Logistics forms the lifeblood of Indonesia’s value chains. Without it, trade and commerce would be at a standstill as businesses depend heavily on logistics infrastructure to ensure their products reach their customers. However, the Covid-19 pandemic has caused profound disruptions to Indonesia’s logistics during a time when unfettered supply chain movement is crucial in keeping societies and economies going during the ongoing crisis.
The Rise of Indonesian Logistics
Indonesia is Southeast Asia’s largest economy but one that is also highly fragmented due to its unique archipelagic geography of some 17,000 islands. As such, logistics operators in the country must operate in a complex multimodal system (comprising land and sea freight) to transport goods across the country’s various provinces.
This means that resource and time efficiency has been a key ecosystem challenge. Yet now, more than ever, these efficiencies are required to restimulate economic sectors that work in tandem with logistics actors. While B2C and C2C economic sectors such as e-commerce experienced a renaissance during the pandemic, they were not enough to sustain the sector at large due to disruptions in more physical industries such as mining and agriculture.
Hence, the logistics industry must transform its operations to help stimulate sectors – both digital and physical – to operate with greater supply chain efficiency and productivity. This requires digitization to take a stronger root between the ecosystem’s key actors – namely transporters, warehouses, and businesses – by leveraging more sophisticated technologies.
Indonesian logistics companies needed to navigate an often opaque and unreliable national supply chain network underpinned by underdeveloped infrastructure and low technological adoption in the domestic industry. For example, truck fleet operators still must go through many processes such as matching of orders and verification of deliveries manually, or through ad hoc channels such as WhatsApp. Such limitations add more layers of complexity for transporters when navigating logistical environments. One solution to help them mitigate these issues is via better operational streamlining and transparency through a transportation management system (TMS).
A TMS is essentially, a software that helps companies plan their logistics process including facilitating the movement of goods, as well as optimizing resources, to ensure timelier freights. It effectively helps transporters unravel the intricate web of the supply chain network to fulfil deliveries in ways that not only drive up the satisfaction of customers – both end consumers’ and the businesses that contract their service. By combining a TMS with more advanced technology such as Internet of things (IoT) and artificial intelligence, we are able to have access to more detailed data insights and analysis. For instance, weight sensors can be used to detect and alert transporters when there are sudden changes to the load to prevent theft. Another example is an AI routing engine which can automatically route trucks to optimize the delivery process, depending on their load’s weight and operating hours of the roads in real-time.
Gone are the days of workers going around complexes with checklists to identify and choose stock, load them into carts and hand them over to transporters. In today’s modern warehouse, operations must be made more efficient by automating order receipts and stock confirmation, while robots can help humans facilitate the quicker transport of goods across large complexes.
These are the key elements of a warehousing management system (WMS) – in which warehousing technologies connect and work with each other within a technological ecosystem to improve a warehouse’s agility (in terms of quickly retooling operations for unprecedented disruptions) and scalability (the greater and more quickly warehouses can receive, manage, and distribute stock, the larger stock volumes they can handle). However, not all of them operate the same way, so warehouse operators must look at those that give them the best data visibility – namely those that incorporate AI and IoT to transmit, collect and analyze information in real-time – to better guide their decision-making and resource allocation throughout the warehouse complex.
A business’s reputation rests on its customers’ satisfaction. If a product is not delivered to the customer in time, the business is often at the front of the firing range – irrespective of how its transport and warehousing partners operate. As such, the businesses themselves must also lead the digital transformation charge, particular in how they manage end-to-end logistics between warehouses and transporters.
Today in Indonesia, there are more platforms and solutions geared towards businesses managing their logistics by improving data management, monitoring and communication with their warehousing and transport partners. Many of them can also be accessed via mobile apps. This improved connectivity and transparency in the logistics ecosystems can then help businesses drive down supply chain costs while also making operations more predictable, especially as businesses could obtain the sort of control that was only feasible if they owned the entire supply chain infrastructure. Digitalization absolves this by helping businesses leverage economies of scale by using their existing warehouse networks to consolidate or deconsolidate goods, while also improving flexibility and gaining faster access to markets.
A Critical Juncture for Indonesia’s Logistics Ecosystem
Indonesian logistics companies now face a litmus test for their adaptability. Such is the importance of transforming the logistics sector that Indonesia has highlighted it as being of national significance. Even before the pandemic, Indonesia via ‘Make Indonesia 4.0’ thrusted the need to digitally transform logistics under the spotlight to support the nation as it moves towards a brighter and more inclusive socio-economic future.
But they cannot stop just there. In the post-pandemic environment where digital transformation will be the new norm, greater advancements – such as using IoT to monitor machines and packages remotely, as well as using AI to improve situational analyses – must be ramped up. Still, this seismic ecosystem shift cannot be done in siloes; businesses, transporters and warehouse operators all have their part to play in making logistics in Indonesia smarter. This is not only for them to better serve their customers across various locales, but also future proof their operations to remain competitive in the new normal as other players digitize their operations for greater business efficiency and productivity.
Andree Susanto is the CEO and co-founder of Waresix.
The views expressed in this article are those of the author.