The response has been encouraging and the readership has grown steadily with over 36,000 hits; many comments and e mails coming from all over the Americas; Europe; Africa; India and throughout Asia and Oceania. Clearly, there is an interest in creating a Logistics approach that does not seek to plug and play from the Logistics Lexicon of the developed economies alone and seeks to build a unique and relevant response to a set of all too real logistics challenges beyond the fast tracks of the developed world.
Strategy is all about imagining a future environment five years out for your product or service and then, creating the operational map to get there. Looking at T L after one year the vision remains the same – to create an umbrella term for logistics in developing and emerging markets that offers a toolbox and case studies of ways in which logistics can, and has, transformed businesses and the quality of life. This does not mean best practice from the developed world so much as fresh practice from very different circumstances – more jugaad than blue sky thinking; simply modal rather than leading edge.
Here are some notes on key areas of enquiry for T L:
1. Methodology. T L started from a set of observations about logistics in India. Initially, the informal economy was the focus but it became obvious that there are wider applications. After one year, the methodological framework settles to this:
Transformational Logistics urges us to leave aside what Professor Sassen has described as those parallel geographies of urban glamour and the squalor of slums. Above all, there is a crucial role for T L in these uncertain times. As Einstein once observed, “to continue to do the same things and expect a different result is a sign of madness”.
Transformational Logistics is a catalyst for what needs to be done in terms of connectivity, mobility and skills for an era when over 9 billion people will crowd the planet. This is the brands new world. By 2050, over 70% of this number will live and seek to work in 50 city regions where over 60% of economic outputs will be generated. This fact alone demands quality thinking on logistics and its role in transforming the quality of life for those drawn to these regions and, crucially, for those that are not – for whatever reason.
2. Ideas. It is important to stress that T L is an umbrella term and, as such, bears a close resemblance to another one – Humanitarian Logistics. We have no hang ups about highlighting great ideas from any source – there is no pride of authorship here. However, this past year has reinforced my initial hunch that there is not only space for another umbrella but, there is a real need. How else can Iraq move through the gears to a market solution; how else can traditional industries survive and prosper if connectivity and mentoring on logistics techniques does not happen to link local industry to wider markets and, how else can the image of logistics industry rise above that of the truck driver in so many economies?
A bibliography of influences to date is the subject of a separate post but, for me Amartya Sen’s work on welfare economics and the role of relevant measures and, an ethical position remains an inspiration. C K Prahlahads work on the Bottom of the Pyramid and Paul Colliers work on the Bottom Billion triggered a massive search through all sorts of works old and new. Paul Polak on design in the developing world and a massive literature on Development have been key. I enjoyed the discussions with Lenny Koh at the University of Sheffield on the Green Supply Chain; Peter Cappelli at Wharton on the skills agenda and see this as a major area for further enquiry and T L response. Mauro Guillen, of Wharton’s the Limits of Convergence challenges the widely accepted notion that globalisation encourages economic convergence and acts, for me, as a catalyst for much of the thinking on the validity of T L offering a similar insight for logistics. As I said, the Bibliography is a big one and the subject of a separate Post to come. Meanwhile, this is where the spirit of enquiry takes us:
3. Relevant industries.
- Developing and emerging world industries. Dairy; Leather; Cotton and textiles; Flowers; Jewellery and Logistics itself. All of these industries are facing a set of unique challenges that developed world logistics alone will not solve. These industries trace movement from informal players and aggregators to formal markets.
- Mountain economies. Adam Pain has done terrific work on mountain economies and industries that start in the home such as carpets or, wild honey from remote rural areas on their way to a sophisticated marketplace.
- Emerging world. Infrastructure is a major headache and the Last Mile video from Chennai has struck a chord with so many people. The need to understand connectivity into remote rural areas is key and a failure to develop this will force the pace on mindless expansion of no more than 50 global city regions – with untold consequences for public health and a congestion that will reduce logistics to the pace of a medieval caravan. This is where ingenuity and jugaad plays as big a role as major investment in urban infrastructure.
- Outsourcing. Martin Christophers work on Logistics is well known and his insight that supply chains and not companies compete in the modern world is pivotal. It triggers a huge debate on sourcing beyond the first tier and this brings into play the whole issue of the informal economy.
- The Brands New World. As Cavinkare (Chennai) amply demonstrated, brands have to innovate to reach the majority world – they did this with single use sachets for shampoo. Reach is a key factor in making this happen and logistics and connectivity is key to success.
- Technology. Several posts on this blog emphasise the need for any technology to be adaptable, affordable and accessible if they are to succeed in the Majority world. Each of these drivers is loaded with meaning and challenges for conventional developed world companies. The work of Bharti Airtel in India is worth a closer look – in connectivity for remote rural areas; aggregation of demand and, healthcare. T L sees this as a key enabling area.
4. The T L agenda. From a simple base, the ideas have built around the following core ideas:
- Inclusive value chains. Many developing and emerging economies have little to gain from supply chains that add the value in the developed world and relegate the developing world to little more than a low-cost supplier of raw material. This status means that the contract will fade as another lower cost operator is found. Malcolm Harpers, Inclusive Value Chains in India (2009) has been a considerable influence and there is more to come from this concept which links so well to the T L philosophy.
- Key drivers. The logistics of the following are key:
– Food and Water Security. With food riots taking place everywhere from Italy to Indonesia, there is a clear need to look closely at productivity and connectivity in this vital area.
– Fuel and energy options. It is not what was said at Copenhagen but was is done that future generations will judge us by. Interesting how India and China are starting to pull away from the Developing world but crucial for someone to drive the agenda with the Majority World – which is mainly informal – into the policy mix. Policy rarely does informal – unless to ban it.
– Finance. The Global Recession has challenged Aid budgets and signficantly undermined the security of remittances. This is a major source of instability. Micro Finance has been well documented though this recession brings home the fact that it is dangerous to view it as a universal panacea. There is a world of difference between a loan for a sewing machine and what is needed to scale up to factory output.
T L has a role to play in ALL of these drivers.
- Adding value. T L has covered several examples of how agriculture can become agri-processing. India processes only 3% of the harvest versus over 70% in Brasil. So much can be achieved by exploring this throughout the developed and emerging world.
- Rescuing traditional industries from extinction. T L does not advocate There are clear market driven options to build added value options such as adding contemporary design technique to traditional jewellery to retain gemstones and add value rather than allow gems to move off as raw material for others to reap the major reward. This means working hard on design; connectivity of ideas and, the logistics that can transform outcomes. A recent post on Ghana argues for greater balance between the quest for white water growth from oil and the need to balance the economy with diversification.
- Social welfare. Truck drivers are a case in point. Nowhere does the truck driver get the credit they deserve. Poor working conditions; corruption; bad food and dangerous accomodation along the way have been compounded by widespread alcohol related and sexually transmitted disease. In India alone, an estimated 7% of Aids carriers happen to be truck drivers. More just has to be done. T L is looking for funding to set up and develop a research programme on truck movement in the energing and developing world – Catalyst or constraint.
- Design. Paul Polak speaks compellingly of the need to reverse the obsession with designing for the affluent at the exclusion of for the majority world. Videos on this Blog illustrate a whole raft of thinking in this area. After all, to design a solar powered oven would cut carbon emissions dramatically and, all manner of simply modal applications could make an even greater contribution.
- The Green agenda. Professors Lenny Koh of the University of Sheffield and Lynne Frostick of the University of Hull are leading some excellent work in this area and, as we explore ways in which supply moves to more inclusive value chains we need to sieze the opportunity to use this as a catalyst for environmentally sound practice from end-to-end.
- Simply modal. The logistics equivalent of slow food – I coined it in a restaurant in Chennai – simply modal speaks for all those ideas where products are moved by manual distribution approaches or unit packaging that facilitates low-tech solutions. The work of Tielman Nieuwoudt has been an inspiration on this. The bamboo bicycle has been a popular post and other ideas on shelf ready packaging has struck a chord.
- Skills. This is a massive area that requires urgent attention. Far too many emerging countries have built economic momentum dependent on a high percentage of foreign labour. Localisation and skills development is the only way to build sustainable local solutions and this needs a closer look. In fact, skills is relevant to developing economies as a means to ABSORB aid and inward investment; to emerging economies a a means to ENABLE sustainable growth to occur and, even to developed economies as a means to FUTURE PROOF and UPGRADE core skills. This is a major factor in the drive to implement holistic energy strategies and low carbon futures. We seem to go no further than Policy and run the real risk of leaving operations and the skills to maintain renewables equipment to chance. Crazy.
- Gender. Martha Chen and the work of WIEGO has developed a tremendous body of work in this area. T L plans to revive some work done on mentoring women in the Logistics industry in coming months.
- Measures. Two posts relate to the World Bank’s Logistics Index others explore the Millenium Development Goals. These have been very popular and illustrate a wide impetus for greater understanding of progress and high impact strategies as opposed to loud voice. Sen is helpful here with his critique of measuring a country on GDP alone. What of literacy etc? Looking to the future there is a real need to measure full economic impacts of energy choices too. For example, as things stand GDP tots up all the goods and services produced in an economy, as valued at market prices but leaves out the cost of cleaning up any environmental mess. Suppose a tanker runs aground and causes untold damage to the environment. The associated clean up costs would give a boost to the GDP figures. Hmmm…
- Finance. Micro Finance has scored some major victories in challenging the coventional banking wisdom on who to back with loans. However, as the Boston Globe reported recently: “billions of dollars and a Nobel Prize later, it looks like microlending doesn’t actually do much to fight poverty. For some time, microfinance was viewed as a miracle cure to emancipate women; create millions of entrepreneurs and solve poverty. And yet, a more balanced view would celebrate it as an option but caution any suggested status as a silver bullet. Time to develop a clearer insight into what is needed going forward.
- Ethical Supply Chains. As indicated elsewhere, T L has been greatly influenced by the work of David Richardson; Kevin Bales and Joel Quirk at WISE. There is real scope to develop an ethical supply chain movement that can act as a catalyst for a number of initiatives to deliver inclusive value chains and challenge the black box or, at worst, demonology of the informal economy with a set of practices that can deliver fair trade. The Ethical Supply Chain is a priority area for T L and has generated the most hits for any single post on this Blog.
- Job creation and sustainable growth. Over 85% in the US and more than 65% of jobs in the EU are generated from SMEs and, with the Majority World depending greatly on informal jobs it is ludicrous to ignore the skills agenda.
5. Next steps: Some thoughts …
- The T L Trust. T L remains an Open Source approach and every effort is made to maintain independence. The next step is to appoint a group of trustees and these people will help us to build momentum for the T L agenda.
- Develop the Blog. Plans are in place to migrate to a better site with additional features that can generate funds that will be invested directly in research.
- On-Line Conference. The idea would be to develop the above ideas on a series of video talks that would feature on a website and open up the debate still further.
- Seminars. We are in discussions in India; Argentina and Africa to launch a set of seminars on T L with Case Studies. The seminar would cover:
– T L: A methodoological framework.
– Case Studies
- Research. Lenny Koh has been instrumental in exploring ideas at the University of Sheffield and we are optimistic that this can open up more significantly in coming months. Any thoughts on how we can link to Institutions in the Americas; Asia; Africa and elsewhere? The on-line Conference will be part of this process.
And so, let’s close on seasonal greetings to a few of the people who have encouraged my pen to scratch away through several Friday evenings on T L related topics. German Banchio and Fernando Ferrero on the relevance to South America and Byron Song on China; Masha Afanasieva on Russia; Duncan Morgan of Baobab and Clare Brennan have been very insightful on Africa and, Graham Hamilton very helpful with insights from fieldwork in Tamil Nadu. So too Sravish on a number of ideas. Above all, the support of Neil Watson and Andy Maslaveckas at Archomai have been pivotal in allowing the time to progress from the beer mat discussion with Sridhar in Chennai.
Enough said. Progress has been made despite a lack of resources typical of these sorts of venture and, maybe, the thoughts are best developed in book form. Watch this space. Meanwhile, we are keen to feature more Case Studies and respond to realities out in the field. You are all welcome to contribute and other writers are needed as we try to step up a gear in coming months.
Thanks for the interest shown. Have a great Festive Season and here’s hoping for real inclusive progress in 2010!