Much has happened since Sridhar and I thought about the unique characteristics of Logistics in India. I drew two boxes on a blank sheet and wrote ‘INFORMAL’ in one box and ‘FORMAL’ in the other. We talked through (Formal) Retailers sourcing from (Informal) Farmers in remote rural areas. Other examples flooded in from all over the emerging and developing world. Then, the lines that connected the boxes were added: physical, information and cash flows. Then, the questions and, slowly the ideas that are helping Transformational Logistics to take shape as a meaningful umbrella term – how logistics can transform economic and social outcomes within the informal economy and into the wider economy. Where are we now?

The following notes highlight progress made to date and set out the agenda for the coming months.

1. Definitions. Transformational Logistics is an umbrella term for current and fresh practice in two key areas: 

  • As an integrator of the formal and informal economies as a whole promoting effective and efficient ways to deliver inclusive and sustainable growth. In this context …

    Transformational Logistics helps to build the connectivity for hybrid business models that recognise the mutually beneficial synergies between formal and informal markets. The huge scale of global outsourcing makes this all the more significant as ways to transform logistics performance become ever more crucial.  

  • As an enabler in the transition of an economy from a natural disaster, the devastation of warfare or even a Soviet Style Centrally Planned Economy to a stable open market economy capable of delivering sustainable and inclusive growth. In this context …

    Transformational Logistics acts as the bridge between a state of military and humanitarian logistics to one that offers a marketplace for consumers.

2. Recognition. The Majority World lives in informal market conditions and more needs to be done to recognise synergies rather than for the informal market to remain as a parallel universe. Transformational Logistics is part of this process.

As world population climbs from 6 to 9 billion more people will live in cities and issues of connectivity and logistics will come to the fore. If utilities and power are not tackled a silent tsunami of diseases could paralyse whole cities throughout the developing world. And, a failure to tackle connectivity with remote regions will only exacerbate the gap between the haves and the have nots.

Moreover, as the current Financial crisis bites, who can ignore the potential for products and services within the informal community? Anyting from mobile phones to white goods; environmentally safe cookers and gas cylinders to supply them; all types of branded goods from affordable bottled water to coke can build profitable market share in the Majority World.    

A number of articles on Transformational Logistics themes are in the pipeline in various Journals over the coming months. All of them will contribute to the Informal / Formal debate and explore the role that logistics can play in transforming outcomes.  

3. Conference, August 2009. We are delighted to announce that the CII (Confederation of Indian Industry) have agreed to make T L the theme of their biannual Logistics Conference. We may focus this as Logistics in Emerging Markets. This Event will act as a catalyst for many other initiatives to build to and from.  The Trans Log Conference will be looking for:

  • Speakers on T L themes. See below re subjects.
  • Speakers on Case Studies illustrating T L themes: We welcome ANY company with examples of how they have grown their business or, made a contribution to the Informal market.
  • Sponsors. We are looking to launch a fund to raise money for vocational training and studentships at partnering Universities and Colleges.
  • Knowledge Partners. We want to grow a serious core of research to help the Transformational Logistics agenda take shape. Currently, the LSCM Research Group is coordinating this led by Professor Lenny Koh. We are keen to add to the group and set up reseaerch projects – especially across the Emerging and Developing World.

Details to follow

4. Trans Log Blog. Launched a couple of months back, we have had over 100 hits per day on occasion and many debates have sprung up with practitioners from all over the world and, some leading thinkers on aspects of the informal economy and logistics itself.

Themes with a Transformational Logistics dimension that are emerging from the Blog to date are:

  • Policy. The informal market is now the Majority World and much more needs to be done to integrate rather than, through inaction, promote the informal and formal markets as existing in parallel universes. The Last Mile campaign that is building constructive dialogue with local and national authorities is a case in point.
  • Infrastructure and market access. The Majority World represents a huge challenge for all sorts of connectivity: power, utilities, roads and general access. At one level, the lack of adequate infrastructure could trigger a silent tsunami of disease within the marginalised community. On the other, poor connectivity will reduce the opportunity for all types of company to make the informal market commercially viable.
  • Flows. Physical flow or  movement of goods; Cash flow and, Information.  All of these aspects of an effective and efficient supply or demand chain or network (on a local and global level)need a closer look.
    Physical flows: Much can be done by mapping supply chains from end-to-end. This Blog has mentioned the Carpet Industry from Iran, Afghanistan and elsewhere; Professor Adam Pain is working on Wild Honey into the Pharmaceutical industry; Auto components is another and, the whole story of Cooperatives and their links to the local self employed. There is much to be done to understand and develop solutions in this area. How does any product move to market and, tis is not just about wheels it can be about shelf ready packaging. Much to be done.    
    Cash flow: Micro credit for micro projects has grabbed all of the headlines and has done so much to build the capacity to consume. However, more needs to be doen to understand, explain and develop the SME model from launch to sustainable growth. This can only be done with some form of capital and operational funding. In the current credit crisis the going is about to get much tougher. More needs to be done to understand and develop solutions.  
    Information. The example of the Kerala fishermen using the mobile phone to check prices and place their catch whilst out at sea triggers all sorts of examples of how IT can make a difference. Order aggregation in Africa, eChoupal in India, Infosys, many examples throughout South America, Mountain economies and so on. All can be liberated through IT.
    Transparency. All flows within an end-to-end business cycle are subject to regulation and scrutiny. Increasingly, health and safety regulations are raising market entry standards for all products regardless of origin. Business continuity is subject to ever more stringent security measures. And now, environmental considerations are raising the Green Bar for all business models. Transformational Logistics can be at the forefront of this demanding agenda. 
  • Innovation. Reality rather than blue sky thinking is the real seedbed of innovation in products and secrvices. For example, CavinKare’s sachets opened up the informal market to shampoos and other toiletries; affordbale bottled water reduces the dependency on unhygenic water sources and, packaging that can contribute to better, cheaper and faster routes to market will reduce waste and improve choice. And then, innovations in financial services such as the Bahia Department Store, Brasil or, the Future Group India generate both the capacity to consume and major new volume markets for everything from white goods to household furniture.
  • Skills. Many workers in the informal market are trapped in low skilled tasks on antique equipment. There are issues of functional literacy, gender and access to adequate finance to be considered. Several academics mentioned in this Blog have produced a challenging body of work in this area. Above all, the skills agenda is one that can trigger the productivity and career paths that can transform outcomes in the informal sector and, do most to build bridges. There is tremendous scope for ideas such as mentoring women in Logistics; tutor assisted distance learning; short courses on key topics – all geared to build the capacity to learn and, the capacity to deliver logistics and infrastructure goals.
  • Triple bottom line. There is a need to look beyond simplistic short term gain and embrace economic, social and environmental concerns with any drive for results. We think that Transformational Logistics can achieve just that:
    Economic: Improved market access means enhanced potential for growing distribution and, profitable sales – for all sorts of products.
    Social: A recognition of the synergies between informal and formal markets opens up all sorts of skills improvements and sustainable development opportunities.
    Environmental: We cannot ignore the need to tackle these questions urgently. A failure to provide adequate amenities could unleash a silent tsunami of disease and / or, a failure to integrate the informal communities into the environmental agenda could ignore a huge ability to recycle.
  • The Last Mile. This is a fine example of what Transformational Logistics can support and helpd to develop constructive solutions. The video featured on this Blog is just the start. We have several others in the pipeline. The idea being to take people into the field as often as possible – using technology to do so. In addition, we are keen to link up with other campaigns on Fair Trade; on Water; on any aspect of this whole informal / formal debate where Logistics can make a positive contribution in transforming outcomes.  

The Trans Log Blog will be upgraded shortly to include a Logistics Book Store; a Case Study Library and, a number of features including campaigns and, studentship and sponsorship initiatives.

5. Research Focus. The LSCM ( Logistics and Supply Chain Management Research Group) is an emerging think tank for Supply Chain issues involving a wide number of Universities and Practitioners world wide (See: Blog Roll) We are delighted to announce that Professor Lenny Koh of the University of Sheffield Management School and Chair of LSCM confirms that the LSCM will include Transformational Logistics as a research theme going forward.

IMPORTANT. We welcome any research initiative or business experience that we can partner or work with in some way to develop learnings in all of the areas mentioned above. If you are a member of any research team or company please get in touch.

Meanwhile, we would like to thank Bill Emmott, Phil Brophy, Clare Brennan, Tom Bremer, Jeremy Coupland, Darryl Hare and Byron Song for their enthusiastic support; Professors Martin Christopher, Peter Capelli, Rod Cross; John Cullen, Lenny Koh, Adam Pain, Tom Reordan, Colin Williams, Donna Blackmond, John Bradley and others for their insights, questions and ideas; an ever expanding group of industrialists all over the world who triggered ideas along the way – Peter Aarosin of RMS Group; Sanjay Aggarwal of Dev Bhumi Cold Chain; Rakesh Barti Mittal of Bharti Group; Gokul Patnaik of Global Agri Systems; Kishore Biyani and Anshuman Singh of Future Group; Paul Bradley of Arshiya; Dinesh of TVS; Simon Holland of Zoraly; Alberto Horcajo of Telefonica; Srini Kadaba of Kanoo Machinery; Poul Jensen of TransCare; Kumar of the CII and Sanmar Chemicals; Antonio Matos Farreira of Unistock; Sanjay Jacob of Microsoft; Ravi Mantha of AgriWatch; Ganesh Raj of DPW; Srinivasan of Take Solutions; Dominic Ward of A M Jacksons. There are others whose thoughts will be reflected in the Case Studies and Research of coming months. And finally, there are special thanks to Ben Dunn and Neil Watson for technical and general advice that so often hits the mark.

It remains to thank all of those who have visited the Blog and have made a contribution in any way to the development of Transformational Logistics as a meaningful umbrella term. Momentum builds …

To you all – have a prosperous 2009!