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SMEs in Indonesia get help to digitise supply-chain infrastructure

The mobility restrictions caused by the COVID-19 pandemic have raised many challenges for companies that are still dependent on salespeople in the field to provide inventory information. Organisations started to realise their need for a distribution and retailer management system, turning to tech providers to help accelerate their supply chain transformation.

The rapid growth of e-commerce in Indonesia, especially during the pandemic, is placing increasing demands on its supply chain infrastructure. But the country’s logistics industry is highly fragmented, with companies usually relying on multiple distributors for one shipment, and many warehouses are still concentrated around major cities.

A report says that this fragmentation means higher expenses, logistics costs range is between 25% to 30% of the country’s gross domestic product (GDP). Even neighbouring countries, like Malaysia, incur half the cost as a percentage of GDP for logistics expenditure.

Now, an Indonesian tech company, after closing a US$2.75 million funding, wants to ease the logistical burden of manufacturers with the usage of software technologies to make the whole supply chain and logistics easier to track.

To help make logistics more efficient for its clients, the tech company offers a Software as a service (SaaS) solution to monitor their entire supply and logistics chain, from warehouse inventory to generating delivery routes for drivers. It includes a product digitalisation feature that uses QR codes to track products and prevent counterfeiting and tools for salespeople visiting retail stores since that is still one of the most effective tools for manufacturers and importers to find customers.

The tech company’s new funding will also be used to launch an online-to-offline system for small to medium enterprises (SMEs) and grow its sales team. The online-to-offline system will allow sellers to integrate inventory and sales from all their channels, including brick-and-mortar, business-to-business, and e-commerce.

The tech company is among several tech start-ups that are taking different approaches to tackling Indonesia’s logistics infrastructure.

Accordingly, a report says that the country’s freight and logistics market is currently trading at an inflexion point. Being the world’s fourth-largest populated country with excellent growth potential, Indonesia is a key market in the global scenario. Given the scope of household consumption in a densely populated country and its strategic location on geographical terms, the country is currently a centre of attraction for global investment. There is an evident display of momentum in the economy, with steady prospects for higher growth and more ideal economic scenarios.

Moreover, the country’s economy accounts for two-thirds of the ASEAN economy, with a growing rate of around 5%. The development of its stagnant manufacturing sector may ignite structurally high economic growth for a sustained period. A flourishing manufacturing industry seamlessly exporting domestically manufactured products will accelerate economic growth and generate plenty of employment opportunities.

At the same time, similar efforts have been put in to aid the digital transformation of the sector. As reported by OpenGov Asia, Indonesian SaaS-based start-ups recently merged to create a platform that will support SMEs through digitisation and human resources and financial management. This move was in response to the Government’s plan of digitising SMEs.

The platform aims to increase the productivity of SMEs in the country through significant technology adoption. The merged start-up will also provide help in cloud-based human resources management. Moreover, it will focus on providing a more affordable SaaS option that would address the needs of the SMEs.

According to statistics provided by the Ministry of Communication and Information, only 6.5 million out of a total of 59.2 million SMEs have been digitised since last year. Modern solutions are needed to enhance the business of Indonesian SMEs.

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