Interview: The New Institute Management about AI and Logistics

"Prof. Henke and Prof. Clausen, while Prof. Kirchheim just joined the institute in 2024, you already have many years of experience at Fraunhofer IML. What’s different today in comparison to when you started? How has logistics research changed since then?"

Henke: In the last eleven years, since I began working in Dortmund, enormous strides have been made in logistics and supply chain management research – not only due to the occasionally disruptive changes in industry and society in recent years, but also because of the breakthrough of new technologies such as artificial intelligence (AI). That means the ecosystem in Dortmund’s scientific hub has become even broader and more diverse than it already was in 2013. Fortunately, two things have stayed the same: 1. We have and are quietly pursuing a strategic plan that will take us well into the future. 2. Logistics continues to be the field where new technologies always break through first. In the future, we want to focus stronger on developing new business models for these technologies along supply chains.

“Logistics continues to be the field where new technologies always break through first. In the future, we want to focus stronger on developing new business models for these technologies along supply chains”

-Univ. Prof. Dr. habil. Dr. h. c. Michael Henke 

Clausen: Much has changed in the more than 23 years that I have been a director of Fraunhofer IML. When I started, online retail was only just getting off the ground – today, it is a vital platform for (almost) all types of goods, and we are considering how we can manage cross-channel coordination of distribution processes in real time, i.e., take a “unified commerce” approach. Back then, there was no talk of the internet of things; today, we’re realizing how many aspects of that concept can work in actual logistics systems. Back then, we said environmental assessments were important; today, we know much more about how we can actually implement them in practice – we helped to develop ISO 14083 and we are driving the transition to low-carbon logistics. Back then, we had laid the foundations for DISMOD and had already implemented it in a number of industry and trade projects; today, this transportation logistics software is available as a web-based program, has been improved with multimodal features and has been used as the basis for 300 projects and five licensed applications, which means it is probably Fraunhofer IML’s most successful software. Although the scientific world was already talking about AI in my early days at Fraunhofer IML, we’re only starting to be able to fully exploit its potential and put it into widespread application now. These days, we are also giving more importance to interdisciplinary collaboration and agile working methods, which are bringing us new opportunities. One thing that will probably always stay the same is the need to provide the best logistics service while making the most cost-effective use of resources possible – but in the logistics sector, our confidence has (justifiably!) grown. Because the sector orchestrates the flow of goods and information, logistics is crucial to the success of companies and economies. This is true in general, but as an institute we have been able to contribute a great deal to this over the last two decades.

"Prof. Kirchheim, you have taken over from Prof. Michael ten Hompel, who was one of the driving forces in the institute for over 20 years. Which topics will you be focusing on in your research, and are you planning to prioritize any new key areas at Fraunhofer IML and in the Chair of Materials Handling and Warehousing at TU Dortmund University?"

Kirchheim: You’re absolutely right – Prof. Michael ten Hompel has had a significant impact on intralogistics in the last few decades, and in his work here at Fraunhofer IML, along with his colleagues and all our employees, he has made a huge contribution to the ecosystem. With his visionary, holistic approach, he has driven progress around topics and concepts such as the internet of things, simulation-based AI and the digital continuum. So I personally feel I was very fortunate to take over the management of an institute that has developed so well and is running smoothly. However, this means I need to be the one to adapt, because I don’t believe in changing a running system. In summary, after almost 100 days at Fraunhofer IML, I’d say we’re moving forward in the right fields. And we will keep this progress going, particularly in mobile robotics and artificial intelligence. Deploying large language models in industry is a very topical field of research right now. But in this area, too, our employees are already bringing their first projects into implementation with our partners. Exactly the same applies to the Chair of Material Handling and Warehousing, where Dr. Moritz Roidl has been making significant contributions to the theoretical side of this field for many years. Maintaining the close connections between Fraunhofer IML and the Chair is important to me, because basic research gives rise to relevant topics for applied research, which can then be transferred to industry. At the same time, we will be actively working on new topics and incorporating them into our research agenda.

"What topics are going to shape your divisions – Material Flow Systems, Enterprise Logistics, and Logistics, Transport and Environment – and the research they carry out?"

Many high-performance intralogistic systems today contain kilometers of continuous handling equipment and, depending on the circumstances, large sorting machines. These are not flexible systems. It takes a long time to install them, they cost a lot to service and maintain, and you need to do a huge amount of work to adapt them to new conditions. Autonomous mobile robots, on the other hand, are flexible and don’t come with any of these disadvantages. They are the future of intralogistic transportation. With the LoadRunner, evoBOT and O3 dyn, we’ve made huge strides in the last few years in terms of researching and developing mobile robots for the logistics systems of the future. Now it’s important that we stay on the ball. When we look to the future, humanoid robots are already on the horizon. In recent months, there have been some press releases from large corporations that have begun collaborations with companies or will be carrying out initial tests in the areas of production and logistics. And one thing is clear: Logistics will be a major field of application for humanoid robots. And artificial intelligence is at the heart of all these developments.

“Logistics will be a major field of application for humanoid robots” - Prof. Dr. . Ing. Alice Kirchheim

But I would like to add that here at Fraunhofer IML, we’re not always just working on new trends and fields. We also have a lot of people working on exciting, slow-burn topics, including sustainable packaging, assistance systems for ergonomic workplaces and our warehouse logistics platform, not to mention our continued efforts to drive digitalization by creating universal information processes in logistics systems.

Henke: The field of corporate logistics will become more and more focused on supply chain management, which will actually encapsulate the flow of materials, information and finance. That’s why we’re working particularly hard in industrial research projects to lay the foundations for tools such as an AI system for digital twins that can address financial and environmental issues. In the future, this tool will allow us to carry out virtual simulations based on not only physical, but also financial data, meaning that the optimizations for every step of the chain, from raw material suppliers to end customers, will then be improved in real time. In doing so, we will also establish a basis for truly circular value creation, a key element of the fight against climate change and one that we must all unite across scientific disciplines to achieve.

“Closed material, information and financial flows are the basis for true circular value creation, which we must all work on together and across disciplines to stop climate change”

-Univ. Prof. Dr. habil. Dr. h. c. Michael Henke 

With these developments, we are moving further and further into the digital continuum, which will be built on the ecosystem provided by the “Silicon Economy” initiative and for which we already have all the technologies we need. These technologies are being used more and more on companies’ shop floors; however, on the top floors, they often have yet to be used as a basis for decision-making, e.g., in finance divisions. If we are to make the idea of circular value creation a reality in the future, this must and will change. It will then be possible to address both sustainability and resilience issues under the header of circular supply chain management. Consequently, there is an urgent need to expand existing technologies in a way that complements the system of management that has been further developed so that these very technologies can be used – this would be technology management at its best. In our scientific hub in Dortmund, we are making advancements in technology management by integrating new technologies into supply chain management, resulting in increasing convergence of these technologies. As such, we are progressing beyond previous approaches to the digital transformation, because we are considering value creation networks in their entirety. The process of operationalizing cutting-edge technologies in business management is closely linked to considering and evaluating them from a commercial point of view. All this only covers a small number of the topics that will shape research in the fields of company logistics and supply chain management in the years to come.

Clausen: Logistics is indeed more than just transportation, but it will never get by without freight transportation. We work in our projects and with our customers to develop innovative solutions so that we can continuously improve the efficiency, sustainability and adaptability of structures and processes within transportation logistics. Digitalization and efforts to achieve sustainability have been a key factor in this for many years. We have also recognized and are working to harness the potential of artificial intelligence and machine learning. We are seeing high levels of interest in multi-modal logistics solutions. Many research projects now and in the foreseeable future will focus on using electric vehicles and alternative fuels to reduce CO2 emissions, in order to meet the industry goal of making logistics and transportation more sustainable. Other important issues include efficient solutions for last-mile deliveries – not only, but often in urban areas – and low-noise logistics. The role of humans in transportation logistics processes, a good understanding of human-system interactions and the adaptability of logistics systems will be highly significant in this context.

"Everyone is talking about artificial intelligence right now. What influence will it have on your respective divisions in the coming years and how will it benefit us as a society?"

Henke: AI is having a huge impact on logistics in general and on corporate logistics in particular. In the future, large language models and foundation models will also be used to a greater extent along supply chains, so they can be managed more effectively than ever before – these systems will be deployed in fields ranging from demand forecasting to risk management, so as, for example, to ensure that the beans for our morning cup of fresh coffee were actually produced sustainably. Wherever AI is applied in the future, the most important thing will continue to be connecting technologies and developing new business models. For example, “SKALA”, a large project we have just launched with funding from the German Federal Ministry for Digital and Transport (BMDV), will focus on developing scalable AI and blockchain solutions for automation and autonomization in value creation networks. Using these technologies in this context is extremely challenging because it involves a large number of financially independent partners that do not necessarily trust each other, but must exchange data, goods and values. Transparency and data sovereignty are essential prerequisites for exploiting the potential of AI, and these aims can be achieved through blockchain technology. The SKALA project team is developing open source AI and blockchain components in the form of software modules, AI models, smart contracts and adapters for connecting with third-party systems. These components represent a unique opportunity for quickly and efficiently creating and disseminating de facto standards for technology convergence in a way that would not be possible for individual companies.

Clausen: AI has developed enormously in recent years and is becoming part of more and more areas of our everyday lives and the business world. It can help us automate repetitive tasks and is already increasing information volumes and leading to better information personalization, as well as helping improve route recommendations or device controls – for everything from logistics facilities to “smart home applications.” AI also opens up entirely new possibilities when it comes to analyzing large data volumes and offers impressive potential in the creative field (text, image and video). For example, efficient analysis of images and large data volumes could help improve operational processes and planning decisions in transportation logistics. In maritime logistics, we have successfully combined voice recognition and radiolocation at sea. Meanwhile, in the healthcare sector, AI could lead to quality improvements in diagnostics and, hopefully, greater efficiency in the very necessary process of documenting treatment and care. In all these areas, we at Fraunhofer IML work at the cutting edge and create value for our partners in industry, trade and service companies through innovation.

Kirchheim: In the last two years in particular, large language models have shone a spotlight on the ways in which artificial intelligence could be harnessed in our everyday lives, both professionally and personally. Now it is a matter of developing the initial hype into use cases that can be applied in industry. Automatically generated sustainability reports are an excellent example of the practical possibilities of this technology. We are developing a solution that will automatically generate and amalgamate data from an ERP system and carry out any calculations that are needed to translate this data into a sustainability report that complies with the applicable regulations. I don’t know anyone that enjoys doing that kind of task manually, and it’s also very error-prone work. If activities like these are no longer necessary, skilled workers will be able to focus on doing the tasks that we humans are best at. If you follow this train of thought and start compiling a list of how many such tasks are involved in the average company, then it’s clear that our entire society will benefit from AI.

“Large language models have catapulted the usability of artificial intelligence in everyday professional and private life to the center of attention. The task now is to develop applications for industry from the initial hype”

-Prof. Dr.-Ing. Alice Kirchheim 

"Prof. Clausen, you are the chairman of the Fraunhofer Transport Alliance, which has 20 years of experience in successfully pooling the numerous Fraunhofer institutes’ transportation expertise. What role can a strong scientific alliance play in German politics (in the context of the transportation transition in particular)?"

Clausen: We are in constant demand in our capacity as a neutral scientific interface between business and politics. As an institution, we cannot and do not want to be a political party or a lobby organization, even if we may naturally like to support certain goals at a personal level; however, this can in turn motivate us to use our research to help create better solutions for business and mobility in our society. Even at Fraunhofer, we do not always hold the same opinions when it comes to questions of which goals are more important and which solutions are better or even necessary, and I am emphatically in favor of allowing this. However, what is important for any Fraunhofer institute or for all of us collectively in the Transport Alliance is the replicability of our results and the quality of the scientific work with which we derive them.

"Prof. Henke, let’s venture a look into the future: Where do you see Fraunhofer IML and the domain of logistics research in ten years’ time?"

Henke: Even today, we are already “the place to be” for applied research in logistics and supply chain management, in Germany, in Europe and around the world. We want to maintain and expand this position by increasingly presenting logistics not only as a first use case for new technologies, but also by means of a further step where we demonstrate that the technologies and business models originally developed in the logistics sector can also be deployed effectively in other functional areas and industries. As to where we will be in ten years’ time, I cannot make any legitimate predictions in times as wild as these. However, I do have goals: for example, my aim with regard to our project, SKALA, is that within two to three years, no one will be able to overlook Dortmund when it comes to combining AI and blockchain in general, even outside the fields of logistics and supply chain management.