There is more to the term “logistics” than transport. I went to the Asia CEO Forum’s Asia Logistics Summit 2016, expecting panelists—all leaders in either retail, technology, or courier/transport businesses—to suggest ways to solve the transport problem and the concomitant high transport costs.
I was wrong. I should have realized that the best business leaders aren’t born to simply discuss ad nauseum what changes they wish to see in their industry.
Instead, they face the challenges head on and adapt. And as one of the speakers at the Logistics Summit at Marriott Hotel in Pasay City said, “we only deal with things we can control.”
Filipino Entrepreneurs’ Helping Hands
This is not to say that the government doesn’t have a plan for issues that beset the country’s business sector. For one, the current administration has appointed two key leaders from GoNegosyo, a 12-year old advocacy of non-profit organization Philippine Center for Entrepreneurship, to steer the course for the country’s businesses—most importantly, for the micro, small and medium enterprises (MSMEs).
One of these two leaders is Joey Concepcion, presidential consultant for entrepreneurship and founder of GoNegosyo, who called on leaders present at the Logistics Summit to help MSMEs by making the latter “part of the big businesses’ supply chain.”
“Most of these MSMEs are what we call survival entrepreneurs,” he explained. “The owners have not gone to the best schools nor have access to business mentors or received adequate support. They need your help.”
In the country, 99.6 percent of businesses are MSMEs.
Inclusive Business Model
Some big names in Philippine business are leading the implementation of “inclusive business models”: a model where businesses tap poor communities to provide services or goods for either their demand or supply chain. Among these companies are Human Nature, Selecta, Manila Water, and Pilmico Foods Corp (a food subsidiary of Aboitiz Equity Ventures).
Now that the stage is slowly being set for MSMEs to be part of key players’ supply chain, the next question is: Are MSMEs ready to level up?
Here are some key takeaways from the Asia Logistics Summit that small businesses should consider if they want to connect with big businesses.
- Be lean but mean by outsourcing aspects of your process. Dustin Andaya, CEO of cut flower e-commerce site Island Rose, narrated how his company grew by staying lean. During its early years, it found itself up against competitors that were mean machines: These had the funds to buy numerous trucks as well as computers for their B-2-C businesses.
Island Rose didn’t do any of that. Instead, it outsourced part of its website maintenance, payment and fulfillment processes. “Outsourcing is a vital component…. We instead stick to our core [competency].”
Today, Island Rose outlasted its rivals enough for it to claim the title, “longest running e-commerce business in the Philippines.”
- Be aware of global and local trends. “Look out for opportunities when the development starts to focus on 2nd and 3rd-tiered cities,” said Monchu Garcia of Orient Freight International.
Some of these areas of opportunities are in road, building and airport construction, food chain facilities, distribution and storage, and motorization.
- Step up your game to be noticed by big companies. With technology comes transparency. Business solutions provider Adjuno, for instance, has a cloud technology that allows big businesses to use data analytics in determining the performance of their service providers.
Today, companies can use technology to track the delivery turnaround of data-providers such as shippers. This transparency now requires micro and small enterprises to step up so as to be as competitive in their delivery services as the more well-funded firms.
- Even if yours is a mom-and-pop store only, go through the process of planning your business. According to Jock Stacey of TV Shop, planning for your business should be similar to how a general plans for a mission.
Planning encompasses setting up an audit trail for checks and balances, documenting standard operating procedures, and investing in people’s development. For instance, small businesses should hire based on qualifications and not on affinity (i.e., hiring a brother or an in-law just because they are family).
- Be up-to-date on supply chain management trends. Want to be a service provider to, say, manufacturing companies? Then, learn the latest on supply chain management.
Luca Fichera, supply chain director of Nestle Philippines, noted that while there are many jobs on supply chain management, the country lacks local talents. Skills in sales, communication and project management are vital.
Also, the supply chain talent of the future is one who has knowledge of advanced analytics as well as other developments in technology: Internet of Things, Advanced robotics, 3D printing, wearable technology, etc.
As its way of plugging the gap between need and supply, Nestle Philippines has set up and maintains its own Supply Chain Academy.
Perhaps the biggest takeaway from the Asia Logistics Summit is that success is a two-way street. Historically, a huge percentage of MSMEs fold up within five years.
It is therefore not enough that the government and private sector are pulling all stops to help MSMEs. The MSMEs too must learn to evolve, adapt, and constantly learn if they don’t want to be another statistic five years from now.
How about you: Is your business ready to take this challenge?