With over 600 million people and a GDP of US$2.4 trillion (S$3.3t), Southeast Asia (SEA) has one of the largest economies in the world. According to the international research firm Frost & Sullivan, Indonesia’s compound annual growth rate is predicted to be of 15.4% till 2020. Reasons for the region’s continued growth includes lower production costs, larger government spending, increasing disposable income of a growing middle class, along with an expanding e-commerce sector.
In the article linked, the author states that with rapid urbanisation, the consuming class is estimated to double to 163 million households by 2030. This leads to growth in consumer goods, retail and consumer services sectors.
With such robust growth in the economy, businesses in the region are expanding and preparing to meet this rising demand. As such, the logistics sector would also be required to step up their game and figure out how to optimise their logistics offerings to increase productivity.
Even though the some of the challenges faced by the supply chain in Southeast Asia market is growing, the still-developing economy brings its own set of challenges. Since the Southeast Asian market has different maturity levels, different organisations will require different supply chain strategies.
Research by Google and Temasek Holdings further highlights the region’s potential, projecting that the e-commerce market could grow from US$5.5 billion in 2015 to US$88 billion in 2025, with Indonesia comprising 52% of the market.This means that there is a huge market for the logistics sector in SEA. As such, companies need to focus on their last mile delivery services to differentiate themselves as they will be facing an increase in pressure of consumer expectation, increase in competition and lack of customer loyalty.
The logistics company can look to automation to help increase their productivity. As business expands, it is no longer possible for humans to consider all factors involved in logistics and make a decision efficiently. Automation and use of AI have thus become imperative for businesses.
Companies can no longer afford to simply invest more in the human capital, the need of the hour is to automate and remove human dependencies. Automation can help to optimise route planning and attain efficient last-mile delivery. Efficient warehouse management, 3D Packing, sales beat optimisation, and real-time tracking are just a few of the ways in which automation is changing the game.
The real benefit of automation, according to the author, is how AI-based decision-making engines can actually help the top management in making better logistics choices. By using historical data for future projection, AI can unlock many secrets when it comes to optimising resources or understanding the customers.