Tuesday, January 19, 2021

Up to Speed

If greater use of e-commerce is going to be part of our so-called new normal, then our existing logistics service providers have a lot of work to do.


I was reminded of our General Membership Meeting roughly two years ago, when we explored the last mile and made sense of the challenges facing it today. As e-commerce continues to boom, last mile players admitted that they have problems keeping up with increasing demand, especially during those sale periods around Christmas time. While they’re able to manage customers’ expectations (and perhaps provide them with a sense of control and reassurance by letting them know of where their orders are most steps of the way), they’d still much prefer to be able to deliver orders within a few days.


That, of course, means significant investment both in capacity and capability. As we’ve illustrated before, e-commerce players have done a lot to push the envelope in this front, utilizing technology to allow for faster fulfillment and to provide customers more options for paying – a particular bugbear in a country where a lot of citizens remain unbanked and many choose to pay cash on delivery rather than via credit card. Yet investment in physical facilities are held back by regulations and cost, and finding the right people remains a challenge, particularly in areas where many logistics companies jostle for the same pool of talent.


That GMM is two years ago, however, and it’s safe to say some changes have taken place, More of the larger logistics service providers have responded to the call of e-commerce, whether by providing additional capacity in distribution hubs, or on the home delivery aspect. As I write this, I’m still waiting for a phone we ordered online. (The phone was dropped badly, something you do not want to do during a lockdown where almost everything is closed.) It’s been a week, and we’re still waiting for a waybill number from our last mile provider. Sure, these are different times, but logistics providers are allowed to operate at full capacity from the outset,  which suggests that as demand goes further up alongside the need to remain physically distant, last mile players are still trying to keep up.


The challenge issued then to other logistics providers is to be able to offer services that would satisfy e-commerce players. They said that, despite their in-house solutions, they’re more than willing to work with more established companies to fill the gaps. It makes economic sense: smaller players, particularly in the provinces, can offer levels of service that suit the nuances of the area, and one that the e-commerce players might not be able to pick up immediately. Also, it provides cost savings, outsourcing these functions instead of investing in new facilities altogether, although you would need to adapt existing warehouses for the purpose, I assume. It’s why the likes of Lazada still work with the likes of 2GO and LBC, despite having their own logistics operations.


Now that there’s a renewed (and invigorated) push for e-commerce, the question remains: can our logistics service providers be up to the task? Much is being done now, particularly by the Department of Trade and Industry, to prepare entrepreneurs for this so-called new normal. Perhaps we should also look at our logistics players, who will continue to connect businesses with customers. We have to make them understand the possibilities of the last mile, and be comfortable with the technology that goes with it. Perhaps we can get started on that, too, so every player down the chain is truly up to speed.


Henrik Batallones is the marketing and communications director of SCMAP, and editor-in-chief of its official publication, Supply Chain Philippines. More information about SCMAP is available at scmap.org.


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