Kuehne + Nagel, the largest freight forwarder in the world, accounting for 15% of the world’s air and sea freight, and with over 80,000 employees in 109 countries, found that their Contract Logistics function was not sufficiently responsive to customers.
To meet the growing needs of e-commerce customers, Kuehne + Nagel introduced low-code application development, externalizing customizations from its core warehouse management system and enabling increased agility.
The adoption of low-code enabled Kuehne + Nagel to develop 23 “middleware” applications, retaining and gaining multiple Fortune 500 customers while reducing delivery timelines from months to weeks.
See for yourself how outcomes like Kuehne+Nagel's are possible with the Mendix platform.
E-commerce has made the process of purchasing products – from bulky auto parts, hazardous chemicals, prescription drugs, specialized bicycles, unevenly shaped furniture, fragile stemware, to perishable foods and beverages – much simpler. But it’s also created intense pressure for companies to deliver those products even more swiftly and efficiently than ever before.
Manufacturers who may have once handled part or all of the shipping logistics in-house are leaning harder on logistics service providers for more comprehensive, immediate help in order to stay competitive. E-commerce has also left logistics providers in a lurch as they attempt to figure out how to move swiftly without sacrificing the dependability they are known for.
“Big manufacturers are really struggling,” says Judith Potters, Customer Project Manager at Kuehne + Nagel, a logistics service provider established in 1890. “They want to start with e-commerce, but they don’t always know how. They are good at manufacturing and we are good at logistics.”
Kuehne + Nagel holds the expertise to handle all the pieces of the journey – plus a whole lot more — behind their warehouse doors. But like the big manufacturers that they serve, Kuehne + Nagel has also had to adjust its traditional application development model to keep pace with its clients, who need not only speed and efficiency of delivery but customizations to better serve their markets. To remain one of the top logistics providers in the world, Kuehne + Nagel sought a way to deliver those customizations, keeping up with the pace that e-commerce was setting.
From static to dramatic
Kuehne + Nagel, with 82,000 employees in 1,300 offices in more than 100 countries, sees a big opportunity as they bring their solutions to market: They can link to their clients’ customers and create a seamless shipping and warehousing experience that will benefit all. “In the past, we were just pushing full pallets forward,” says Arthur Godschalk, VP of eCommerce Solutions and Contract Logistics at Kuehne + Nagel. “Now, we have to break that down to individual parcels and ship it directly to the end consumer. Ship it across borders, where customs and trade compliance become quite important. We try to bring solutions to the market, fulfilling that when you buy something in China, it gets delivered in the U.S. and that customs is already paid up front.”
Especially for savvier e-commerce companies, complete with marketing teams who want to test new approaches and make changes on the fly, Kuehne + Nagel realized that they were simply not going to be able to deliver customizations quickly with their static, warehouse management system (WMS). Changes to their WMS could take six to nine months due to the intricacy of the system, and any modification could have a ripple effect. “We could not cope with the pace of change that was requested by [some] e-commerce customers,” says Godschalk.
Kuehne + Nagel wanted to make customizations to its WMS that matched what the customers were demanding, without sacrificing steady warehouse operations. The IT and business teams at Kuehne + Nagel decided to move to low-code development, helping them both maintain control and gain speed by creating middleware applications that sit between their WMS and their clients’ systems and processes. “One of the good things that we did … is not to try to make our WMS more agile, but to create middleware to make sure that we can adapt faster,” Potters says. With low-code, “it is quite easy to involve all parties to communicate about it. Which makes sense, especially when you compare it to a WMS, which is really static. With Mendix it’s easily done, so you can really make it to the wishes of the customer.”
With their approach, exposing their WMS and undertaking changes at breakneck speed, Kuehne + Nagel became the contract logistics company to crack the e-commerce code. This became clear when they addressed concerns of a Fortune 500 beverage client with serious doubts about Kuehne + Nagel’s capabilities, according to Godschalk. However, the low-code middleware solution they built assuaged any fears the client had.
Kuehne + Nagel went live with the solution within four weeks. More importantly, they could make changes with unprecedented agility — each change took two weeks or less, depending on the complexities.
“We showed this customer that we were capable of reacting in a very short period of time, which gave them confidence that we were the right partner of choice…and that we have the agility to cope with those changes and keep pace with whatever the market requires,” says Godschalk.
With the right combination of speed and control, Kuehne + Nagel maintained the steady warehouse operations that they’ve been known for across the globe while embodying the agility e-commerce companies expect.
Kuehne + Nagel staying fresh
Building with low-code has allowed Kuehne + Nagel to create an application once and then share it across global operations – internally and for their customers. “Kuehne + Nagel differentiates itself in the market by copying modules and ways of working across the globe,” Godschalk says. “We do business with the Fortune 500s… Wherever you go, the same way of working can be guaranteed.”
With their ability to customize and change on the fly – a tall order for a company their size – Kuehne + Nagel have since brought on more Fortune 500 firms as clients, ranging from a healthcare company with a prescription delivery model, a beer brewer changing its business model to deliver to individuals rather than stores, to a supermarket with distribution efficiency challenges. “By showing off that we could actually do this, some other big brands came to us to help them to enable their strategy on e-commerce,” Godschalk says.
The supermarket customer specifically struggled with efficiencies in their warehouse inventory management and shipping logistics, asking Godschalk and team to improve their process. “What those supermarket chains like to see is full trucks,” Godschalk says. Knowing that one full truck, rather than several half-empty trucks, is more cost-effective, the supermarket customer was asked to provide their weekly forecast, allowing Kuehne + Nagel to conduct the ordering with an app, which dealt away with the logistical complexity and opacity that the supermarket client was experiencing.
Building with low-code has allowed Kuehne + Nagel to create an application once and then share it across global operations.
This level of simplicity and transparency made its way into another customer experience with Kuehne + Nagel. “We just made the information transparent for the supermarket chains, for our customers, for our manufacturers, and for us as a logistics service provider so that we can plan in an optimum way for deliveries…to supermarket distribution centers,” he says.
Another improvement Kuehne + Nagel was able to implement alongside their WMS with low-code applications was visibility and prioritization for warehouse operators. Marten Doeser, Logistics Innovation Specialist at Kuehne + Nagel, provides an example: “One of our e-commerce customers asked us to implement same-day delivery. We had to make sure that in the warehouse, it was really easy for the operators to see [that] these are the same-day delivery orders. We need to prioritize those, and at the end, also inform the carrier.” He indicates that in the past, those kinds of changes to applications would take months. But with low-code, “we were able to do the change in three weeks.”
High performance with low-code
Beyond responsiveness, Kuehne + Nagel is realizing benefits from a wider array of participants in application development. “Provide tools for those who need to make those changes,” says Godschalk. “We can’t do it in our corporate legacy systems. That’s not the case anymore if you use low-code.” For instance, one of Godschalk’s lead developers was a customer service manager without any technical background. “He could not code. So [low-code] helped me, and him, because he could make a career out of it, make solutions, and bring joy to the organization.”
The low-code applications built so far by the Kuehne + Nagel IT and business teams have focused on contract logistics — including logistics optimization, order management, a portal for operations teams to input data, and customized labels/invoices/packing lists. “In four years…we made 23 applications,” Doeser says.
“If you forget the idea that the IT landscape is what it is, it’s amazing sometimes even how easily you can just create another app that will be placed in the middle and will solve an issue which seemed largely unsolvable before,” Potters adds.
Kuehne + Nagel’s low-code and agile development practice coexists with their long-standing traditional approach to application development. “Waterfall is our standard…but that doesn’t cope with what you really want in e-commerce,” Godschalk says. “Because e-commerce is the opposite: Get it done, and then make it perfect.”
Using low-code to customize clients’ experiences and keep pace with disruptive e-commerce has allowed Kuehne + Nagel to remain doing what they’ve done for the past 130 years: to keep on delivering.