SUMMARY. The future skills needed for the in the field of logistics. Summary. Summary of study findings. Early identification of skill needs

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1 Early identification of skill needs SUMMARY The future skills needed for the in the field of logistics Summary of study findings Summary Published by FreQueNz, 2013 Bremer Institut für Produktion und Logistik an der Universität Bremen

2 Logistics as a domain of application for the Internet of Things in the early identification initiative of the German Federal Ministry of Education and Research (BMBF) Bernd Dworschak, Helmut Zaiser, Simone Martinetz, Lars Windelband The main objective of the German Federal Ministry of Education and Research's initiative for early identification of skill needs is to pinpoint the skills and qualifications required for the new skill requirements emerging from impending changes in the world of work and for which widespread demand may well grow over the next three to five years. For the purposes of the BMBF early identification initiative, employees with intermediate level skills are primarily those people in gainful employment who have completed vocational training in a nationally recognised occupation or school-based vocational training which is regulated at the state (Land) level as well as trained employees who have completed further training to the master craftsman or technician level. Three projects concerning future skill needs and the Internet of Things, which is one focus of the initiative, were completed in the fields of smart house, industrial production and logistics. Internet of Things technologies offer considerable benefits in logistics where they can be used in numerous merchandise and inventory management processes in which goods must be moved, recorded and localised. Technology of this kind can be used, for example, to speed up high-input search and data acquisition procedures for goods and transport containers and enables the permanent data matching which ensures that the latest information is always available. While the three Internet of Things projects are presented in much greater detail in the FreQueNz publication series and in final report form at in German, this publication provides a summary of the key findings of the study on skill needs engendered by the Internet of Things in the field of logistics in English. The study was undertaken jointly by the Institute of Technology and Education (ITB) of the University of Bremen and the Bremen Institute of Production and Logistics (BIBA). and of computer networking and autonomy: In the IoT, objects which are integrated into the information network interact with each other and with control systems and other networks and, in this way, facilitate autonomous and intelligent process control. IoT is not, however, a discrete item of independent technology. On the contrary, it actually depends on the development and convergence of numerous different kinds of technologies and, as such, on the evolving ability of these technologies to coalesce, become networked and to interact with each other to create autonomously functioning IoT systems. The technological underpinnings of the IoT are various forms of technology attached to objects which enable them to sense their environment, store data, communicate and act autonomously. One such technology is radio-frequency identification (RFID). RFID systems are able to read data without physical or visual contact with the source object. They consist of a reader and transponder or tag, i.e. a chip with an antenna. This enables the object to which the transponder is attached to be uniquely identified. As a result, RFID delivers the information needed to track precisely the location of specific components and products. RFID systems can also be combined with sensor technologies which can be embedded in products, with integrated computation processes where these are relevant. Sensor data can be updated automatically via RFID systems. Increasingly demanding requirements for mobility and flexibility are fuelling the trend in RFID and sensor technology towards wireless systems in which a key role is played by radio-based data transmission. Alongside the technologies referred to here, others such as materials science, microsystem technologies, optics/ photonics, electronics, human-machine interfaces and artificial intelligence are all also particularly relevant to the further development of the IoT.¹ Logistics the field with which the study was concerned is a domain of application for the Internet of Things (IoT) for which no generally accepted definition exists as yet. However, one way of conceptualising the IoT is in terms of technological convergence ¹ On conceptual definitions, the most promising fields of application and the technological underpinnings of IoT, refer to Brand, Leif et al.: Internet der Dinge. Survey study, Zukünftige Technologien no. 80, published by Zukünftige Technologien Consulting, VDI Technologiezentrum GmbH, Düsseldorf,

3 During the IoT studies one issue emerged as being particularly relevant: the degree to which the already existing IoT technologies are actually applied or implemented in practice in each of the fields studied. In order to assess this degree of realisation the IoT project partners and the FreQueNz network office together produced an extended framework for exploring the nature of IoT which brings together networking and autonomy attributes with three development levels. Further levels may be added in the future. As the following table shows, the "networking" and "autonomy" attributes which are so typical of the IoT have been extended for the logistics project with four attributes which are specific to the area of study. Development levels of the Internet of Things in logistics Attribute Development level Level 1 Level 2 Level 3 Networking Information is read out manually; passive communication System communicates when particular events occur System communicates all the time (active) Autonomy Information acquisition and storage (e.g. RFID) Information transfer and processing (e.g. status messaging) Decision-making capabilities based on information processing functionality arising from comprehensive logic, sensor and actor technology Technology (1) Use of RFID (2) Use of sensor technology (1) and (2) embedded with computer capacity Aggregation level Technology at the packaging level Technology on the final product (object level) Technology on single parts (component level) Power supply By means of induction (e.g. contact tag and reader) E.g. through an accumulator Autonomous (e.g. by means of energy harvesting ) Localisation of intelligence (decision-making components) Central 'intelligence' or decisionmaking components 'Intelligence' or decision-making components on the thing itself Decision derived from 'intelligence' spread across several things As is apparent from the table above, the third development level involves the automation and equipment of logistics processes with their own decision-making powers across all six attributes. This level with its autonomous and self-controlled transport consequently comes very close to the Internet of Things. Whether level three represents an ideal phase for a supply chain depends, however, on the conditions of the actually given logistical process. The future does not approach too fast! In the framework of the logistics project current practice was found to be at an early development level in terms of IoT technologies, in most cases at level 1. Although businesses are clearly paying increasing attention to these technologies, hardly any companies have actually reached the second or third level. As things stand at present, objects neither communicate independently with each other nor do they have any direct influence on flows of goods. 03

4 Reading an RFID chip on a packet From a technological and business management perspective, development work on IoT in the logistics field in the near future is likely, for the most part, to be contingent on improvements in the readability of RFID chips near metal surfaces and a reduction in the cost of making RFID chips. The most important factor across the board in the medium to long term remains technological convergence. In this context there is considerable optimism about overall innovative developments and the prospects for IoT technologies in Germany.² Nonetheless, another aspect which is of overriding importance in field of practical logistics is that to date IoT technologies have primarily been used at the in-plant or in-company level ( Intranet of Things ). In fact, extending the rather meagre use which has been made of IoT in logistics to date will be critically dependent on the ability to network IoT technologies between internal operations and from company to company to a much greater extent. ² Cf. Brand, Leif: Internet der Dinge und Logistik. In: future technologies update, 02/09, published by Zukünftige Technologien Consulting der VDI Technologiezentrum GmbH, Düsseldorf, p. 3-5; Windelband, Lars et al.: The logistics skills and qualifications required by the Internet of Things (QinDiLog). In: FreQueNz-Newsletter 2009, p Available at 04

5 Future skill requirements engendered by the Internet of Things in the field of logistics Lars Windelband, Claudia Fenzl, Felix Hunecker, Tamara Riehle, Georg Spöttl, Helge Städtler, Karl Hribernik, Klaus-Dieter Thoben The purpose of the following sections is to show that the future development of the skills required by the Internet of Things (IoT) in logistics will depend on when IoT begins to be implemented on a higher level than is currently the case and on the direction in which the IoT itself develops. At the same time, the IoT has in fact already started to have an impact on communication structures and in this way to change job profiles and skill requirements. Only certain work processes are modified by the current implementation of the Internet of Things and skill requirements only change to a minor extent. At present the fact that IoT technologies have only been implemented in logistics operations to such a limited degree as well as the lack of network connectivity between companies have meant that, to date, only a small part of processes and tasks has been affected and related skill requirements only to a minor extent. While in-company work processes have been optimised and partly automated with the introduction of new technologies leading in many cases to the merging of several different process steps this has seldom resulted in fundamental changes being made to the work tasks of the relevant employees. In connection with the use made of technology to date, two distinct lines of development can be discerned: On the one hand the technology is used to automate processes and to reduce failure rates in work processes. In many cases this has led to a simplification of tasks and associated requirements profiles. In conjunction with the corresponding technology and job design, this means that it is possible to deploy low-skilled personnel rapidly, at lower cost and without the need for lengthy on-the-job training. At the same time, IoT technologies are used to optimise work processes by taking account of employees' strengths. To some extent the implementation of IoT has freed up employee capacity and enabled employees to take on other tasks. Here entrepreneurs continue to value well qualified and skilled personnel. While the first line of development primarily affects the target group of unskilled and semi-skilled workers who have been trained for their specific job only over a short period the second concerns the target group of skilled employees with intermediate level skills. In the course of the logistics project three different requirements profiles could be identified for the latter target group:» dispatcher,» short and long-distance drivers and» logistics planning. Despite the generally rather low level of IoT implementation in logistics, the processes of some companies have in fact been permanently modified; the tasks of these companies' employees have also changed. Key features of these companies are the automation of processes and the digitalisation of information. A technology mix consisting of digitalised documents, telematic records of geopositions, on-board terminals for status recording purposes and an integrated flow of information over the Internet enables these companies to provide a higher quality service. This is where skilled employees play an increasingly important role: employees who are able to capture and enter data with the requisite discipline and without making errors and who, at the same time, have a good understanding of the process as a whole. In other words, some companies make considerable use of various technologies and, in the process, have managed to exploit some of the potential which the IoT offers. Often these companies have made ongoing investments in the expertise needed to implement the related technological and organisational changes. They are, however, far from typical. 05

6 All groups of employees need to be increasingly skilled in using information processing technologies. motivation to learn about and use new technologies; knowledge of and ability to use IT products (e.g. mobile devices, PDA). Quite apart from the implementation of the IoT, it became apparent in the context of the logistics project that there has been a strong and general rise of requirements in using IT systems in recent years. In administrative and planning offices good computer literacy and knowledge of and the ability to use industrystandard software are now fundamental elements of requirements profiles. It is fair to assume that this trend will continue with increasing technological advances and computerisation. IoT-driven 'technologisation' will also play an increasingly important role in the long term and will give further impetus to automation and process optimisation. As far as the area studied in the logistics project is concerned, the following skill requirements in using information processing technologies were identified: basic knowledge of IT systems (e.g. scheduling and planning systems, fleet management systems); product knowledge relevant to Auto-ID systems (such as RFID systems), sensor and embedded systems (memory, processor); basic knowledge of standard operating systems and data backup, practical working knowledge of data processing, and Internet browser programmes; application of modern navigation systems (for planning routes in accordance with consignments and special vehicle features); The Internet of Things is changing the structure of communication. Although the degree to which the already existing IoT technologies are implemented in practice to date is rather low in most cases, there has already been a major change in communication methods. Telematics and intelligent location tracking now ensure that drivers and dispatchers are in constant contact without speaking to each other. Status messages and location systems show the dispatcher where the driver is at any one time and enable him to respond to questions or problems. The driver can pass on the most important information to the dispatcher without having to ring up or fax. This means that the dispatcher is better able to support the driver than in the past. However, only once the development stages (described on p. 3 of this summary) on the way to level 3 of the IoT have been reached and implemented permanent changes in the design of tasks and communication channels and an emergence of new processes could be possible. The communication processes used to date, such as writing and sending an invoice, will then be started and undertaken automatically; in the same way in which delivery notes and invoices are sent directly to the customer once a job has been completed. The task profiles of drivers and dispatchers will be redesigned. The rationalisation effects generated by more stable (IT) processes (fewer malfunctions) will go hand in hand with tasks which demand higher level skills (where interventions are only made in the event of malfunctions, for example). This will stimulate much greater demand for problem-solving competences. 06

7 Implementation of the "Internet of Things" may create initiative constraints for intermediate skilled employees. The use of IoT technologies may be used to manage problems of coordination between planners and staff at the operative level by producing a higher degree of control and standardisation of logistical procedures. Technology will take over tasks or make them easier to perform. However, as decisions and procedures are determined by the technical system, this can restrict margins of discretionary action. Interventions are only then made in processes if unanticipated problems occur. At present these constraints are particularly affecting the unskilled and semi-skilled workers who have been trained for their specific job only over a short period. In the long term they may have a similar impact on employees with intermediate skills as well. Where IT systems are dominant the skill requirements regarding decision-making and problem-solving competences at the intermediate skills level are decreasing. This is also likely to mean that over the course of time the relevant workers will lose these competences as they have progressively less opportunity to respond to problems by intervening in processes. Action of this kind is either taken by IT specialists or by system control level employees. More and more of the activities involved in controlling work processes are likely to be performed by technicians and engineers. The level of process knowledge and communication skills which these activities require will rise. When it comes to logistics planning which has been identified as the third requirements profile alongside dispatchers and drivers at the intermediate skill level - no employees at the intermediate skills level appear to have been involved in planning activities in those companies in which the project case studies were performed. It was also apparent that planning tasks are transferred to other skill levels where they are undertaken by a few specialists, such as technicians or engineers. Process implementation and monitoring grow increasingly important. Growing levels of automation, or more accurately semi-automation, of the kind which currently appears to be realistic will entail interventions when problems arise or processes need adjustment. While the skilled employees who work with the relevant technologies in day-to-day work processes are expected to guarantee a properly functioning process, in reality the fact that they cannot modify IT systems means that they have very little influence on process routines. In most companies the relevant IT developments are implemented by internal IT specialists or even external IT service providers. For the implementation, optimisation and maintenance of IoT technologies the interface between IT services and logistics will therefore become increasingly important in the future. This is because these tasks require an understanding of the way in which processes are structured and IT systems are programmed and configured (and are usually implemented by computer specialists). At the same time, IT specialists also require detailed knowledge of logistical procedures in order to integrate IT systems optimally in the overall process; this knowledge is obtained by resorting to the process knowledge of operational staff. However, developments of this kind also demand much greater and more detailed process and planning knowledge on higher levels of the organisational hierarchy. This could prove to be a new task area for planners (process engineers), dispatchers or, for example, a process controller. 07

8 Car parts completely disassembled for shipment abroad In the companies in which case studies were performed experts who have implemented and or carried out maintenance on new technologies were very few and far between: these tasks are mostly undertaken by external IT service providers. For this reason an IT specialist with precisely these tasks was interviewed in more depth. The task profile identified in this case was collated with findings from interviews with other people who are responsible for the implementation of new technologies and the monitoring of processes in order to develop a profile of a process controller. cooperation with engineers and other experts on software and product conception and development; The tasks which the profile for a process controller might include are listed in the following: installation of software and additional services; networking with other IT systems; analysis of work processes; software adaption/ programming to meet the requirements of specific operations; creation of interfaces to other operational areas, such as dispatching, accounting; implementation of the system in the work process (assembly, installation, adaption and employee induction); system updating, maintenance and optimisation (telematics application, RFID reader); data management (recording fault reports); and control of logistical processes, ensuring stability, etc. 08

9 IT specialists will also become increasingly important in those areas which have not to date been regarded as particularly IT relevant, such as the forwarding business of smaller companies which operate in the modern logistics sector. In most cases companies of this type cannot afford their own IT specialists and are forced to buy in services at considerable expense. At the same time, however, these companies also require more and more people with specific IT knowledge who are able to implement standard solutions in order to safeguard their competitiveness as small or medium-sized enterprises. In what direction will the "Internet of Things" develop? And what role will there (still) be for humans? The project on future logistics skill requirements elaborated three scenarios which illustrate possible directions in which the IoT could develop: In the second line of development more and more decisions would be taken by a company's central IT function in the form of control algorithms. This would increasingly eliminate the need for autonomous human decision making and would lead to a kind of managed work which would leave little freedom for alternative actions. This scenario would also entail transferring to the IT function decisions which experienced employees could usually take more quickly themselves. The increasingly pervasive automation associated with this line of development has a powerful deskilling impact. The third line of development involving further automation and inter-plant or inter-company links is the one which leads to the new process monitoring or process controlling task profile. In this case the interface between process monitoring and the members of the logistics chain becomes increasingly important. Process monitoring intervenes when problems occur and reaches decisions on how potential solutions might be approached. This means that not only logistics process knowledge is required, but also specific IT knowledge in order to reach decisions and find solutions. 1. The first line of development would not leave decision making to the system, but to people. In this scenario people would receive supporting information on how to optimise processes, but would still be able to intervene autonomously in the process. In this case employees would have to be able and willing to rely on the technical systems. At the same time, employees would require and could acquire or develop a great deal of process-specific knowledge in order to intervene with problems or make decisions. The use of technology as an assistance system and instrument of support would necessarily generate a need for more advanced skills. Even if it is true that most companies will opt for greater automation, or more accurately further semi-automation, the project findings do not as yet suggest one particular direction has become dominant. In any case the IoT will certainly contribute to a completely new kind of relationship between humans and machines which, in the light of the IoT, will need to be entirely redesigned. This will concern both technical issues and the new division of labour between humans and machines and will also involve the social and ethical consequences of increasingly autonomous computerisation. These interconnections merit further study and redesign, including for specific jobs and occupations. 09

10 Further Final report» Qualifikationsanforderungen durch das Internet der Dinge in der Logistik» Newsletter» The logistics skills needed in the future for the 'Internet of Things'» Consequences of the implementation of the 'Internet of Things' for skilled work and the human/machine interface» Flyer» Books» Qualifikationsentwicklungen durch das Internet der Dinge. Trends in Logistik, Industrie und Smart House. FreQueNz publication series, W. Bertelsmann Verlag, Newsletters and flyers can be ordered from bernd.dworschak@iao.fraunhofer.de 10

11 Contacts University of Bremen Institute of Technology and Education (ITB) Am Fallturm 1 D Bremen Project manager: Prof. Dr. Georg Spöttl Project coordinator: Dr. Lars Windelband Phone +49 (0)421/ Fax +49 (0)421/ windelband@uni-bremen.de Dr. Tamara Riehle Phone +49 (0)421/ riehle@uni-bremen.de Internet Bremer Institut für Produktion und Logistik an der Universität Bremen Bremen Institute of Production and Logistics (BIBA) Hochschulring 20 D Bremen Prof. Dr.-Ing. Klaus-Dieter Thoben Phone +49 (0)421/ Fax +49 (0)421/ tho@biba.uni-bremen.de Dipl.-Inf. Felix Hunecker Phone +49 (0)421/ Fax +49 (0)421/ hun@biba.uni-bremen.de Internet Project sponsored by the Federal Ministry of Education and Research as part of the initiative on early identification of skill needs