Wednesday, March 18, 2020

Digital Transformation amidst the Corona virus crisis

The Corona virus crisis has given the world a great opportunity to change and change it will be for the better. For most of us it is mainly based on three things,
1. how can I avoid the infection 
2. will I get my salary next month and 
3. will there be enough stocks and items around in the stores to buy
While the first and second situations are based more on the healthcare systems of the country and the financial strength of the economy and the markets, the third situation warrants an understanding of how the existing supply chains of the country need to be spruced up, digitally or otherwise, to be more effective an optimal in these times of challenges.

Digital Transformation of the supply chains is definitely going to happen and is one of the ways our lives are going to change for the better.

It is said that at least 100 million people in India (7.5% of the population, click here for the link) has transacted online last year. In Europe and US that figure goes to 16% while in China this figure is close to 71%. It, no doubt is a reaffirmation of how much digital transformation is influencing the lives of ordinary Indians and the Chinese. In India, there is so much more scope for digital transformation and in China it has been making the change. One of the biggest impact of the Corona virus crisis on Chinese society is we find more people have crossed over from physical stores to online stores and have become part of giant e-commerce networks. 

Robots and ASRS systems have transformed Cainiao logistics big time ..
While going through an article from Harvard Business Review (Delivery technologies is keeping Chinese cities afloat through Corona virus, HBR, March 2020, click here), I was surprised to find how this corona virus incident has given China despite its deaths and the accompanying grief, an opportunity to go digital in a big way. Alibaba mediated to deliver goods and grocery to the people of Wuhan and Hubei by it's Cianiao network (click here) an opportunity to spruce up it's last mile delivery network by tying up with physical retailers and mom and pop stores in Chinese neighbourhoods to act as part of the giant delivery network of Alibaba.  

While Alibaba maintains the information systems, inventory warehouses and supply chains for the mom and pop stores across the Chinese geography, the mom and pop stores serve the main function of being dependable last mile delivery outlets for Alibaba, thereby increasing the reach and effectiveness of the Alibaba network

Will these incidents have a profound impact on the way Chinese population do future commerce or shopping, we have to wait and see. But it is more than clear that that this crisis has paved the way for more digital transformation initiatives from companies, organisation and governments not only in China, but from around the world. I was surprised to read from national newspapers in India, how Amazon in India is preparing to recruit about 100,000 employees for its last mile delivery network across India as during the virus crisis and the accompanying quarantine has motivated more Indians to go online and make purchases from Amazon, Flipkart etc.

Neither Europe nor India have networks the size of Alibaba, so we cannot expect a Cainiao like last-mile delivery network to groom in Europe or India quick, but definitely we can expect great innovative initiatives from Amazon and Flipkart to spruce up their last-mile delivery network capability.

George

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