YCP Solidiance country manager Anna Rellama gives her take on Philippine supply chain’s journey towards digital transformation and the Fourth Industrial Revolution
Interviewed by Henrik Batallones
Do you believe digitization in Philippine logistics has picked up pace during the COVID-19 pandemic?
Definitely! Out of necessity more than choice, logistics in the Philippines has had to go digital so as to survive. Imagine at each stage – from customs arrivals to port processing, release, warehousing, and last mile – logistics services were not spared from the reality of limited operations. Terminals and warehouses needed to operate at skeletal levels, resulting in severe backlogs. Scheduled domestic transport services were all of a sudden disrupted as well, preventing goods – including fresh produce – to freely move even within the Philippines.
All these led to digital tools being hurriedly explored and launched to keep operations running. Paper-based exchanges were being done online. Wholesalers and retailers were latching on to e-commerce platforms. Use of on-demand delivery services skyrocketed. QR codes and digital wallets were everywhere. Digitization had to be quickly embraced for many businesses to survive.
Luckily for the Philippines, there had been some progress that we can build on. We had platforms that allowed many businesses, in particular MSMEs, to not be left out. Our smartphone penetration was high enough to support the wide use of platforms. With regional initiatives such as the ASEAN Customs Transit System, there already was that initial groundwork from the government’s part to increase the level of digitization in an effort to increase transparency and efficiency. Add all these together and what you get is no other than accelerated digitization.
How can companies hurdle this ‘digital divide’, especially in regions with limited infrastructure and investment?
As an emerging economy, digital divides are a reality that we especially cannot escape. This is true for all of society’s aspects, affecting the implementation and delivery of education services, health services, and logistics services, among others. Within logistics specifically, this hampers many digitization initiatives that occur at the “edge” resulting in gaps within GPS pings, inability to access emails, or receive digitally transmitted chats.
From the private sector point of view, there is little that can be done from an infrastructure standpoint. These can only really be achieved through PPPs or dedicated investment from telecommunications providers. However, from a user perspective, basic infrastructure support via the provision of tools as well as the accompanying training are a good first step. To overcome blackout zones, additionally, SMS integration for regular pings or delayed sync mechanisms must be incorporated to allow data sets to sync in locations where connectivity is better. The latter in particular will allow for uninterrupted data collection and upload processes, despite the temporary lack of connectivity.
With global economies now exploring the possibilities offered by the Fourth Industrial Revolution, how can the Philippines ensure it is not left behind?
There first needs to be that baseline acknowledgement of its benefits and significance among stakeholders so as to set a unified goal for the whole sector. This goal – which must embrace innovation at its core – will dictate the steps that will thereafter need to be taken by each participating stakeholder, ideally resulting in actions and decisions that reinforce and compound one another. This baseline understanding paves the way for the 4IR enablers – namely capacity, capability, and coordination – to commence their work in ensuring that our country moves towards that vision.
In the case of the Philippines, investment into each of the three may not come as easily when compared to other developed nations. But we need to keep in mind that we do not always need to invest in all three at the same time. It is easy to dismiss the value in digitizing when you cannot go big, but starting small would allow your organization to be more comfortable with the process overall, generating greater ownership while making sure additionally that everyone is gradually trained and onboarded onto the digitization initiative.
It may also be useful to acknowledge how many economies and firms have embarked on the same transformation journey. There are mistakes that we can avoid and lessons that we can learn simply by informing ourselves of how they went about the process. We can buy or borrow their capabilities through subscriptions or partnerships to start and then simply build on it as our business progresses. There is not a requirement to build everything that we want to achieve from scratch right now, but perhaps when our digital literacy has seen enough improvement, we can eventually transition into becoming the builders of this world.