Background
Globalization and internationalization of the businesses have had the tremendous effect on the activities of the modern corporations (Sadler, 2003). According to The Guardian (2015). 2015 Gates Annual Letter predicts that the next 15 years will be driven by innovation in technology or innovation focused on giving access to the technology to a larger population and obtaining higher data collection and transformation speed along with the development of technologies and innovative solutions, aimed at vertical and horizontal business integration. That said, Accenture Technology Vision 2016 report outlines the major business technology trends for the near future: intelligent automation, liquid workforce, predictable disruption, platform economy and digital trust (Accenture, 2016).
This document focuses on the analysis of the specific company, Panalpina, one of the biggest logistics companies, which proud itself in excellent supply chain solutions for the global customers (Panalpina, 2015). Logistics industry, and international players,like Panalpina, are highly dependent on technological advancements and innovation in building on their competitive advantage and lead the market (Sadler, 2003).
Research Aim and Objectives
Two trends underpin the strategy of Panalpina: market penetration through expansion and market development through organic growth (Panalpina, 2015). This will further demand to focus on significant financial and Human Resource (HR) investments to align its long-term strategy with the external trends and forces (Moncka et al., 2014). From the organizational perspective and Panalpina specifically, intelligent automation and liquid workforce are the most relevant trends to consider, given the strategic goals (Accenture, 2015).
Innovation in technology is the key to organizational success and growth in the medium and the long term for all the major organizations. Panalpina is not an exception. Focus on the above-outlined technologies is essential for the company's strategy, but this strategy should be grounded on a solid financial planning and risk management to ensure the stability of the company in this volatile market (Teece, 2010). This argument is based on the fact that innovation in technology constitutes the major line in the organizational Balance Sheet, having the tremendous impact on the financial stability of the companies, like Panalpina (PWC, 2012).The Panalpina 2015 Annual Report outlines 4 pillars of its long-term strategy: cost-effectiveness, advanced innovation culture, unique internal capabilities and the exclusive and differentiated offer (Panalpina, 2015). The aim of this research is to examine the major capability gaps between technology in intelligent automation the liquid workforce and current strategy of Panalpina.
Research Objectives
The preliminary study of the contemporary business environment demonstrates that investment in technology is the key for Supply Chain industry. Accenture (2014) study on suggests that over 73% of the supply chain leaders, including Panalpina, extensively invest and use technology for organic expansion and market penetration, while this number is only 31% among the lower performers in the industry. Moreover, the empirical study by the same organization outlines that major investments are made in intelligent automation ad digital trust solutions within ERP and supply chain systems (Accenture, 2014). Marquez (2010) notes that the technology life cycle in the supply chain industry is one of the shortest, often allowing only 3 to 6 months spin of the same systems, before the mandatory upgrades and updates, putting pressure o the companies in financial terms. The technological background, available for the companies in logistics sector is developing at the exponential way (Accenture, 2015Short life-cycle of SC technology places a number of pressures on profits and “financially affordable” innovation process (Marquez, 2010). According to Accenture study on the supply chain industry, conducted in 2014, many companies choose to wait for the next generation technology at the expense of the outdated systems, as the lifecycle of the technological solutions is very low and at times waiting allows significant savings (Little, 2007). That said, the challenge is to find an optimal balance between the manual processes and automation of some of the essential activities the risk of being left behind the competition (PWC, 2012; Tecee, 2010). The research aims re-formulated in two objectives is:
How can Panalpina close the capability gaps to align its business strategy with the external technology trends in specific technology focused in intelligent automation, digital trust, and the liquid workforce?
How can Panalpina remain cost-conscious in its technology adoption processes, while effectively aligning internal capabilities and strategy objectives?
Literature Review
An analysis of the situation and the challenges, specific to the logistical and supply chain management industry globally, outline that technological advancements are the key challenge for SCM industry (Flynn, 2011). Accenture (2015) study demonstrates that companies in the contemporary business environment invest in a liquid workforce and process automation technology, enabling competitiveness in the constantly changing business environment, but they fail two critical factor in this strategy: workforce and cost. More specifically, there is a capability gap, where these companies fail to build a strategy to balance between the technology adoption and cost optimization, associated with this technology. The growth emerging markets, central to Panalpina strategy, is grounded on the investment in technology for AI and digital security, and Panalpina not only directly invests in R&D but is actively involved in Merger and Acquisition (M&A) through a purchase of Apollo Perth and Grieg Logistics. Understanding of how the company can optimize the cost of innovation in technology and remain leaders in the industry therefore is essential to this study.
Peirchy and Fang-L (2016) looks at the HR risks associated with M&A strategy in emerging economies. The point that the author makes is that failures to integrate acquired human and technology capital leads to significant losses in a long-term due to the reduction in productivity, quality, and motivation of employees. This outlines the challenges in addressing the liquid workforce trend under market expansion strategy. One of the solutions is to focus the efforts on internal potential and strengthening the organization through integration and AI and increasing the efficiency of existing workforce and systems (Monzcka, 2014). Indeed, this will allow reducing the risks of the loss of identity and reduce the overall investment in growth. The scope of technology available on the market is significantly wider than the needs of a single organization (Peirchy and Fang-L, 2016). For Panalpina, the key is to align the HR and SCM strategies with the internal capabilities through new technology implementation at a lower cost. This will require the review of the company’s position with regards to the adoption of new technology on the basis of cost-benefit and risk analysis (Teece, 2010).
Another important element of this discussion is the level of acceptance and risk, which the company is ready to take on when it comes to adoption of new technology. Little (2007) argue SCM industry is one of the sectors, which highly relies on technology, explained by the complexity of the business model and the fact that the competitive advantage of companies like Panalpina is built upon the ability to offer more cost and operationally effective solutions to their clients in Business-to-Business (B2B) sector, based on outsourcing of non-core activities (Devenport, 2013). This demands focus on technology and AI and its personalization for specific Key Accounts. Moncska et al (2014) suggest that companies should be able to prioritize their customer segments and align investment levels into technology based on the Return on Investment (ROI) and the lifecycle of technology. Competition analysis, strategic partnerships with B2B clients and high market trend awareness are the key to the successful operations of the company (Weele and Weele, 2005). With that, Panalpina should see the solution to the challenge of achieving technological competitiveness at effective cost through in-depth market research and strategic partnerships with its major customers, which can guarantee the continuity of the projects (Wang, 2009). Moreover, technology in the SCM industry has the very short life cycle, drawing on the different strategies through focus on the three types of innovation: incremental, breakthrough and radical. In order to be able to leverage the costs, organizations like Panalpina should look at breakthrough innovation as the core of its strategy in emerging markets, as it will give an advantage of early adopted and inimitability of the service offer, while avoiding additional costs of incremental innovation and high risks and costs of radical innovation (PWC, 2012).
Theoretical Framework and Research Design
Theoretical Framework
The research will be mostly guided by the interpretive perspective of Alvesson (1996), who suggests that individual analysis and research should utilize single theory, linked and explained by the personal view on business, political and economic situation. This means that the research will aim to use the case study and document analysis theories, which the author is intellectually familiar with.
The Alvesson's approach utilizes not only theory research but observation and interviews. The aim f this research and the timeline limitations and resources will, however, demand to narrow down the research methods to secondary data collection only, such as literature and studies, conducted in the period of 1990-2016. The period for research is determined by the major developments in technologies, influencing the organizations in the logistics sector and the implementation of such important concepts as AI and ERP in the core of supply chain business strategies and customer offer in the sector (Devenport, 2013).
Research Design
There are many examples of the Panalpina's scope of work with its B2B clients, based on the company's publicly available Case Study Database. Taking into account the possibility to have access to some specific and relevant case studies, the research of Panalpina with the focus on the current and the future challenges related to the adoption of new technology. The purpose of this research, is not to identify or evaluate the appropriateness of the quantitative variables, such as return on investment (ROI), collective and individual performance improvement and positive medium-term impact on bottom line of partnering companies, which Panalpina have developed to assess its strategic fit, but rather to understand the theoretical framework, real-life cases, and outcomes. Additionally, the research aims at assessing the level of adoption of technology in intelligent automation and liquid workforce and the degree to which the company manages to leverage the risks and financial costs associated with the chosen degree of adoption. The problems, identified in the research are not quantifiable and focus on the strategic level of organization. Considering that, qualitative research methods will be utilized. The focus on this specific method will ensure that the research is adequately built to be concluded with quality and within the given timeline.
Research Methodology
As the study is focused on the specific issues and challenges that surround the Panalpina company, this study will be focused on the analysis of various information sources, including some raw statistical data and an in-depth study of the theories and frameworks, presented in the works of business and academic authors over the period of 1990 – 2016. The author aims to apply three major qualitative methods of analysis:
Document analysis;
Structural and content analysis;
Document analysis will include both, print media and the online sources, such as company website, blog and digital reports, available for general public and those, targeting more specific stakeholders. The objective of this method of research is to go through a significant data to be able to draw upon specific observations, relevant to the company.
The structural and content analysis will allow narrowing down this research.The key element of this methodology is to make emergent conclusions and gather the information that will be further defining the research question, determine its relevance and the feasibility of this study. More specifically, the research will focus on the analysis of the effects of technology and innovation on the operational and commercial aspects of Panalpina and its competitors.
Finally, the case study method will be utilized to analyze the specific events, relationships, and developments, which surround Panalpina and define its strategic approach to the business in the past, present and the future. This method will allow elaborating the study with specific perceptions and the understanding of the intended outcomes as they relate to the actual events within the company. Additionally, the research aims to develop several qualitative variables, such as the retention rate and collective performance levels, and brand image, which could build on more comprehensive conclusions with regards to the future strategy and the change management of Panalpina.
Ethical and Accessibility Issues
This research will be conducted in accordance with the AoM Code of Ethical Conduct,outlining the principles underlining the professional responsibilities in research and enforce ethical standards, which apply to academic studies, such as integrity, responsibility, and respect. AoM as the guidance for this study will ensure that it cannot harm the participants.There is little concern with regards to the possible breach of confidentiality as no documents or interviews will be conducted to expose the personal or organizational data, not available to general public (Flynn and Goldsmith, 2013). Based on the widely available documentation in online as well as print media, this research will only involve non-sensitive data.
Another important aspect of academic research on a business topic is plagiarism, where the works presented as unique, while it uses and borrows the ideas from other studies, previously conducted. To avoid deception as well as plagiarism issues in this study, the author will accurately cite and reference all the information sources, directly and indirectly, used to complete this analysis (Miller et al, 2012).
There are several accessibility considerations to this study that should be taken into consideration (Richards, 2014). Panalpina is a publicly traded company, allowing access to some of the major high-level data, including the balance sheet, share prices, and debt ratios. This data will limit the scope of statistical information about the company. Secondly, in order to ensure the quality of the qualitative research methods, it was decided not to include observation and interview methods in the analysis as it would demand significantly higher time and resource investments.
Timeline
The above timeline is a comprehensive guide for the authors for collection, evaluation, and analysis of the data. It will provide a basic framework for the follow up on the progress and the intended outcomes.
References
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