Transport and logistics

Many organisations in the consumer and industrial products and services (CIPS) sector rely upon transport and logistics to supply raw materials and to distribute finished products. In the current environment, some transport and logistics networks have experienced delays and disruptions. In planning for the future, it is even more important for CIPS sector companies to consider the potential for disruption of these networks, the impact of emerging technologies and the customer expectations of tomorrow.

By June Kago

As consumer behaviours change in response to improving technology, digitalization has become a necessity for businesses in the CIPS sector. Consumers are also driving change through their capacity and readiness to adopt digital channels for product and service delivery. The transport and logistics industry has a key role to play in supporting this push-pull process of digitization, although it faces certain challenges with regard to the availability of skills, the current health and economic environment and in some cases, outdated technology.

New entrants are disrupting traditional shipping and delivery business models through innovative strategies and efficiencies, posing a threat to incumbents and an opportunity for their CIPS industry customers. FreshPro, a Kenya-based startup, uses a mobile app to deliver fruit and vegetables directly, from “farm to fork” or, in other words, from the grower to the buyer’s doorstep. FreshPro has eliminated middlemen and brokers by providing a direct link between farmers and consumers; whereas the farmer gains direct access to their customers and saves on transport costs (improving profit margins), the consumer enjoys greater convenience, time savings and freshness. With data analytics tools, FreshPro can predict a customer’s order patterns and share this information with farmers to inform what to grow and when to harvest.

Twiga Foods is another Kenya-based startup focused on logistics. Twiga Foods uses a mobile-based supply platform to deliver fresh produce from farms to vendors (such as “mama mboga” small local sellers) and Blockchain and Artificial Intelligence to provide micro-financing for those vendors. Fetchr, an app-based logistics service provider in Dubai, uses GPS data from their customer’s smartphones to deliver packages to them. Fetchr has disrupted the delivery service sector by eliminating the need for formal addresses, which may not always exist in emerging markets, and hence reaches customers who otherwise could not receive packages at their doorsteps.

Innovations like these are causing many CIPS industry players to reassess their routes to market, and even their business models. With the typical technologies currently in use, it can be difficult to track the exact locations of shipments and deliveries of both raw materials and finished goods. Blockchain, a distributed ledger technology, has the potential to reduce inefficiencies in delivery systems and eliminate uncertainty in supply and distribution chains, as well as last-mile deliveries of finished goods to customers. Blockchain can enhance efficiency in document processing, improving transparency, security and reliability. It can serve as an encrypted digital ledger, tracking the movements of products from point to point and linking documentation directly to these movements in real time. Any gaps in this process can be identified and flagged through a blockchain logistics programme and prompt CIPS sector companies and their transport and logistics partners to take immediate corrective action.

Artificial Intelligence AI is a powerful technology with significant applications for the CIPS industry and their transport and logistics partners. AI can interpret information from sensors inside trucks, ships and aircraft, for example, that are connected to AI programmes monitoring fuel consumption and can then identify efficiencies and savings for CIPS customers. Several truck manufacturers and logistics companies have already moved into logistics and invested in AI-based applications to upgrade transport vehicles with software, sensors and advanced cameras that can identify, scan, and record shipments.

These applications can also suggest where packages should be placed based on size, destination, weight and impact on fuel expense.

Big data analytics and Robotic Process Automation Data can provide invaluable insights to optimizing routing, identifying recurrent bottlenecks in the supply chain and restructuring the flow of products in the warehouse. CIPS industry players can use big data analytics to improve last mile delivery by applying it to establish patterns, identify best delivery modes and times for a certain address.

The logistics sector has made inroads in enhancing inventory management through the use of robotic process automation (particularly useful with routine repetitive tasks). Better workforce planning and management can help to minimize costs for CIPS companies. Amazon, for example, is already using robots in its warehouses for several functions such as packaging, storing and picking.

Drones and self-driving vehicles Drones are unmanned aerial vehicles that are being used in a wide range of activities such as the delivery of packages, spare parts and medicines, fleet management and same-day food delivery. The CIPS industry should consider embracing drones for their speed, accessibility and low operating costs when compared to conventional modes of transport that require human labour.

Rwanda is already using drones to deliver blood and emergency medical supplies in remote areas of the country, reducing travel time from 3 hours by road to 6 minutes by drone! Unlike cars, drones are not subject to traffic delays hence medical supplies can reach healthcare workers faster, making it easier to maintain ideal storage conditions.

Amazon uses its Prime Air fleet of automated drones to deliver packages to addresses within 30 minutes of an Amazon centre. Automated (self-driving) vehicles, once fully tested and deployed, should contribute to greater efficiency in transport systems and improved safety as well as savings.

In conclusion, technology provides many opportunities for CIPS sector companies. They will need to invest in upskilling and provide an enabling environment for local innovation and the customisation of global solutions to local environments. With the rise of e-commerce, retailers need to expand their distribution networks and leverage more on third party logistics partners.

June Kago

Senior Manager, Advisory at PwC Kenya

E: T: +254 20 285 5758

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