Originally published in Advancing ASEAN in the Digital Age Book, 14 November 2017.

 

Logistics and The Digital Age in ASEAN

We are now moving into the fourth industrial revolution of significant relevance to the logistics industry – the first being steam and water power; the second being electricity; and the third being automation and IT. This time it is internet of things, e-commerce, big data, 3D printing, artificial intelligence such as autonomous vehicles and energy storage such as electric vehicles.

eCommerce

ASEAN is one of the largest and fastest growing eCommerce markets in the world, with Vietnamese programmers at the forefront of development, Indonesia offering creative and complex distribution options to the end consumer and Thailand, Malaysia and Singapore having well established eCommerce infrastructure already.

The supply chain industry has been using eCommerce tools such as electronic data to communicate with its customers for over 20 years. Supply chain partners use the data to exchange order information between their distribution centres and sales and customer service teams to ensure deliveries occur on time and accurately. The explosion of eCommerce in Asia uses the same concept to communicate directly to offer a more customised and targeted channel of supply.

To remain competitive, logistics companies must respond to customer needs: eCommerce is increasingly becoming a tool for large retailers to connect with their individual outlets to provide services such as automated inventory management and reordering services using point-of-sale data. This is particularly relevant in the supermarket industry, where, across ASEAN, competition is already at advanced stages between major retailers for online purchase and delivery services.

In ASEAN countries, traffic congestion will continue to be a barrier to the efficient delivery of goods. The industry must not be held back by this and the adage “you are not stuck in traffic, you are traffic” illustrates that until public transport infrastructure improves and attitudes towards private car use changes, we must get around the problem. Put simplistically, the issue of efficient road transport and infrastructure is a similar innovation tale – design around the problem and improve.

The low traffic speeds in Bangkok and Jakarta for example, are directly influencing the rise of eCommerce with residents finding it increasing difficulty to access shopping malls and supermarkets. The consumer stands to benefit from efficient software, planned delivery schedules and motorbike transport.

These new networks need intelligent systems to provide accessibility and visibility of transactions for distributors and consumers. Until recently, the high cost of driver devices was a considerable barrier to completing the visibility loop in the supply chain. But increasing wage rates and low cost smartphones is now solving this problem.

As a result, new apps are appearing in the market, replacing the old and expensive enterprise track and trace solutions with agile and intelligent proof of delivery (ePOD) solutions. These apps allow customers to see where their goods are in real time, and allow sellers and retailers to receive instant confirmation of orders reaching their destination.

This development significantly speeds up the order to cash cycle for many businesses from the manufacturer through to the delivery driver. It also maximises the flexibility of delivery options by using GPS apps to adjust deliveries en route based on traffic conditions or changes to customers’ requirements.

Supply chain providers like Linfox are now successfully filing this gap with a fulfilment solution that plugs into our customers’ online presence, providing a fully integrated service and direct access to the end-customer. It offers comprehensive services for customers’ B2B and e-commerce offerings – ranging from basic ‘pick and pack’ and dispatch services to reverse logistics, repairs and track and trace.

Logistics is a key part of the process and Linfox is working closely with our customers to provide solutions such as greater network visibility, shorter delivery timeframes, and innovations in warehouse operations to meet higher volume small order requirements.

Looking ahead

The fourth industrial revolution – the internet of things, ecommerce, big data, 3D printing, artificial intelligence such as autonomous vehicles and energy storage such as electric vehicles – is well on its way.

As the use and understanding of big data and analytics deepens through the expansion of the Internet of Things, the range of options for end consumers will be boundless. 3D printing will provide flexibility on the supply side and hence allow the consumer to tailor elements of the product to meet specific requirements. It will affect certain industries quicker than others, particularly those that require bespoke parts that may not be mass-market products. However, if the consumer demands it, the level to which it may disrupt the logistics market may increase.

Autonomous vehicles appear to be a fair way off the market, but its impact on road transport delivery will be huge. Long distance driving will no longer be impacted fatigue laws, programmers will argue that autonomous systems are more efficient than human drivers and eventually, cheaper. In the warehouse, automation is already well underway, and for ASEAN, as soon as the cost of implementing and running automated warehouse systems makes economic sense, it will eventually replace workers.

 

Many of the world’s top technology companies are looking at improving energy efficiency. Whether this is through fuel technology or electrical battery power, these advances will also bring efficiencies for the logistics sector.

 

Many of the world’s top technology companies are looking at improving energy efficiency. Whether this is through fuel technology or electrical battery power, these advances will also bring efficiencies for the logistics sector. Fuel economy is one of the greatest challenges the transport industry will face as valuable resources become more scarce and more expensive. To avoid increasing the price per kilometre, the road industry and supply chain will need to rely more on electricity, battery power and other innovations. Tesla is due to unveil its new Tesla Semi Truck in October this year, with a reported range of 320-480 km on a single charge, which shows recognition of the importance of this technology to the logistics industry. With niche engine makers such as Cummins, high technology companies such as Dyson and motor giants such as Toyota also ramping up activity and we can expect imminent advances in this market.

Improvements in the supply chain should be embraced, as they bring significant benefits to consumer, in the form of choice and price and to the transporter and owner of the product as well as the environment. This must not be at the expense of safety, which should always be of paramount importance and policy makers will need to get ahead of the curve to ensure they don’t lag behind technological advances and changing customer demands.

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About James Evans

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