Transformational Logistics is an umbrella term for logistics and supply chain thinking and practice in Emerging and Developing markets.
Globalisation has not produced homogenous markets and uniform supply chains across all geographies and industrial sectors; and, developed world logistics and supply chain solutions do not respond to all market conditions. One size does not fit all and Transformational Logistics acts as a catalyst for markets with widely differing contexts:
- Emerging: the BRIC (Brazil, Russia, India and China) and, the Second Eleven (Mexico, Bangladesh, Vietnam, Indonesia …)
- Developing: those with a high degree of social and economic hardship; lacking the robustness to compete alone such as a host of African; South American or Asian economies.
- Devastated: those wrecked by geological or metrological phenomena and requiring Humanitarian Aid and International support like Haiti, Niger, Pakistan, Chile.
- Dislocated: those experiencing or recovering from warfare such as Iraq or Afghanistan.
- Transitional: those moving from Centrally Planned to open markets like Russia, Eastern Europe and, the Baltics in the 1990s.
These economies are characterised by:
- High levels of informal economic activity, employment and housing.
- Hybrid and asymmetrical supply chains linking traditional, low-tech and highly fragmented suppliers with demand from modern, high tech and consolidated Corporations either in the domestic or, global markets.
- Significant regional, urban and rural differences.
- Variable levels of hard and soft infrastructure connectivity.
- Inconsistent and insufficient levels of sanitation, energy and market access.
- Extremes of affluence and poverty; literacy and numeracy and, cultural norms on gender and social mobility.
Logistics in these markets has to improve market access on a local; regional; national and global level commensurate with available as well as potential resources, skills and support. There is no one best way and, there are many options and alternatives. Transformational Logistics can improve the bandwidth of mainstream logistics and supply chain thinking and practice.
These days, supply chains compete not companies and they do so globally drawing from all types of local sources and environments. Logistics and Supply Chain thinking and practice has to accommodate small local enterprise as well as transnational corporate players; informal as well as formal actors and low-tech as well as high-tech solutions. It can help in disasters but needs to play a bigger role in rehabilitation and, sustainable growth. And, logistics is crucial to economies dislocated by war and, in transition from Central Planning to an open market. Here’s why.
Emerging and Developing markets are characterised by distinct urban and rural realities; poor infrastructure and materials handling equipment and, high levels of informal business and employment relationships. National markets feature significant regional variation in climate, demographics and, relative prosperity. For example, of the BRIC economies – Brazil features the urban bustle and favelhas of coastal cities and, the Amazon rainforest itself; Russia is spread over 11 time zones with most cities located in colder climates; India has huge regional variation and, China is significantly more developed on the coast than the interior. Many contend with scarce or inconsistent energy and water resources and, shortages of skilled labour and experienced management challenge productivity, performance, competitive advantage and investment. India has to train 500 million skilled workers by 2022 and all developing countries have to develop a local skills capacity to realise potential. All too often poor governance and weak or inconsistent regulatory frameworks in these markets make sustainable growth an elusive quest.
Despite these challenges, Emerging and Developing markets offer high growth potential for all sorts of products and services currently experiencing stagnant or low growth potential in mature economies. There are exciting opportunities to access markets at different price points; often with huge volume potential and, exposure to these environments can and does stimulate innovation in business purpose, process and, people development. And, there is increasing shareholder and stakeholder activism pushing companies from the developed world to access these emerging and developing market opportunities or, lose support and market share. When we consider that 51 of the top one hundred economies in the world are Corporations – shareholder activism in particular is a major force to be reckoned with. And when, we consider the needs at the Bottom of the Pyramid there is another very real source of activism that could turn opportunity into disaster.
Mainstream logistics and supply chain thinking has to adapt to these challenging conditions and deliver social and environmental as well as economic benefits. This means hybrid techniques using resources and assets responsive to local context and needs.
Transformational Logistics builds on mainstream logistics to offer:
- A framework for research into logistics and supply chain thinking and practice relevant to Emerging and Developing markets.
- A forum to build better understanding and common purpose between the formal and the informal elements of the economy as a whole.
- A means to embed a viable, inclusive and sustainable market as an economy responds to a natural disaster, the devastation of warfare or, political and economic dislocation.
And Transformational Logistics can be:
- An enabler to grow logistics skills standards, capacity and delivery.
- A facilitator to promote and share adaptable, affordable and accessible practice in all end-to-end flows (physical; information, cash and skills) relevant to effective and efficient operations in these markets.
- A catalyst for mature markets and established companies to access new markets and learn from them.
Global population is growing from 6 to 9 billion; resources are increasingly scarce and, the recent three F’s crisis (Food; Fuel and Finance) questioned global business assumptions triggering a Recession and, the G 7 opened up to the G 20.
Transformational Logistics is not an alternative to current Logistics and Supply Chain thinking and practice. It aspires to be a valued member of a broader Logistics community alongside other initiatives such as the Green Supply Chain and, disciplines such as Humanitarian Logistics. As Paul Collier responded when it was said after the Haiti earthquake that the challenge “was to get the country back on its feet”; Haiti and many other economies have never been “on their feet in the first place”. Transformational Logistics could be the catalyst to take Humanitarian rehabilitation into a sustainable future. Taking the World Bank’s Logistics Performance Index as a base line, Transformational Logistics occupies the middle ground between high performers such as Singapore and, low ranking countries dislocated by all manner of disasters or characterised by low level or non-existent connectivity.
It is time to transform the world of logistics to keep pace with emergent realities and, to deliver inclusive and sustainable growth through adaptable, affordable and accessible solutions. Markets are only free and open when they respect livelihoods as well as lifestyles and an ethical dimension to business between suppliers, buyers and consumers can deliver sustainable growth. This is the brands new world and, Transformational Logistics can help widen the scope and, future proof the discipline in all markets.
This Transformational Logistics Blog is a forum to champion and progress this agenda.