The countries of the Middle East have witnessed many important developments in recent times, starting with being a global trade center and occupying the eleventh rank in the logistics performance index, through directing more spending to develop supply chains and pushing towards the implementation of sustainability initiatives.
Let’s review together how many initiatives, challenges and evolving dynamic changes will contribute to reshaping the future of supply chains and logistics.
1. Automate last-mile deliveries
With Eshraqa 2023, it is expected that more companies will adopt the use of automation tools for last-mile operations, given their pivotal role in improving the efficiency of delivery operations and reducing their time. By leveraging intelligent logistics management tools, companies can facilitate deliveries using their own fleet and third-party logistics. These tools automate the carrier selection process thanks to predefined intelligent logic. Smart Allocation Rules consider several factors when making a selection, including cost, historical data, serviceability, first attempt successful delivery rates, etc. in order to automatically allocate to the carrier for deliveries. Thanks to the speed of decision-making and the efficiency of the overall process, delivery times can now be reduced, which is especially crucial for consumers in the UAE, who prefer express delivery over free or low-cost delivery.
2. Using predictive intelligence capabilities
Predictive analytics in supply chain management involves analytics of historical data to understand trends and anticipate the future, enabling smarter and more accurate decision-making. These capabilities help companies predict outcomes and properly manage potential risks, delays or emergencies. According to the “MHI” report for the year 2022; Adoption of predictive analytics among businesses is expected to increase from 22 percent to 82 percent over the next five years. Gartner also reported that by 2024, 75 percent of organizations will invest in data and analytics capabilities to prevent failure. Thus, it is expected that organizations will increase their reliance on predictive intelligence to add more flexibility to their supply chains.
3. Increased focus on artificial intelligence (AI) and machine learning (ML) in pursuit of efficiency
Considering the most important challenges faced by companies in the Middle East for the year 2021, the reliability of supply chains emerged among the four most important challenges facing the region for this year. It’s time for companies to realize the huge value that artificial intelligence and machine learning technologies can bring to managing supply chains. Both technologies save costs and allow organizations to build a network of independent supply chains. According to a 2022 PWC survey, about 48 percent of actors in the supply chain sector intend to integrate the use of AI technologies into their operations. A report by Gartner also indicates that 28 percent of supply chain leaders surveyed plan to leverage AI technologies in their logistics business to improve operations efficiency.
4. More uses of Blockchain
Concerns about trust, transparency, reliability, and traceability remain ongoing challenges for companies operating in the logistics and supply chain industry. Blockchain technology represents a panacea for previous challenges, due to its immutability and tamper resistance. This technology infuses efficiency principles into existing processes while enabling smart contract-based payments, which is essential for managing international logistics. It is expected that the “blockchain” technology will receive more attention as it gives greater confidence and guarantees higher levels of financial transparency in the field of logistics services.
5. Orientation to platforms to eliminate the fragmentation of operations
Operating across isolated islands and having nodes in systems that restrict data exchange hinders the growth potential of organizations. Going to the platforms will help companies crystallize a centralized view of their supply chain operations. Adopting a one-stop-shop approach helps enhance collaboration with freight forwarders and in-house teams, as well as standardize all container movements, share live updates of movements and locations, and directly track incidental charges using a single window.
6. Increasing reliance on many logistics service providers
Large order volumes and increased customer expectations for deliveries will lead to increased reliance on third-party logistics services. The reason for this is that partnering with several logistics service providers increases serviceability and reliability of deliveries, and helps reduce delivery times, while providing additional benefits such as economical management of flexible demand situations.
According to Gartner, logistics service providers who have a diversified list of services are better able to address complex challenges and adapt innovation to solve business problems while reducing costs and increasing the benefits of the services provided. Nearly 90 percent of Fortune 500 companies use third-party logistics services to enhance their logistics and supply chain capabilities. The third-party logistics market in the UAE is also expected to grow at a CAGR of 9.2 percent during the period 2021-27. Thus, this trend will witness more adoption in the coming period, along with smart coordination solutions for third-party logistics services that will simplify the management of logistics services provided by multiple third parties, using unified dashboards.
7. More cooperation between stakeholders in cross-border logistics
“The global cross-border e-commerce market (from business to consumer) is expected to exceed $3,042.2 million by 2028, after reaching a value of $793.7 million in 2021,” says Soham Chokchi, CEO and co-founder of Chipsy, despite what this market offers. However, weak operational tracking limits the sector’s ability to achieve success, as this weakness causes subsequent problems in terms of costs, service level agreements in the event of delivery failure, and negative reputational effects. We can say that multi-stakeholders such as manufacturers, retailers, freight forwarders, shipping lines, logistics service providers and others will benefit from smart logistics management platforms to address these challenges and enhance collaboration between them.
8. More focus on the economic benefits of sustainability
Sustainability is more important than ever, especially with the reorientation of many government policies and initiatives towards it. However, freight operations (air, sea and land) contribute nearly 8 percent of global greenhouse gas emissions. Several factors are driving companies in the direction of reducing carbon emissions, including investor pressure, growing consumer awareness, as well as future regulations and laws. On the other hand, businesses across geographies are seeing significant cost savings by reducing miles traveled, using intelligent route planning technologies, dynamic order grouping, advanced optimization of service delivery areas, delivery route optimizations, and more prioritization of the most convenient delivery methods. Environmentally friendly, such as using electric vehicles and bicycles for final deliveries. More companies in the region will go green to improve profitability from deliveries in the future.
There is no doubt that modern technical tools will be the betting horse to deal with the rapidly evolving market dynamics. Intelligent logistics management systems backed by AI technologies, machine learning, automation and predictive capabilities enable companies to reap the benefits of the above trends and stay ahead of the business competition.
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