How the Internet of Things will revolutionize your supply chain

A batch of vaccines leaves a pharmaceutical company bound for another continent. Each of the thousands of tiny vials has the potential to save a child’s life. But only if the contents of the container are kept chilled throughout the long journey.

From the moment it is driven away from the loading dock, the batch is being tracked. A chip is recording its location, and whether it is being kept upright. Crucially, the chip is also monitoring the temperature of the vaccines. From refrigerated lorries, cargo holds and warehouses, the chip feeds this information back to both the manufacturer and the medical center that has placed the order. Doctors and medical staff can see where the vaccines are and when they will arrive, certain they are in perfect condition. They can plan an immunization campaign that will keep a village free from a deadly disease for a generation.

All this is possible thanks to the Internet of Things.

What is the Internet of Things?

When we hear about the Internet of Things (IoT), we usually think of smart household appliances that can communicate with a network – for example fridges that keep track of their contents.

But IoT devices can be attached to almost anything. As 5G technology becomes more widespread, tiny chips are able to relay a huge amount of data. These chips could be sewn into the collar of a shirt, embedded to a table leg, or attached to the cardboard packaging of a coffee mug. Anything that you want to track can be tracked.

They can report location and state awareness (temperature, humidity, tilt, etc). The data can be accessed from anywhere in the world in real time – alerting anyone who needs to know about delays, detours, unexpected stops and accidents.

Why does the IoT matter for supply chain?

For the supply and logistics industry, knowing where the goods are and what state they are in is vital. Huge amounts of time and money are spent logging and tracking consignments, with the reputation of the shipper on the line every time a delivery does wrong. Because supply chains typically involve multiple providers and subcontractors, trust is essential.

IoT devices allow complete visibility. A shipping company will be able to keep track of every stage of the process. There will be no opportunity for products to go astray, be tampered with, or even be replaced by counterfeit goods. Shippers can guarantee quality and security, and keep all stakeholders informed about the progress of the delivery at all times.

Opportunities…

The potential benefits of IoT are enormous.

Data from IoT devices can be encrypted and shared using blockchain, so that customers and suppliers have a real-time record of a transaction as it progresses. This will facilitate instant payments and reduce the need for lines of credit.

Inventory management will be transformed. There is no need for time-consuming and costly stocktakes when there is a guaranteed accurate and reliable record of every item entering and leaving a warehouse.

The data provided by millions of objects travelling all over the world can be analyzed to identify optimal routes. Delays and bottlenecks can be predicted. And different options can then be tailored to each customer depending on priorities: cost, speed, security, and carbon footprint.

…and challenges

There are two major considerations that will affect IoT in the supply chain: disposability and privacy.

For the former, the question is simple – what do you do with the IoT devices and chips when the item has been delivered?

Currently, most of the IoT devices being used for pilots and trials in the supply chain need to be returned to providers, which is expensive and time consuming. However, the cost of the individual devices and chips is falling rapidly. Discarding chips would create vast amounts of electronic waste and is not sustainable in the long run. Recycling schemes, whether run by transport companies themselves or third parties are likely to be an essential part of the business before long.

There are also privacy concerns about whether an item could continue to be tracked once it has been passed to the consumer. How do you know the chip in your TV or even shirt is no longer active? The industry will need to collaborate to establish safeguards and protocols that can win the trust of the public.

Where is the IoT now?

IoT technology is already being used to track deliveries.

Agility has operated successful pilots with several partners, that have proved the value and efficacy of the technology. We have overcome practical issues such as ensuring IoT devices can be used on commercial cargo aircraft.

There are also a number of companies that offer IoT tracking devices for individual deliveries, such as Roambee.

As 5G is rolled out worldwide, there will be no technical barriers to the widespread adoption of IoT as a standard. High value items, and those that need close temperature monitoring such as pharmaceuticals and fresh or frozen food, are naturally the most likely early adopters. But within a few years, anything that customers or suppliers decide they want to track, will be tracked.

What we are learning

The big lessons in trials with customers are, first, that IoT without a corresponding data strategy is only half the story. IoT expands the data points available to shippers, but without a contextual data science strategy, the data is of little use.

Another lesson is that there is a larger-than-anticipated degree of compliance – whether with governments and regulatory authorities or with transport providers such as airlines – that has to be factored in.

For shippers, the next step is demonstrating where they can extract value from the data. That means using it to generate predictive analysis that strengthens their supply chain.

When a shirt is shipped from China to a shop in Europe, it passes through a complicated and sometimes slow supply chain, involving many different parties, manual data entry and a stack of paper documents.

What’s more, the retailer needs to trust that the shirt is on its way, and usually needs to make payment before it arrives.

Now imagine that the shirt is embedded with an intelligent chip and can be tracked using distributive ledger technology.

As it leaves the factory, it sends a digital signal that it’s on its way. Since this data is recorded in the blockchain, it is secure, immutable and can be trusted by all parties – no one needs to double check or verify that the shirt is on its way.

The retailer can pay for the shirt with assurance that it’s in transit, and the sender can instantly verify that the right person is collecting or receiving the goods.

In short, it’s faster, cheaper and more efficient way to send an item around the world.

This is how blockchain could change the face of logistics: by fostering trust between all parties and eliminating the need to manually track shipments, sign documentation and verify payments.

What is Blockchain?

Blockchain was made famous as a platform to trade cryptocurrencies like Bitcoin. But it has many uses beyond digital money. It is a secure record of transactions, a ledger, in which all data can be publicly verified and shared.

Offering a new way to send, store and verify information, the technology has trust at its core. Its secure, scalable and decentralized nature means its applications are potentially limitless. It could change the way we process and store health records as well as revolutionizing the way we shop, save and invest.

All that means the global blockchain market will be worth $23 billion by 2023, up from around $1 billion in 2018, according to MarketsandMarkets research.

Why does blockchain matter?

Blockchain technology has the potential to make shipping and logistics cheaper, safer and more reliable. It can be used to verify and store information all along the supply chain, as well as connecting different parties, giving them access to data and real-time tracking of goods as they move around the globe.

By embracing it, the industry could lower costs and ease friction. Documentation and administration are estimated to be one-fifth of the $1.8 trillion spent annually to move goods across borders.

What opportunities do Blockchain bring?

The key benefits of blockchain are speed, transparency and security. This generates a high level of trust in a transaction, unleashing a powerful tool for the logistics industry, where transactions involving many different parties and milestones are common.

For example, a very simple supply chain involves the shipper, banks, an assembly manufacturer, parts suppliers, modal carriers, port authorities, freight consolidators, customs officials and many others. It’s easy to see the potential for blockchain in this scenario, enabling the shipper to unlock access to specific information for specific parties, while retaining complete visibility of the whole process.

By enshrining trust in a transaction, there’s no need to verify documents and timestamps, to certify authenticity, or to deliver certificates, streamlining every step in the pathway.

What are the challenges with Blockchain?

Even so, blockchain requires a collaborative approach, and one the industry might not yet be ready to embrace. To unleash its full potential, it needs the buy in and understanding of everyone along the supply chain, as well as agreement on a common approach and standards.

And without a critical mass, the risk is that too many providers try to create their own platform, meaning the results are disjointed.

Another challenge is the potential for a skills shortage. Finding and employing the right people with the necessary skills is essential to bridge the gap between those companies that have the knowledge and the technology in place, and those that don’t.

Fostering experimentation and collaboration will be key to success.

How does blockchain related technology apply to our current needs?

As discussed, distributive ledger technology is ready to go and has the potential to revolutionize our industry. Once a common approach is agreed, adopted, and achieved, its game-changing nature is likely to be unstoppable.

Agility is leading the conversation on how best to harness the potential of blockchain – helping our customers conduct pilots and working together to figure out the best ways forward.

We’ve already teamed up with Maersk-IBM to manage and track container shipments using blockchain, by identifying events associated with individual shipments and sharing information about them via the distributed ledger technology.

In this way, costs can be reduced, trade can be made more efficient, and standards can be set for an industry-wide adoption. Our aim is to help our customers understand how to use blockchain to improve shipment visibility, eliminate paperwork, reduce errors, and shorten transit times.

Blockchain could also help improve safety. Agility is part of a consortium of industry leaders exploring blockchain’s role in mitigating accidents and serious incidents onboard container ships.

Wrongly classified or inaccurately identified dangerous cargo leads to fires and other accidents that result in millions of dollars in losses, ship damage and delays in supply chains. Nearly a quarter of all serious incidents on containerships were attributable to mis-declared cargo, according to the Cargo Incident Notification System. It’s easy to see how blockchain could play a role in continuously tracking and monitoring what’s inside containers and reduce these risks.

Even as these examples show how blockchain is set to change the world, our industry is lagging behind. By recognizing the full potential of the technology and collaborating to foster experimentation, Agility is ready for the disruption that’s in train, and will be prepared when the pace of change accelerates.

What are we learning about Blockchain?

Use of blockchain for shipping remains largely in the pilot and concept stage for the moment. That’s likely to remain the case until there is wider industry participation that creates a tipping point.

Companies developing blockchain solutions are trying to figure out how to monetize a technology that requires so many participants to create an ecosystem. They need to incentive early adopters who can create more use cases and scale the number of transactions taking place with blockchain.

Digital technology is changing the way the world does business and doing so at an extraordinary pace. Whatever your part in the supply chain – customer, supplier, or logistics provider – the speed at which new technologies are being developed can be bewildering.

Agility is working with customers and partners to adapt to this fast-changing landscape. This guide is intended to help you identify which technologies your business should be concentrating on right now.

Keeping pace with change

Agility’s Chief Digital Officer Biju Kewalram says the supply and logistics industry is at a very early stage of its digital evolution, and compares it to the period of the Model T Ford in the car industry. 

But just as with the development of the auto industry, some of the areas that attract a lot of hype may prove to be expensive dead ends and  some of the less glamorous technologies may turn out to deliver the best returns on investment.

Should you spend heavily on cutting edge last-mile solutions like delivery drones? Does your warehouse need to be fitted with advanced robotics or augmented reality? Without limitless funds for research and development, how will you know what works for your business?

Staying agile

Success in the digital supply chain will be determined more by fostering the right mindset than making the right bet on a particular technology. The key is to take an agile, experimental approach.

The unprecedented pace of change means traditional ways of evaluating technologies are outdated. There simply isn’t the time for a company to carry out a full-scale trial to study how a technology will affect its entire business.

At the same time, sweeping one-off changes to the company’s entire workflow are likely to be too expensive, and too late.

Instead, Agility recommends continuous incremental change – small trials and pilots on a specific part of your process. This allows the trials to be evaluated using real data on the actual impact on your business, rather than based on intuition or hopes for what the technology might one day do.

Successful tries should be scaled up, and monitored carefully as the technology is spread through different parts of your business. But it is also important to be prepared for experiments to fail, and to be able to walk away with small losses. Those failures – and the knowledge of how and why something didn’t work – can then be applied to the next trial.

The success of many technologies will depend on the development of new ecosystems. It’s best to work with trusted partners and other stakeholders to find out how the changes you make affect each other.

There will be no settled end state. We live in an age of continuous innovation. Ever-changing technology means there will always be a need to keep experimenting. Technologies that didn’t have the desired effect when you tried them the first time will need to be looked at again and again, as your processes and the environment you operate in evolves.

Four Technologies to watch

This is what Agility is doing constantly: working with partners all the way along the supply chain to test how emerging technologies work in the real world.

We currently have a watch list of 16 technologies that are worth keeping an eye on, ranging from machine learning and the cloud to 3D printing, virtual reality, autonomous vehicles and drones.

We have identified four of these that everyone in the supply chain should focus on.

These are already being used to a greater or lesser degree in certain areas of supply and logistics. We believe they will be the foundation of many of the changes likely to sweep through the industry.

They are the BIRD technologies – Blockchain, Internet of Things (IoT), Robotic Process Automation (RPA) and Data Science. Agility has created guides to each of these that help explain how they work, what they can do, and how they can benefit your business.

The BIRD technologies overlap when it comes to how they enhance the way we use data and harness the potential of the digital revolution.

Blockchain establishes trust in data.

Internet of Things provides a vast quantity of relevant data points.

Robotic Process Automation improves the accuracy of data.

Data Science extracts value.

Companies that successfully integrate these four technologies will be in a strong position to take advantage of whatever comes next.

What the future holds

Imagine a product rolling off a production line. From that moment, it is tracked. Its location, tilt, and temperature are securely recorded on an encrypted ledger that cannot be faked. All relevant parties – manufacturer, exporter, shipper, importer, customs official, wholesaler, retailer – have immediate access to the information they need. That information is automatically processed, and there are no errors. The route chosen has been optimized to be cheap, safe, quick, and with the minimum carbon footprint.

Payments can be made immediately with no need for lines of credit. The end recipient knows they are getting exactly what they ordered, delivered in perfect condition. There have been no hold-ups for paperwork, document checks, or delays at port. Lower costs, more satisfied customers, better profit margins.

This is all possible using technology that exists today. Within just a couple of years, it will be common across the industry. With Agility’s help, your business, large or small, can lead the way.

Brazil is the third-largest trucking market in the world after China and the USA, but has historically struggled with poor road freight infrastructure and a supply-and-demand imbalance between freight and trucks.

CargoX, which has been called the Uber of Brazilian trucking, is using big data, machine learning, and the sharing economy concept to radically overhaul the country’s cargo transportation system.

CargoX has built a marketplace via mobile app that connects over 250,000 truckers with shippers moving goods around Brazil. The app reduces costs for shippers, boosts truck drivers’ income, and increases efficiency.

Since it launched three years ago, CargoX has enjoyed massive success, attracting millions of dollars of investment and swiftly dominating the Brazilian trucking market.

We spoke to founder and CEO Federico Vega about the company’s success, and about how machine learning and big data are transforming trucking.

How is CargoX using data and machine learning to improve Brazilian trucking?

We’ve been compiling and analyzing data since 2013, and more than 60% of truckers in Brazil now connect to our app on a monthly basis.

This level of market penetration provides us with an unrivaled level of data, which makes our real-time updates incredibly accurate. The richness of our data, paired with our technology, is what puts CargoX ahead of any competitor and makes our app so effective.

Our machine learning algorithms can calculate where trucks are likely to be at a certain time, solving the problem of 40% to 60% of trucks in Brazil running empty because they can’t find a load. For example, if a truck is in São Paulo now and will be in Rio de Janeiro in a few days, the algorithm can predict this and can match the truck capacity with freight that needs to be transported.

Machine learning can also help to improve safety and decrease the chances of freight theft, which is quite common in Brazil. Data on freight robberies such as location, type of freight, and time of year are used by the machine learning algorithm to calculate ways of lowering the risk.

By using data and machine learning to improve trucking safety and efficiency, we’re making a positive difference for shippers, truckers, and the wider community.

Why do truckers choose to work with CargoX?

We estimate that truckers can earn around 30% more when they work with CargoX because with other carriers they spend a lot of time traveling empty. Our business model ensures that they are always traveling with a full load, so they make more money per kilometer.

It also provides a more efficient, streamlined process for the truckers. On average, truckers in Brazil have to travel 60 kilometers to find loads. With the CargoX app, you can search for a load nearby, and then secure it and pick it up.

We also solve the problem of truckers going unpaid, by conducting credit checks and background checks on the shippers who use our platform. And once a driver has accepted and delivered a load, they’re paid by CargoX, so we guarantee their payment and take some credit risk on their behalf.

And what about the benefits that CargoX provides for shippers?

Once you open a CargoX account, you can post your freight on a web dashboard and then it gets pushed to drivers via the mobile app, along with the pricing. When a trucker accepts the load, they deliver it and get paid. 

Our dashboard enables shippers to track and analyze their loads, which is really useful when shippers are moving hundreds or even thousands of loads every month.

CargoX launched in 2016, and has been very successful in a short period of time. What has been the key to your rapid growth, and what advice would you give to other entrepreneurs?

We were in a good position to grow fast without making as many mistakes as competitors because we had the involvement of highly knowledgeable investors like Agility. CEO Tarek Sultan has  been excellent at providing advice and pointing us in the right direction. He’s also been able to make valuable introductions to everyone from financial investors to potential clients, and provided information on things we could do here in Brazil that Agility has done elsewhere in the world.

With a board of directors, advisors and investors who go beyond being sources of capital and who really understand your business, you can get ahead of the competition. We are a trucking company, but we’re also a technology company. One of our investors and directors is Oscar Salazar, co-founder and former CTO of Uber, who has the knowledge needed to run the technology side of the business. And then someone like Tarek has deep knowledge of how to run a logistics business, but also has the entrepreneurial expertise, and knows how to rapidly grow a company. And the involvement of Eddie Leshin, the former CMO of US freight marketplace Coyote Logistics, has been invaluable too.

This depth of knowledge and experience really makes a difference when you’re starting and scaling your business, and also commands more investment, as people can see that you have the involvement of people with experience and you’re more likely to thrive.

I recently attended a Business Year conference on the role of the private sector in the future of the Kuwaiti economy. The event highlighted Kuwait’s potential to support a vibrant start-up community, but the need was clear for entrepreneurs to capitalize on the country’s digital transformation to drive innovation.

I spoke on a panel alongside entrepreneurs from other well-known Kuwaiti brands including Carriage and Just Clean. There were also insightful contributions from several others, including Kuwait’s Minister of Finance and the Director General of the Kuwait Direct Investment Promotion Authority (KDIPA).

We discussed the fact that while funding for SMEs is critical, a complete eco-system including incubators, talent, laws and other elements must be a part of the wider picture.

I’m encouraged because many of the essential components of a strong knowledge-economy eco-system are coming into place in Kuwait: public and private funding sources, incubators, accelerators and vital sources of mentorship, advice, connections and go-to-market expertise. Kuwait’s legal and regulatory framework is evolving in a positive way.

At Agility, we believe that established companies like ours have a key role to play in supporting SMEs, especially those in the Middle East. We do this both by building products that facilitate SME growth, and by directly providing funding, mentoring and other resources to startups in Kuwait and the broader region.

In March, we brought experts from the MIT Media Lab to Kuwait for the Agility Data Hackathon, a four-day event in which technology students, coders and entrepreneurs competed to solve real world societal and business problems with data and analytics. The idea: to bring together a new generation of Kuwait problem-solvers and encourage development of the collaborative, creative mentality critical to the future of Kuwait and its citizens.

Agility Ventures, our in-house venture capital arm, invests in and advises startups on supply chain ideas and technology. Startups we’ve supported so far include Homoola, a Saudi Arabia company using data analytics and technology to bring new efficiencies to road freight, and CargoX, a Brazilian road freight platform.

We’re also acting as role models, driving our own digital transformation through in-house innovation and investment and the introduction of new products and services. As part of our SME product strategy, we’re investing more than $100 million in Shipa, a new family of tech-enabled freight, e-commerce and delivery services that help small businesses reach international markets. New technologies can streamline the shipping process and make it easier for small businesses to reach overseas markets.

Can Kuwait transform itself into an innovation hub and a private sector-led knowledge economy? The Business Year conference showed that we have the right ingredients for a thriving startup community: funding initiatives, banking structures, connectivity, and well-placed consumers. Now we need to connect the ingredients so they form a healthy, integrated eco-system rather than existing in isolation or as part of fragmented networks. With key stakeholders leading the call for change and entrepreneurs driving innovation, a connected ecosystem will deliver lasting results.

3D printing is big news. It is already a $14.5 billion dollar industry, and is set to keep growing steadily over the next few years. Reports saying it’s now possible to print everything from weapons to an entire house are very eye-catching – and for many businesses and industries potentially alarming.

There’s no doubt that 3D printing, which is also often called “additive manufacturing”, has world-changing disruptive potential, but are we really about to start printing everything we need? Famously, Bill Gates’ mission at Microsoft was to put “A computer in every home”. For the additive manufacturing vanguard, is this about to be updated to “A 3D printer in every home”?

We caught up with Biju Kewalram, Agility’s Chief Digital Officer, to find out the reality of 3D printing, how it is affecting the global supply chain, and what it means for logistics startups.

Is the 3D printing trend really everything it’s made out to be, or is it hype?

There’s no doubt that 3D printing is going to revolutionize global trade at some point – even more than we can currently imagine. However, many projections are over-ambitious about how quickly that impact is going to happen.

When people talk about 3D printing, they tend to imagine whole items which are ready-made, like houses, clothes or food. Additive manufacturing is already being used in a lot of products, but it is often to create prototypes or to assemble small elements of larger products, such as parts, finishings and fittings. These are very useful, but not quite as glamorous!

When it does take off, some futurists talk about every home having its own 3D printer to produce everything they need. Won’t that destroy the logistics industry?

This isn’t a very realistic scenario! 3D printers are already available to buy, but for individual households they are quite expensive and limited in what they can produce, so their uptake has been limited. Some people might start printing certain things at home, but personal printers replacing third party goods altogether is unlikely to ever happen. If it does, there are so many other issues to overcome – like households storing the necessary range of raw materials – that it is still an extremely long way off.

That’s not to say there’s no appeal. My colleague Henadi Al-Saleh and her children had a great experience trying out a 3D printer at home. Her son really loved designing his model and watching it print. There’s clearly something very special and exciting about this technology, but there’s a world of difference between that and it replacing shopping as we know it.

So what’s the real impact of 3D printing for the logistics industry?

It’s crucial to understand that once 3D printing revolutionizes manufacturing – which there’s no doubt it will – there will still be a supply chain. It’s going to transform logistics, not destroy it.

Even with 3D printing as the main method of global manufacturing, the various raw materials needed to print goods will still have to be sourced, moved and stored. Warehouse capacity for hundreds of thousands of printers will be required, and printed goods will have to be transported to their end destination.

Right now, the puzzle of how to reposition the raw material needed for 3D printing at scale still hasn’t been solved. How are you going to get the right amount of raw material in the right place at the right time so you don’t have leftover inventory? 3D printing won’t destroy the supply chain; it will just replace one puzzle with another.

What’s Agility doing in the 3D printing space?

At Agility, we have a stack of 18 technologies we are continuously monitoring for market opportunity, and 3D printing is one of them. We use a defined methodology to assess each technology’s state of readiness, and move when it becomes an attractive opportunity.

At the moment, 3D printing doesn’t fulfill our criteria. We’re waiting for new business models to emerge, but we’re monitoring the technology’s progress and we fully expect it to become attractive in the future. When the time is right, we’ll start moving rapidly through our pilot and partner process.

What does it mean for tech and logistics startups?

It’s certainly nothing to be alarmed about, and there will be exciting opportunities because of this technology in the future. Big logistics players are monitoring the technology and opportunity, and although 3D printing will one day change how goods are manufactured and distributed more than we realize, we are not quite there yet.

Startups developing new ideas and business models in the logistics space certainly shouldn’t be put off by 3D printing. And in lots of areas of tech and manufacturing, 3D printing is already having a big impact – so startups who can harness this momentum can make a real impact.

In recent years, large global companies have come to understand the need to innovate and evolve more rapidly to stay competitive and relevant. That recognition gave rise to the corporate ecosystem, an ever shifting collection of partnerships, alliances and collaborations that expose companies to fresh ideas, minimize their cost of trying new things, and let them learn by doing.

Ecosystems for small and medium-sized companies (SMEs) have been slower to take shape. Now they’re finally coming into view.

Strategist James F. Moore first noted the parallels between the natural world – where living organisms interact with one another and with elements in their environment – and what was taking place in the business world at the dawn of the Internet Age.

Moore wrote in the Harvard Business Review in 1993 that by joining a business ecosystem, companies could “co-evolve” and innovate together. “Successful businesses are those that evolve rapidly and effectively. Yet innovative businesses can’t evolve in a vacuum. They must attract resources of all sorts, drawing in capital, partners, suppliers, and customers to create cooperative networks.”

Business leaders today accept the importance of the ecosystem as a means of creating future value. In a 2017 study by Accenture, more than 97% of major companies said future business models would be created within ecosystems.

Smaller businesses need their own ecosystems. They require products, services, partners and collaborators that speed their digital journey; help them enter new markets; allow them to deploy their data; and give them access to scale-building technology that sharpens their competitiveness.

Big businesses are relentless in their hunt for the small, tech-driven “unicorns” that can bring outsized value to their ecosystems. But until now they’ve had little interest in more prosaic SMEs as ecosystem collaborators, protégés or even customers. That’s been especially true in emerging markets.

In Africa, where SMEs provide 80% of jobs and represent 90% of all companies, the life cycle for most small businesses is tragically short. Bigger companies and governments are doing little to help them develop their own ecosystems or close what the London Stock Exchange group says is a $140 billion SME funding gap.

Venture Africa says: “Unfortunately, the hostile business ecosystems in many African countries don’t support the growth of SMEs, resulting in their rapid death.”

That is changing, albeit slowly. The SME ecosystem is at the heart of some notable new initiatives. The Monetary Authority of Singapore has formed Business sans Borders, a hybrid business data and solutions hub that will use artificial intelligence and other capabilities to aid in the digital transformation of SMEs. Mastercard, SAP and others are taking part in the project.

Kuwait’s $6.5 billion National Fund provides SME startup capital and steers young SMEs to private sector mentor-advisor companies that can stress-test their ideas and help them figure out what it takes to go to market.

Similarly, Saudi Arabia is knitting together a network of innovation centres, entrepreneurship platforms, incubators, accelerators and co-working spaces to foster SME creation and growth.

Officials in Pakistan recently identified SME growth and ecosystem support as the country’s top economic priority.

Elsewhere, Scale-Up Denmark is introducing Danish SMEs to larger corporates and prodding them to sell in global markets. And SheTrades, an initiative of the Geneva-based International Trade Centre, aims to connect 3 million female entrepreneurs and female-owned small businesses by 2021.

Even sophisticated, tech-driven SMEs have been hampered by lack of access to affordable data analysis. Hal Varian, chief economist at Google, says powerful number crunching and analysis are now available to SMEs through programmes such as R and Python, Google’s Kaggle, or easy-to-use machine learning algorithms offered by TensorFlow, Cafee and others.

Varian is credited with coining the term “micro-national” to describe the new breed of entrepreneurs and small businesses that have joined the competition for cross-border trade. Micro-nationals are proliferating as they discover online tools that give them buying power, capital, market access and local connections needed to export and do business outside their home markets. Eighty-six percent of SMEs in one survey felt technology was “levelling the playing field” for them to operate globally.

In India, small manufacturers can now use a cloud-based platform to analyze the efficiency of plant machinery and begin their digital transformation.

Lazada, Shipa, Kabbage, First Circle and others are building technology, logistics infrastructure and financing mechanisms designed for small business “e-tailers” and entrepreneur-led e-commerce.

Banks in New Zealand, Spain, Germany and Australia are offering SMEs services like those they market to big corporate customers: advisory services, financial management, strategic insights, and tools that help with forecasting.

Florian Semle wrote in Medium: “Ecosystems emerge through cooperation of a wide range of different players – startups, companies, platforms, services providers, consultants, research hubs and more, to solve common problems.”

He said building an ecosystem “is the way to create a structured framework out of the noise and complexity of digital transformation. It is a process of social acceleration, designed to overcome organizational limitations in speed, expertise, talent, technology and flexibility”.

At many big companies, the ecosystem is awkward, uncomfortable, hard to manage. It is a painful social and cultural stretch that requires large organizations to offer creative freedom, collaborate, and innovate within a network in ways that feel alien. Only a small minority of those surveyed in the Accenture study believed their company culture was ready for that kind of collaboration.

Ecosystems that connect large companies and SMEs are good for both. SMEs, in addition to bringing ideas and energy, come with a hunger that is often missing in big corporates, along with a tendency to question entrenched notions and accepted practices. SMEs help quicken the metabolic rate in lethargic ecosystem partners that are slow to spot and grab market opportunities.

And in emerging markets, SMEs can be the most valuable ecosystem partners. That’s because larger homegrown players – usually the most sought-after partners for global companies – are often overly concerned about guarding market share and too hesitant to share proprietary data to be of much value as ecosystem collaborators.

Most emerging markets have voracious appetites for new business models. They feature a furious rate of technology adoption. They offer pools of eager, young talent. All these elements are essential to successful, dynamic ecosystems – meaning ecosystems that generate value.

India, where internet penetration has yet to hit 30%, hints at the wildly vibrant ecosystems driving growth in social media platforms that were adapted to local tastes and habits with the help of thousands of SMEs.

India is already the world’s largest market for WhatsApp and Facebook; no. 3 for Instagram; and no. 4 for Twitter; home to four of Tinder’s top 10 cities for paying users; and the location of one in 10 Uber rides, according to research firm eMarketer.

So the next time you take a hard look at your ecosystem, see if you can spot the hole.

This article is part of the World Economic Forum Annual Meeting

Read the original article here:  https://www.weforum.org/agenda/2019/01/smes-make-the-most-valuable-partners-heres-why/

How technology is providing a VIP shopping experience for all Q&A with Nadia Akil, CEO of UPAC

E-commerce is disrupting the retail sector. Its growth potential is huge in the GCC, as e-commerce has been slower to gain a foothold here compared to more mature markets. The market is expected to double to $20 billion by 2020.

So what does this mean for brick-and-mortar retail? Malls are a crucial part of the region’s culture. Will a shift to online buying spell trouble for them? Not likely. In fact, some of the same digital innovation driving the change in consumer buying habits is also transforming shopping malls in the Middle East. It’s time to get ready for the super-sized smart mall.

To find out more, we spoke with Nadia Akil, CEO of UPAC, an Agility affiliate and leading investor in Reem Mall, a $1.2 billion retail leisure, dining and entertainment destination set to open in Abu Dhabi in 2020.

What is your take on the changing retail landscape in the Middle East?

It is drastically different from ten years ago. The rise of e-commerce is a huge challenge for retailers. Although its uptake has not been as rapid as in the U.S. or U.K. — e-commerce still counts for just 2% of retail sales in the Middle East — that’s only going to increase. We’re living in a digital world, and brick-and-mortar retailers must embrace this if they’re to survive. I’m not just talking about having an online presence. Retailers need to move to a smart model where the physical act of shopping is combined with a digital experience. As a retailer, you need to look at the customer journey and use technology to improve it and, most importantly, make it personal to them.

How can retailers use technology to improve the customer experience?

Augmented Reality (AR) is a great example of how technology can improve the customer in-store experience. Sometimes when browsing clothes you want to see what they look like, but don’t want the hassle of actually trying them on. Shops can offer an AR experience through augmented dressing rooms, or via a smartphone app. AR is already a hit with consumers – according to a study by Interactions , 61% say they would prefer to shop at a store that offered AR over those that don’t.

If shoppers enjoy trying items on but want a better experience, smart mirrors are the answer . Interactive fitting rooms kitted out with “magic” mirrors automatically recognise products through RFID tags. These are synched with store inventories, so if a customer wants a different size or style they can request it. The mirror image can also be captured on camera, allowing the shopper to easily seek a second opinion from friends via social media.

Robots aren’t being utilized past the self-checkout stage for now, but it’s only a matter of time before consumers can enjoy their own “personal shopper” robot in store.

And what about personalizing the customer journey?

Data and analytics play a key role here. Retailers who have an online offering can use this data to encourage their customers to visit the store through personalized promotions. Physical stores can also maximize on the point of sale, encouraging consumers to spend more by sending targeted offers to their mobile phones through digital signage, and based on what they’re trying on in the dressing room or have in their baskets.

Personalizing the customer journey will be crucial to the survival of physical stores because it’s everything from the customer’s perspective. Nearly all consumers (91%) are more likely to shop with brands that recognize and remember them, and that provide relevant offers and recommendations, according to a study by Accenture.

How else is technology transforming the process?

Retailers need to be able to rely on super-efficient supply chains. If they don’t have a product a customer wants in stock they need to be able to get it to them ASAP. Shoppers who want purchases delivered to their doors need retailers with super-fast delivery services.

In response to this need, technology is transforming the logistics sector and enabling it to operate at high-speed. Warehousing is more efficient thanks to big data, automation and robotics. The challenges of the last mile are being overcome by the gig economy and SMEs who collaborate with retailers to ensure last-mile delivery in under an hour.

What about the rise of the super-sized smart mall?

In the Middle East, the mall is so much more than a place to shop. Malls are a key part of our culture, places you go to spend time with your friends and family. But to survive in the digital world they must embrace technology and use it to enhance the visitor experience.

In the smart mall, technology is everywhere. From the digital and interactive signage throughout to the tablet you order your lunch from in the food court. Malls can enhance the experience with apps that engage customers by letting them know about events at the mall, the latest offers and promotions in stores, and helping them locate services and find friends who are also visiting that day.

We’ve touched on AR, but VR (Virtual Reality) is also an exciting way for malls to offer immersive experiences to visitors. VR lets customers try out products in a way they couldn’t anywhere else, taking the retail experience to a new level. Say you’re buying an outfit for a special occasion, VR allows you to try it on and test it out “on location.” Buying new sports equipment? VR puts you on the tennis court or golf course, ready to swing your racket or club.

Smart malls can also overcome pain points for shoppers by offering parking assistance and delivering purchases to cars to free up shoppers throughout the day.

Finally, malls should be mindful of social media opportunities and integrate these into their design and layout. You need Instagram-friendly displays, and interactive features that users can synch with their social media accounts.

And what about “retail-tainment”?

Consumers want bigger and better experiences and this is where mega-malls come into their own. Their sheer size makes them destinations in their own right.

At Reem Mall in Abu Dhabi we will be offering a range of entertainment activities such as Snow Park Abu Dhabi, the region’s largest indoor snow park where visitors can enjoy sledding, luge runs and zorbing! In a mall! Now that’s an experience. Reem Mall will also be home to the award-winning VOX Cinemas, including the large format MAX screens, fine dining Theatre by Rhodes and the children focused VOX Kids. For the first time, VOX Cinemas will be fused with Magic Planet creating a unique leisure destination. In addition, Reem Mall will house a variety of around 100 food and beverage options ranging across fine dining, family style, casual dining, cafes, fast food, pâtisseries and coffee shops, all located throughout the mall.

Malls really are places where the family can spend a whole day together being entertained, and where friends can meet to relax and socialize. E-commerce can’t take away from that, but retailers can future-proof their businesses by embracing technology and offering customers an enhanced shopping experience as part of the visitor’s day out.

Thanks Nadia. It sounds like, ultimately, the customer will benefit most?

Absolutely. Disruptive technology is challenging the physical retail sector to up its game, and that’s a great thing. Through digital integration smart malls are offering a VIP shopping experience to all, which I for one will be embracing!