IT may take three to five years before the local supply chain and logistics industry adopts blockchain technology as it still lags behind in terms of digitalization, the Supply Chain Management Association of the Philippines (SCMAP) said.
SCMAP President Pierre Carlo Curay, in a virtual event on Tuesday, explained that the local sector has still a long way to go in digitizing logistics processes, which include warehousing, inventory, purchasing, order management and financing.
“Blockchain is purely digitization. You cannot have blockchain if you are not yet digitized,” he explained. “We need to digitalize the operations first before we get to that part of the supply chain.”
Blockchain serves as a digital ledger allowing different parties to access information in a secure manner, Curay said. “No need to validate or verify because everybody is sharing into the information,” he said.
Such technology eases data sharing, Curay said, especially for more complex supply chains that have many stakeholders in different countries.
While blockchain is the “future of supply chain,” Curay said this may still be a distant reality for the Philippine supply chain and logistics sector.
Citing YCP Solidiance’s research and analysis, the SCMAP chief noted that 80 percent of the sector is not yet digitized while 43 percent are highly analog and manual.
Some 35 percent of the processes are digitized but only at “low to medium” levels, he added.
Curay said many companies are still arranging or coordinating the transportation, delivery and inventory via phone calls, mobile messages, paper documents or social media messaging platforms.
“It is still a highly manual process and that is where the difficulty lies. It is almost impossible to manage a very complex supply chain from a piece of paper. What is really needed is technology and digitalization,” he explained.
The lockdown measures amid the pandemic were an added challenge to the supply chain management as these limit face-to-face interactions, Curay said.
So far, he noted that only warehouse management and demand planning, among others, are the logistics processes that are “somewhat digitized.”
Other aspects of the supply chain that also need digitalization include inventory management, fleet management, transportation operations, order management and customer service, the SCMAP official noted.
“I think we are two years or three years, or maybe five years behind our regional counterparts that are way more digitized,” Curay said.
Apart from blockchain technology, Curay said using artificial intelligence (AI) will also bode well for the industry.
Using AI can aid local players in making a more accurate demand forecast in a short period, Curay explained. “You can actually predict what would be the demand…and you can order what you need,” he said.
E-commerce sector
Curay said e-commerce awaits many opportunities for the supply chain and logistics service providers, urging them to focus on this segment.
There has been an increased demand for online shopping in the pandemic, he said, noting that purchases of food and personal care items are “fast-growing.”
Citing reports, Curay said revenues of the e-commerce market are expected to grow to $4.42 million this year from just $953 million in 2019, noting that the largest segment is electronics and media.
“In fact, what I will always say: Amazon, or Lazada or Alibaba, the great big e-commerce giants, they are not a retail company. They are not an online store. They are a logistics company. Just imagine how hard [it is] to deliver all that stuff,” he shared.
According to a study by financial service company Visa, more Filipinos have been making purchases via e-commerce platforms for the first time.
One of two respondents or 52 percent are shopping online through applications and websites for the first time, the survey noted. Meanwhile, 43 percent purchased via social media channels for the first time.
Earlier this year, the Department of Trade and Industry said it aims to boost the contribution of the e-commerce industry to P1.2 trillion by 2022, which is equivalent to 5.5 percent of the country’s gross domestic product.