back down, if they do not need fleets off plants that look neat that sense Tom enters or helps our airports. They mainly need a high, reliable, stable and performance I t. So that sands wear trying also to make or to convert the road off. 18 our business from a coast factor from a commodity. It was considered until May level of the same level, like our fleet and the crews like our hops like our parts because we need everything at the same time to operate. He Alan in a fusion, any reliable way for clients? This remain change. I still see we're still working in ah, a little bit off legacy environment. There are a lot off renovations going on and, um, I said O r current and may focuses on the organization off the whole, um, sales landscape with the covers off, make sure projects and these are really also attracting people enter. I see more more people knocking on our door, asking a white country join left under cover to toe for us off the Charlie Troop utilization. It is a completely different industry, and with a role I t has in In Banking Highness industry, I'm trying also to give him the I t Business year, higher perception, a perception and her more visible and perceivable road, the whole organization

Radu Palamariu:   31:17
on book. I mean, it's it's definitely II. In many ways, I still do it and admire both Your you're basically desire to make this change is also the desire from the stanza cargo, because it it's kind of a both weigh both way journey. And it's great that they took on somebody like yourself that can bring fresh perspectives into the business that can bring a fresh pair of eyes right and look at things in a different way because, well, unfortunately, fortunately, it's it's just a reality. A lot of company cos sometimes just end up doing the same more of the same, and you know, kind of get the same merry go round of people, and then obviously you're not going to get any fresh ideas. So in that in that way, I'm sure lots of things to do. And I wanted to end the interview, as I normally do and for our younger listeners. I wanted to ask you because you had a long career of successful career in mated toe, a sea level role in a in a large organization. What would be some pieces of advice that you could share for for younger professionals that that were most helpful for you in building your career?

Jochen Göttelmann:   32:26
Yeah, you Yeah, try. Don't try to think what's happening in 345 or even 10 years because not only an effort industry, but in most industry. You have to know what's happening in next year, so rely on your attitude in my accepts work on your skills every day and be open and future. It's yours.

Radu Palamariu:   32:50
Thank you. It's been a pleasure. I really appreciate the good sharing and practical practical advice in the in case that is that you you imparted with our audience today from the fancy cargo, and we wish you all the best in the in the future in the next, you know, a little bit stormy months that hopefully all will be well and hope to hope to see you soon. Thank you so far. Thank you for listening. If you like what you heard, we should to go to www dot l called global dot com and click the podcast button for all the show. Notes of the interview also subscribe to our mailing list to get our latest updates. First, if you're listening through a streaming platform like iTunes Spotify arts teacher, we would appreciate a kind of you five star works best keep us going and our production team happy and, of course, share it with your friends. I most active on Lincoln's, So do feel free to follow me. And if you have any suggestions on what what to do and hooting by next, don't hesitate to drop me a note. And if you're looking to hire top executives in supply chain or transform your business, of course, contact us as well to find out how we can help