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A recent study concludes that customer experience is the top factor driving supply chain innovation. And the key to innovation is placing customers in the centre of supply chains. Article by Joseph Lim, Sales Director, APAC, BluJay Solutions.

Supply chain and logistics managers are feeling the impact of rising consumer expectations that come with the ‘now economy’ – a time when products, services and experiences are expected in an instant.

Southeast Asia is in the midst of an internet economy boom. The regions’ e-commerce sales were valued at US$72 billion in 2018, rising 37 percent from the year earlier. The e-commerce giant, Alibaba, can process five million parcels through customs in under five hours.

In a complex and fast-paced environment, the industry must adapt, but many of Southeast Asia’s logistics companies are inundated by infrastructure challenges and are unable to compete in terms of scale, network capacity and innovation.

According to a recent study conducted by BluJay Solutions and Adelante SCM, customer experience is the top factor driving supply chain innovation. The key to innovation is placing customers in the centre of supply chains.

 

Drivers And Barriers To Innovation

Innovation itself is a broad concept that many companies do not know how to approach. There is no doubt that new technologies are emerging that promise to transform supply chain operations, but only a few fulfil their potential. Some in the industry make the mistake of becoming enamoured with new technologies, while others mistakenly dismiss the benefits these can have altogether.

It sounds simple, but to innovate, businesses need first to build a firm foundation and get their processes right. Customer-centric businesses are focusing on transportation, warehousing, and improving supply chain visibility as a priority to optimise their operations, decrease costs and improve customer experience. Supply chain leaders who are always looking at ways to differentiate themselves, those with an outward-focused approach, recognise the importance of flexibility, collaboration and an integrated solution.

On the other hand, there are the laggards. These businesses have fallen behind as they’ve focused on cost reduction as a primary driver of innovation and have found it challenging to look beyond existing systems. Laggards have become complacent with their current environment, or they view certain barriers to innovation as being too difficult to overcome. This includes operating in silos between systems and processes, relying on outdated IT systems like Excel, coupled with fear or uncertainty on new, unfamiliar technologies and trends.

The truth is, innovation does not have to be disruptive. Instead it is the combination of new, proven technologies and optimising existing process.

 

Becoming Elastic

Today, the logistics industry largely relies on outdated legacy IT systems that cannot keep up with growing customer expectations for granular detail and visibility.

From fluctuations in demand and environmental challenges to political events like the trade war, disruption can be particularly frustrating for businesses. Things are harder in countries with inadequate infrastructure and high geographical barriers, like Indonesia, resulting in higher logistics costs.

Operating on a static, closed, on-premise transportation solution does not allow flexibility to adapt to the changes in customers’ demand and uncertainties that affect the market. The first step to overcome these changes is to join a global trade network. The power of a network lies in its ability to bring clarity and visibility to everything that is happening within the supply chain, while offering on-demand connections to thousands of potential carriers that have execution capabilities when needed.

Underlying this global trade network should be a centralised, cloud-based technology platform.  A benefit of cloud-based platforms is that they do not require time-intensive maintenance. Further, combined with the global trade network model, they allow a business to scale up, or down, dependent on the business’ needs. Businesses should look for platforms that are best of breed and provide capabilities such as market insights, automation to speed up processes (such as customs documentation) and provide the foundation for flexibility and operational creativity.

Companies need to have proper processes and systems in place and start to review outdated systems and begin to optimise these. The rise of automated and smart systems will change the way logistics companies interact and encourage greater collaboration and partnerships within the industry. A customer-led business that has a holistic approach to new technologies and considers the entire supply chain is vital for those looking to maintain a competitive advantage in the current market.

 

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