Any business, irrespective of scale, geography, or industry, has
common factors core to its existence: its customers, employees,
resources, and products. Managing these factors individually is
important for success,; but managing the interaction between
them, cumulatively, is crucial to value creation.
These business processes have all gone through a similar
journey of digitisation and democratisation over the last 2.5
decades, redefining the 21st Century enterprise. What used to
be manually recorded, calculated and communicated, gradually
shifted to spreadsheets and emails in the late ’80s and
traditional enterprise technology in the mid ’90s. Companies like
SAP and Oracle created ‘ERP systems’ that had component
‘modules’ to manage assets (ITMS), employees (HRM),
customers (CRM), procurement (EPS), etc.
Traditional enterprise software was monolithic, expensive, had
long implementation and life cycles, user-interfaces that only a
mother could love, and required extra resources to manage the
technology (!). Consequently (and as the cost of computing
reduced), small/medium-sized companies began creating their
own in-house products to manage their processes.
Soon, there came a new breed of companies that built
specialised, cloud-based, mobile-first, user-centric products that
owned one function and worked for companies of all sizes (think
Salesforce (originally), BambooHR, Workday, Freshdesk, etc.)
Today, software that is easy to buy (and easier to use),
customisable, scalable, and immediately deployable are
available to digitise every function of the modern enterprise and
make your life easy.
Well, almost every function.
Deliveries are (still) managed manually.
If you are a logistics/supply-chain manager anywhere in the
world, you’re most probably stuck in the ’90s, doomed to
manage your deliveries through back-and-forth calls and
emails, long spreadsheets, and clunky in-house software. This
isn’t easy, whatever the scale of operations is.
Manual processes aren’t just cumbersome; they are risky.
Let’s take the (real) example of two of Pando’s clients — A and
B.
A, part of a larger conglomerate, is a large paper manufacturer,
with a turnover of about ~US $100 Mil. B is a global electronics
major, with a top-line of ~US $1 Bn (India alone). While at
different scales and in different industries, both these
companies have fairly distributed operations. These businesses
use simple tools to digitise and optimise different business
processes; but, they have not been able to digitise delivery
management.
The amount of time spent on coordination by these companies
— representative of a majority — is mind-boggling. Thousands
of reams of paper, litres of ink, and calls and SMSs are invested
in tracking, monitoring, reporting, and communicating the
progress of each delivery across multiple stakeholders. The data about vendor performance is almost never tracked,
reducing metrics used in vendor re-contracting to the cursory
collection of a few documents.
Both of these companies tried digitising their delivery
management workflows in the past but eventually fell back to a
combination of manual processes and in-house products.
This no-tech reality isn’t just bad news for logistics managers
but risky for businesses as well. Delivering products to
customers is a core function of any business — but most
businesses have no/very little (useful) data on whom they trust
to do this job.
But why is this the case? If super smart people at companies
with deep pockets had tried to solve this, why is it so difficult to
digitise deliveries?
The Case for Convergence
To streamline any business process, companies digitise
individual entities’/users’ tasks and converge workflows
between them, i.e.,get everyone to follow the same process
on the same (/compatible) platform,so information and
assets flow through seamlessly.
Success in doing this has traditionally depended on a) the
number of entities/people involved and b) the degree of
control enterprises wield on these entities.
Processes in small teams are easily digitised. Even larger, more
distributed businesses continue to implement technology top-
down, establishing rules about how and when handshakes
happen, a tight reporting structure, and aligning penalties to non-performance.
This top-down imposition of technology has an inherent
problem, though — it implies that those who ‘buy’ the
technology/product have more to gain than those who ‘use’ it.
This approach has been turned on its head in the last few
years: all over the world, users with credit cards (rather than
purchase departments with budget dollars) are deciding what
technology they will consume, culminating to the enterprise
consuming that tech.
User = Buyer; Σ User Consumption = Enterprise
Consumption
While this democratisation (where users choose products
that work for them) is awesome, efficiency is achieved only
when everyone concurs on the process and uses the same/compatible product(/s) (think Dropbox Business, Slack
Enterprise Grid, GitHub, etc.)
This is where things get interesting. Let’s say a large number
of users picked their own (different, incompatible) products,
and the enterprise couldn’t control any of them? Although
individual entities, in this case, are technically ‘digitised’, the
digitisation doesn’t result in efficiency because the information
and assets don’t flow through seamlessly — it is still held in
silos.
Digitisation without convergence is useless;
Convergence without digitisation is
impossible/inefficient. Convergence +
Digitisation is hard to achieve.
This is the nightmare that is a reality for most traditional
businesses today. While transporters are getting more digitised
by the day (GPS is a commodity, many transporters have in- house fleet management systems), the tools used are so
varied, the number of entities so high, and the degree of control
so low (fragmented, multi-tiered supply) that companies resort
the Lowest Common Factor: Calls, Emails, and Spreadsheets, coordinating between hundreds of transporters,
drivers, brokers and clients manually to ensure safe passage of their goods.
The solution to this problem is not standard (even new-age)
software
Your team of four-five huddled across the floor, or a few
hundred across the globe, uses one product to manage
Customers (CRM) or employees (HCM) not just because each
of you finds it easy to use — but because cumulatively, the team benefits as well. Be it top-down technology imposition, or more democratic bottom-up adoption, the success of a product
depends on both the users and the enterprise staying satisfied.
When the user is the buyer, this is relatively easy. When the
user and the buyer have shared/aligned priorities (either because the enterprise can control the user through negative
penalties or because ease of adoption is enough positive
incentive to align priorities — delightful interfaces, easy support,
and onboarding, etc.), this is fairly straightforward as well. There
is, however, the third bucket of business functions where the
interests of the user do not align with the interests of the
enterprise, or worse, are diametrically opposing to it.
When the interests of the users don’t coincide
with the interests of the enterprise (as in
outsourced logistics), traditional approaches
to technology implementation have to be
rethought.
Outsourced logistics falls into this tricky third bucket. Here,
businesses want to streamline processes, have visibility over
the spend and reduce costs; the users want more from the
enterprise, more frequently. The traditional control mindset will
not work in such cases because the net cost of adoption is
higher than the benefit of adopting a standard product. Good
UX doesn’t cut it deep enough — some users still lose more
than they gain, while others gain more than they lose. Plus, you
(the enterprise) can’t really do a thing because these
users aren’t really on your team.
A new approach to technology implementation — Carrot over
Stick
Interestingly, there is a new breed of enterprise software
companies that are turning such pain points into value
propositions by rewarding users for active use, furthering the
pin in the quest for the democratisation of enterprise software.
This carrot over stick approach works surprisingly well for
business problems like “How do I digitise my delivery
operations, and reduce per-transaction costs, while ensuring
higher returns for the transporter?”
This trend is super exciting for us at Pando, as we are big
believers in inclusive growth. While Pando’s vision is to digitise
deliveries of all kinds for shippers of all sizes, we believe that
technology (in logistics) is a democratising agent; whatever
product we build will add value to multiple individuals in the
ecosystem.
To know how we can enable this for you, contact us.
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