Ask the expert: Ron Ribeiro
Question: How can businesses in the Middle East embrace a systems-thinking approach to benefit from
the regional logistics boom?
Expert: Ron Ribeiro
CEO, Aryan Business Consulting
A market review of the Middle East logistics industry
The region's logistics industry is set for massive growth which is driven by various factors. For starters, the strategic location of the Middle East embraces key global trade routes. Meanwhile, the air has been full of debates calling for the integration of the economies of the Gulf States to formalise a GCC common market.
The six economies that comprise the GCC (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE) have fast accelerated their independent integration into the global economy.
At the same time, inter-state trade between the Gulf nations have also taken a leap. And direct foreign investment has reached an unprecedented high in the past 24 months.
As firms struggle with margin achievement in traditional markets, opportunities in the Middle East remain rife, with key drivers for growth present in infrastructure projects and burgeoning large scale investment in real estate and tourism, which in turn drives demand for transportation projects such as ports, logistics parks and airports.
Consumer demand is increasing too, and the region's FMCG markets are pegged as amongst the highest growth markets in the world.
Searching for the right opportunities
If the sector players are ready to work together we can position the Middle East as an international logistics hub and further develop strong, sustainable international trade routes and deep, result-driven relationships, resulting in a buoyant return.
Opportunities lie in the development of infrastructure, warehousing and WMS, human resources management, training in the transport and logistics community, ports and logistic parks development, together with stable web based IT systems, all which compound to drive efficiency of delivery and thus, another winning card, superior customer service.
The wise business leader can use logistics management as a unique selling point (USP) while marketing for their own regional and international business development. Logistics has proven to be a key business differentiator with the ability to enhance process effectiveness and raise the bar in competitive markets.
Effective, integrated logistics management can add to the bottom-line of organisations and help build market share, especially when the playing field is fierce. Here, its ability to also assist effective cost-reduction and management - comes to the fore.
The major challenges ahead for businesses
The key challenge, and opportunity, is the fast-paced change that the market is experiencing. Broad-spread development is travelling at break-neck speed and the key global players have landed, with others following in their wake.
As the market grows, traditional and niche players are kicking in the same field as the bigger organisations. The traditional, home-grown firms tend to be lacking the deep pockets of the global players, and therefore need to re-look at their business strategies - and fast - if they are going to survive.
The global players are bringing industry benchmarks with them, and the bar here too is rising continuously, so organisations must upgrade their operations and even consider expanding internationally themselves, in order to remain in the game.
It is prudent to re-think long-term business strategies - from the target audience and their demands, to methods of service delivery, to talent retention, and more. It is time to rewrite the book and create a new bundle of USPs.
Looking at market regulations
An eye needs to be kept on regulation, as the mature markets are working towards compliance with the industry standards of the WCO (World Customs Organisation) and other trade bodies. The region's industry leaders must look to create, drive and enforce regional standards that are at least on par with international guidelines.
Web based transportation systems, internet-based tools and services have helped reinvent the marketplace through the creation of freight exchanges and the online marketing of services. Some organisations use this technology to enhance customer service levels. But many do not.
The region can learn and kick-start this next phase in an e-enabled guise from the offset. Web based tools such as tracking systems, RFID, transportation tools, voice-technology, data management programmes or security devices, are now the 'must haves' for success. As the regional market grows, organisations have to attract and retain the right teams.
The overriding challenge for organisations will be to keep their human capital turnover low and strive for employee engagement, loyalty and retention. Human resources must find routes to attract sustainable human capital, but most importantly they must effectively manage this capital to lead in return of investment.