Ask the expert: Raheel Khan

Question: Can the latest generation of technology help the logistics sector to deal with a global crisis?

How the global recession has impacted a booming industry

Following years of consistent growth, the Middle East logistics industry has faced its toughest challenge to date with the global recession. It's understandable that several companies have implemented cost-cutting measures in response to a stagnant market. However, an aggressive short-term strategy to reduce costs could damage the long-term potential of companies to capitalise on a future turnaround. Instead, the focus should remain on delivering value to customers with innovative products and services, which can be achieved with the latest in technology solutions.

Trying to justify your spending when local budgets are limited

Although the market is down at the moment, companies should still have the relevant budgets in place to update their technology infrastructure. This is actually a good time to consider an alliance with Middle East technology providers, especially those with a niche focus on strengthening the supply chain operations of their customers.

The return on investment (ROI) from such an approach should prove worthwhile, leading to significant improvements in inventory management, customer satisfaction, order performance and operating margins.

Although it's natural to believe that spending on modern technology solutions cannot be justified when your budgets are tight, remember that numbers cannot lie. A ROI analysis can actually point to the economic impact of activities within an organisation and provide decision makers with economic justification.

Where do companies start with the upgrade process?

To kickstart the process, take a look at how things are currently being done in-house. Consider how your existing processes are completed, the number of skilled staff that are involved in each task, the team's structure and the roles of each member, the number of hours, days or weeks that it takes to carry out the task, the consistency of achieving the intended results, the type of errors made and the cost of fixing those errors. Remember, there are ROI calculators that help identify areas of improvement and quantify tangible benefits that can be realised using a company's own numbers and figures to support the analysis.

Understanding the role of technology

Supply chain technology can help companies to automate their labour-intensive tasks. For example, barcode technology is extremely popular for reducing errors in data entry. Likewise, automating the picking process can result in picking errors being reduced by 60%. In addition, these solutions can improve warehouse productivity, so that the staff can engage in more creative and profitable tasks. In many cases, companies may realise that rather than reduce headcount, it may be more prudent to redeploy valuable human resources to more productive endeavours.

Different systems for different tasks in the supply chain

When it comes to implementing a software solution, some of the most popular options in the market are warehouse management systems (WMS) and transport management systems (TMS). A growing number of companies are selecting WMS solutions to manage their inventories and overcome uncertainty during the prevailing economic conditions.

TMS solutions, on the other hand, can provide real-time fuel data and history information and help to optimise fuelling and routing strategies. In addition, performance management tools are available to transform raw data within your enterprise into strategic, actionable information. A single shared view of the business is presented through dashboards, scorecards and analytic applications.

Summarising the benefits of technology spend in the Middle East logistics industry

Although the global recession has forced companies in the Middle East to watch their spending habits, with technology budgets being slashed as a result, the situation has also presented an interesting opportunity to challenge the status quo. With a host of modern technology solutions being launched for the warehouse and transportation sector, the potential is still there to improve your business operations and boost your profitability. Without this approach, companies risk losing their position in the local market.

This month's ask the expert column was written by Raheel Khan, regional director of Business Systems Group (BSG).

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