LF Logistics’ Philippines head Joyce Ramos talks about the rise of e-commerce, the question of sustainability, and other challenges for the supply chain sector
Interviewed by Henrik Batallones
Stakeholders expect the current “supply chain crisis” to last late into 2022, and perhaps further into 2023. How can supply chain players continue to respond to these uncertainties in the coming months?
The effects of COVID-19 – logistics disruptions, production delays, and increased labor and raw material costs – have continued to test the resilience of our supply chains. These issues have accentuated the need for agility and diversification. With many variables and scenarios at play, it’s going to be a tough road ahead for companies that remain steeped in their old ways. Now is the time to seize the impetus from all of these disruptions to make meaningful change. Future winners will be companies that have a robust framework that incorporates responsive and resilient risk management capabilities and can pivot quickly and decisively when crises hit.
At LF Logistics, we have been laying the foundation for a strong e-commerce business model across Asia to enable goods to be delivered directly to homes at a specific date and time requested by the consumer. We also applied value engineering and LEAN methodologies to promote efficiencies and optimize rising cost of materials.
What has been the impact of the crisis on supply chains in the Philippines?
In the Philippines, we saw a decline in the B2B businesses, especially for goods considered as non-essentials as we went through several stages of community and nationwide lockdowns. However, it also ushered opportunities for accelerated growth in our B2C businesses. We had to stay relevant with this sudden shift by building the capability to directly handle the end-to-end e-commerce businesses of our customers.
By managing the B2B and B2C businesses of our customers under one roof or facility, one inventory, and one system, LF Logistics can deliver value by eliminating the need to transfer goods to e-distributors for pick and pack as well as optimizing inventory and operational costs.
With a solid business continuity program, LF Logistics is well-equipped in case another crisis, or wave of infection, emerges. We have special protocols in place such as providing housing for our employees and attending to their basic needs to ensure zero downtime in our operations.
Supply chains have spent the past few months responding to disruptions rather than anticipating them. Is this approach sustainable as we move forward from the worst of our current crises?
We can never predict what is going to happen in the future, but we can be certain that disruption is inevitable. The chaos of the past two years underscored the blind spots in supply chain models that were geared towards maximizing efficiency at the expense of resilience. Now we are seeing companies prioritize resilience over efficiency.
The key is to diversify and rebalance your sourcing portfolios to build resilient, agile supply chains. The same mindset also applies to logistics. Global freight issues, shipping delays, container shortages and price hikes call for better risk mitigation strategies such as alternative shipping routes and manufacturing locations.
The past couple of years has seen a greater uptake of e-commerce both in the Philippines and in the wider ASEAN region. Where do you think this trend is headed in the coming years, and how can logistics players be better prepared for it?
E-commerce is here to stay. As technology changes and consumer demand for more personalization increases, e-commerce will continue to evolve and shape the retail industry for years to come. Shopping is a way of life. As brick-and-mortar shops work to quickly build an online presence, early adopters have been shifting their focus on improving the customer experience from the time an order is placed until it reaches their doorsteps. Speed is king and consumers are expecting faster deliveries.
To meet this demand, it is important for logistics players to have an end-to-end e-commerce capability. LF Logistics offers storefront creation and management, an integrated order management system, pick and pack, customer service, last mile delivery and a track and trace system. When we perform all of these services within a warehouse, we can guarantee delivery within 24 hours.
Do you think supply chain players in Asia will be impacted by long-term shortages in talent that comes with the “Great Resignation”?
The pandemic has undoubtedly disrupted the way we live and work. As nationwide lockdowns forced employees to work remotely from home, they found that they were able to work more productively and achieve better work life balance. In the future, we see people looking for work opportunities that can offer more flexibility, outside the traditional 8-to-5 work schedule.
In the logistics industry, the hybrid working model excludes a large pool of workers, such as those working in distribution centers and truck drivers because their role requires a physical presence. This provides an opportunity to review our conditions of employment, engagement and retention programs to accommodate the needs of our employees.
As awareness of our supply chains’ impact on the environment becomes stronger, what steps can we take now to begin our journey towards sustainability without sacrificing our customers’ demands?
We have passed a turning point in sustainability where it is no longer just something that is “nice to have.” Companies have to do better, and we all have to act urgently. Consumers are increasingly pressuring companies to improve sustainability – so equally, our customers are demanding more sustainable products and services. The urgency surrounding ESG means that companies must prepare for changes in almost all aspects of their organizations, and this is just the baseline. We also have to accelerate our efforts through innovation, technology, efficiency and collaboration to address the challenges we are facing more rapidly. There is no room for compromise. We are already together with our customers on this journey towards a more sustainable future.