“Digitalisation” for Logistics & Supply Chain

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In Brief

The logistics industry has entered a new chapter. One where text, pictures and sound is processed into a standardized digital form recognizable by interconnected computing capacities embedded across consumer devices. An inconspicuous, yet, ubiquitous organizer that automates all everyday objects to send and receive data. The chapter of digital supply chain (DSC), as it turns out, also, is devised by the greatest power man has ever experienced in the countenance of modern history. Even hurricanes and earthquakes shift in its command. A force more powerful than the most advanced science and Einstein behind the wheel. Nothing else has ever come remotely close to staking the same claim as the creator, except consumption power.

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Chicken and eggs, who. Emerging along the same lines with paradigm shifts in operating systems are changes in consumer sentiments and therefore expectations of today operators. The focus on the business side, thus, changes from low cost production to high-value service and digital products for customers anywhere in world. Inadvertently, the world as one big market undergoes the same updates in a period of major technological transformations, as well. Every business is affected. But Logistics and Supply Chain takes the biggest hit, as so does energy and communications that develop interchangeably. As Asia opens up, Logistics faces new challenges as a direct result of increased international demand. Overcoming complex cross-border and security formalities along with linking up systems that speak in different tongues, let alone speak to each other, are necessary to servicing far away customers with the same efficiency. Technology and innovation has become the ultimate answer to turning logistics conundrums into opportunity and boosting growth in Asia.

A complex industry with intense competition.

Taking into account market potential and change in consumption behavior each year, E-commerce in South East Asia is forecasted on the up side of $88 billion by 2025. Apps and online marketplaces have increased consumer demand with considerably lower price tags and magnified convenience at the tip of the finger and faster delivery with one click. Such environment requires supply chain structure to be real-time interactive and user friendly to changes in the same token. As with any change, this one also represents both risk and opportunity. Those with legacies to uphold often oppose change while those that embrace new ways of doing things are often seen as industry disruptors. Some incumbents, on the other hand, get stuck in the muddle of unprecedented technological predicaments vs. legacy requirements while startups marches ahead with the light-footedness to trial and error and find more sustainable solutions.

Gradual innovation development.

The IoT has totally revamped logistics and supply chain structure, making it easy to connect devices and process everything in a real-time way across the globe. Cloud computing allows Big Data processing and therefore an analytical power to find new solutions. It also allows businesses to adjust and implement such solutions automatically: setting a new watermark for organizational efficiently that spills into safety and security enhancement as well. Various parts of the business wants to develop a capacity for automation to eliminate redundant procedures and operations that occur within different units as well as across the organization. Organizational Drag, for that matter, according to Harvard Business Review, works counter to systematized standard operating procedures to hamstring overall efficiency and hold productivity in a scissor lock; thus, merit takes a different form altogether. Operational structure, automation and digitalization are three sides of the same coin. A capacity that businesses must accelerate in this period of reform.

While many companies apply technology to key business areas, many, especially those in sea and air transport, remain passive. A good example of Automation is, nonetheless, Warehouse Management (read SCG-L blog: Automated Warehouse…The Digital Alternative that applies Automatic Storage and Retrieval System (ASRS)) where Digitalization helps to optimize transparency. Digitalization is the heart of transparency. It is the key success factor to streamlining supply chain core competencies into one harmonized ecosystem. Businesses must work with tech-savvy companies to put in place a system that caters to customer needs and ever-adjusting market trends.

In other words, it is paramount for non-tech savvy operators to partner up with tech-savvy pioneers that can innovate ways to digitize their entire infrastructure. In today’s world, the reality is that e-commerce has expanded across the entire Southeast Asia. Rapid urbanization has led to a double-digit growth in internet penetration developing communities. Nevertheless, problems remain for going a full regalia digital market. Indonesia, for example, approximately 260 million people in the country are cautious about using credit cards online and prefer cash-on-delivery payments, instead (according to Nielsen’s survey which found 60% of respondents feeling insecure about online transactions), thus, an obstacle for operators to grow online. The notion is that is it typical for most operators and even consumer oppose the initial inconvenience and unknowns that come with game changing technology. As is the case with the internet decades ago and even the BTS system going through the construction phrase in Bangkok prior to wide popularity now. The key point is that online marketplaces require a significant deal of expertise on the logistics service providers’ part.

The Uber On-demand Logistics (Uberization)

A proven business concept for Asia In addition, the Uber business concept is proven to offer significant transport flexibility for business operators in terms of fleet requirement as well as response time to customer demand. The main reason is due to the fact that most freelance share-driving operators are able to operate through the same mechanism with businesses, suppliers and customers of all industries, effectively, in a systematized way. Overall, required fleet sizes fluctuates directly with demand in real time. Unsurprisingly, while Same-Day Delivery becomes an important factor for customers and online retailers, it becomes a big headache for operators that fetch from a self-own transport fleet. The ultimate solution is to outsource logistics requirements to specialized uberised powerhouses. With such, the Uberised Logistics trend in Asia becomes stronger by the day. As new players and startups as a result thereof will continue to emerge. The million dollar question is When, not Why. The key point to consider, on the other hand, is who will survive in the highly competitive market with ever changing patterns in demand and new technologies surfacing with major impact, daily-dilly. The answer has something to do with the good old saying: “you snooze you lose.” The vanguards that are able to save sour for sweet in this era of change and seize the opportunity to come out on top – will win the long race.

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Compiled by BLOG.SCGLogistics

Reference and pictures by e27.co, techcrunch.com, pexels.com

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