Trends that will disrupt MEA supply chain industry
Gautam Kumar, Co-Founder & COO of FarEye talks about trends that will drive innovation in the region's supply chain and logistics industry, namely competition with aggregators, resolving the ‘inaccurate address’ problem and meeting the rising customer expectation.
Thanks to customer expectations, the supply chain, and logistics industry have evolved significantly over the past few years. Brick and mortar processes of delivering goods and services are just not good enough. Hence, surfaces the need to deploy technologies that empower business to keep up with customers.
In 2018 we witnessed significant advancements in the supply chain and logistics field. But is it enough? No, there is still a plethora of challenges that need to be addressed.
In Middle East and Asia (MEA), small-scale restaurant owners are finding it difficult to compete with food aggregators that have no intention to generate profits. In countries like Dubai, inaccurate addresses remain a big challenge. In addition, improving last mile delivery to boost customer experience will continue to be a prominent trend.
So, as we step on 2019, let us quickly glance through the four major supply chain and logistics trends that are going to impact businesses in the MEA region.
Adoption of Advance Supply Chain and Logistics Platforms
In the Middle East region, revenue from food the delivery market is expected to grow at an annual growth rate of 13.6 percent, resulting in a market volume of US$2,804m by 2023. Hence, it’s not surprising that investors will continue to fund food aggregators.
Not worried about generating profits, these food aggregators are seldom known for playing by the rules and conflict of interest between these aggregators and restaurants owners are common.
The question is how does a restaurant compete with these aggregators who are delivering food at cut-throat prices? There is no easy answer to this but adopting an advanced supply chain and logistics platform can surely solve a lot of problems.
Take this case in point. A pizza joint in Dubai wanted to partner with a food aggregator to scale deliveries. Unfortunately, it never worked out because as the latter was insisting credit cards payment options on their platform and demanded 37 percent of total transaction value.
The only way out for the company was to have a supply chain and logistics management platform, the will make delivery efficient and cost-effective. Leveraging such an advanced platform, the Pizza joint built its own proprietary digital e-commerce platform to execute deliveries and the platform worked wonders for the pizza joint.
An advanced supply chain and logistics software help business increase fleet visibility, boost customer experience and engagement, optimize delivery routes, customize delivery locations, predict communications and so much more. Moving ahead, with the way eCommerce is flourishing, I feel it will be a necessity for organizations to digitalize and automate their logistics operations completely.
Dealing with the ‘Inaccurate Address’ Challenge
The incorrect and inadequate postal address is a major problem that supply chain and logistics business face in the MEA region.
A large logistics company in Dubai highlighted that in the Middle East it is common to see packages and letters addressed to a person in a city with no proper delivery address. All they usually have is a name and a mobile number. And that it is the delivery company’s responsibility to investigate, research and find out where is the intended delivery address.
Imagine this. You are a reputed logistics company. It costs you around $5-$7 to deliver a parcel to a customer’s location. In rare cases, it may so happen that a few delivery addresses provided by customers were inadequate or did not have a proper postal code.
Like a good logistics company, you took it on yourself to spend more time, money and manpower to unearth the actual location of the customer and deliver the parcel. In some cases, the cost incurred in doing this might not hurt a company’s bottom line but imagine if this happens regularly with tens and thousands of parcels. The delivery cost will balloon to some tens of billions of dollars per year. And that’s exactly what’s happening in the MEA.
To resolve this ‘inaccurate-address’ problem, supply chain and logistics companies need to embrace AI and ML-based platforms that can leverage advanced technologies to geolocate a customer’s delivery address intelligently.
Improving Last-Mile Delivery to Boost Cx
Next-day deliveries, customizing delivery locations and timing on the fly, paperless billings and more such customer expectations will continue to drive businesses to embrace advanced supply chain and logistics platforms.
Online customers in the MEA region want retailers to deliver ‘in-store’ like buying experience focused on instant gratification. According to Google, in UAE only 53 percent of retailers offer click and collect as a service, and only three retailers offer next-day delivery.
The only way to be on top of the ‘customer experience’ trend is to drastically improve last-mile delivery with advanced Saas-based logistics and eCommerce platforms.