For many people and businesses, the supply chain has always been a lifeline in delivering goods and services. Yet, the Covid-19 pandemic turned it on its head.
When the outbreak first struck and lockdowns were imposed, millions of people resorted to panic buying medical supplies and essential goods, catching companies by surprise and severely testing supply chains worldwide. Firms in the Middle East were no exception. They had to cope with multiple challenges that came with the sudden surge in demand, such as labour shortages and reduced productivity, while making sure strict safety processes were implemented. What this showed businesses was that there is no time to waste in transforming all aspects of their supply chain – from demand and supply planning to strategic sourcing, supply chain network, last-mile delivery and logistics – to ensure that they remain resilient.
The good news is that Middle Eastern businesses recognise this and have an unquenchable ambition to grow by investing heavily in technology. The majority of Middle East companies are already actively investing in digital technologies and Artificial Intelligence (AI) to bolster the resiliency of their supply chains and drive up productivity, in line with global trends. While many of them may be relatively young in terms of digital maturity and enablement, they do have the right combination of capabilities, resources and ambition to accelerate their transformation plans and capitalise on their position to emerge as new leaders in a digital age.
To leapfrog, rather than play catch-up
The pandemic is forcing global incumbents to relook their strategies and move away from traditional methods in supply chain management, be it building up a stronger technology and collaboration base or adopting greater customer-centricity in their services.
As budding players entering the supply chain race, Middle Eastern businesses have an edge over the established players. This means white space to implement fresh approaches by investing new supply chain concepts and virtual or digital enablers that can place them at the forefront of innovation, with a shorter, wider runway for growth.
It helps that many firms have already started their transformational journeys by enhancing the end-to-end visibility of the supply chain, gathering more intelligence, and improving strategic sourcing and planning. Here are two things companies in the Middle East should focus on to achieve their vision:
- Consumer is King
When e-commerce activity peaked on the onset of COVID-19, we saw online appetites grow three- to four-fold. Companies along the supply chain must keep up with the demand and manage consignments – even when there are high unit costs for doing so during this crisis.
But more than just catering to quantity, COVID-19 has shown the importance of creating more consumer-centric and purpose-driven supply chains. Our research reveals that more than 80 percent of consumers in United Arab Emirates and Saudi Arabia have shifted to online purchases. This has dialled up the pressure on meeting service levels, such as on-time delivery performance and customer satisfaction.
To that end, driving supply chain investment in anticipating, predicting and monitoring supply chain events should be a top priority in shaping customer value proposition. This is where technologies such as blockchain or distributed ledger technology, the Internet of Things, robotic process automation, intelligent operations, and data science have a major role to play in strengthening end-to-end supply chain management in the Middle East.
- A strong tech base
Technology will be a key enabler in allowing Middle Eastern businesses to better serve their customers, while bridging the gap with global leaders in terms of digital enablement.
Take the group of companies who are leading from the front. These Masters, defined as the top 10 percent of companies who have successfully reshaped their supply chains and created significant impact on their top-line growth, are pumping 7 percent more funds into driving supply chain innovation, such as funding tech-driven projects to accelerate supply chain transformation.
The proactive approach to using technology puts them in a strong position. By adopting the latest solutions, they are seeing huge dividends in boosting margins and raising productivity.
Dubai-based global logistics, courier and package delivery company Aramex, for instance, has built a data lake to digitise the end-to-end shipment process and transform last-mile deliveries with more accurate and instant predictions of transit and delivery times for customers. The data lake hosts big data infrastructure that uses machine learning and AI capabilities to provide accurate insights and predictions. This has helped Aramex increase its shipping accuracy by 74 percent and reduce 40 percent of calls to their contact centre. At the regional-level, a technology-led transformation is underway as Middle Eastern countries seek to diversify and move away from their reliance on oil. The Saudi Vision 2030’s push for digitalisation, for instance, will drive economic and social development, spur more investments in technology, and develop more localised supply chains.
As new opportunities for the economies of the Cooperation Council for the Arab States of the Gulf to diversify open up, more businesses are seeking to embrace digital transformation as they make adjustments to their supply chains or expand along the value chain by opening up different revenue streams.
A shift from the top
Change is necessary but difficult. Strong support at the management level will be key to providing that impetus for a paradigm shift – to help the organisation as a whole see the importance of allocating funds to invest in technology and talent, and to build more consumer-centric services.
As more homegrown leaders invest in supply chains that are digital, focus on building capabilities, and invest in growing their local talent pool, Middle Eastern businesses will be well on their way to achieving their vision.