Old-school logistics SME Courex plays the ‘startup game’

• Leveraging shared economy goodness, innovating with Microsoft’s Kinect
• To offer its warehouse management software as a SaaS to other logistics firms

THE Asia Pacific transportation and logistics market is expected to be worth US$4.06 trillion in 2016, according to consultancy firm Frost & Sullivan.
 
And while Singapore remains a major hub, the last mile – where goods are actually delivered to the customer – continues to be least efficient leg of the city-state’s supply chain, taking up to 28% of the total cost, according to a Singapore Management University study (PDF).
 
Logistics companies that provide this last-mile leg are often thought of as being backwards and not particularly technologically-savvy. They are often small and medium enterprises (SMEs) where pushing the tech envelope usually means nothing more than moving from paper ledgers to Microsoft Excel.
 
Startups know this and are busy trying to disrupt the industry, with GoGoVan, RocketUncle and Ninja Van coming to mind.
 
It is against this backdrop that Singapore-based Courex, a logistics SME, is bucking its stereotype – not just using technology, but also innovating to improve efficiency in the last mile.
 
Courex was started six years ago as a traditional logistics company, by its managing director Joe Choa, a former army regular.
 
He told Digital News Asia (DNA) that he first had an “eBay business” for a year before realising the problem with logistics. “That’s when I started Courex, which stands for ‘courier express’.”
 
Unlike today’s startups, Courex started with no fundraising rounds or angel investors. The company began with delivery services only, before Choa realised that logistics is more than just about delivery.
 
“Around 2011, as more and more business came in, we started to realise that it’s more than just delivery, it’s about the entire flow,” he said.
 
The last mile is growing even more crucial with the rise of e-commerce and the growing number of retailers getting on board digital marketplaces.
 
Lessons from startups

Despite the rise of logistics startups, Choa (pic above) believes Courex still has an edge.
 
“People said mobility will disrupt logisticians, then they said technology will change the way logistics work, then they said Uber will change the way how parcels are delivered,” he said.
 
“While everybody thinks it’s just an app, those of us in the logistics industry believe that it is a very difficult business to be in – you need to get the entire flow of how things work,” he added.
 
But Choa knows that startups have something good going as well, and said Courex is learning and adapting from shared economy advocates like premium ride-sharing startup Uber, but with its own take.
 
It uses freelance drivers, although he declined to say how many it has on its roster, with a very Uber-like model.
 
Drivers apply online, with a checklist of things to do and requirements. Courex requires potential drivers to have Android smartphones with a data plan to use the app required.
 
Courex classifies its drivers from white to gold, based on the number of deliveries they make in a year and the percentage of on-time deliveries. This system is based on the eBay power seller programme, according to Choa.
 
“We ‘tier’ the drivers so that customers can choose the drivers they want,” he said. “Of course, if they want a gold driver, they have to pay more.”
 
The drivers themselves are also rewarded with benefits and perks, everything from free t-shirts or getting their name embroidered in gold, to vouchers.
 
This tier system has had an unexpected benefit as well, as ‘lower-tier’ drivers seek out gold drivers for advice and mentoring. “We are building an ecosystem,” said Choa.
 
But he admitted that Courex has one problem that technology has failed to solve: The stubbornness of drivers to update the status of their delivery in real-time.
 
Real-time tracking is pretty much the norm across such shared services, from taxi-hailing apps which track the taxi to logistics apps which track the vehicle making the deliveries.
 
“We used to have an app about three and a half years ago, and thought we could do real-time tracking,” Choa said.
 
However, the delivery drivers often did not update the delivery status, with many choosing to update all their deliveries at one go.
 
“Customers do not get angry because you take three days to deliver, they get angry because you were supposed to deliver today but never came,” he added.
 
Instead, Courex sends an SMS to customers when their package is in transit, keeping them informed of the status of their delivery.
 
Technology meets delivery
 
The bigger picture in logistics comes from optimising delivery routes, which would involve being able to fit as many packages into a delivery vehicle. Figuring out how many packages that can fit into a vehicle requires accurate measurements of the package size and weight.
 
Manually measuring a package takes time and manpower. There is also a margin of human error. This can have an impact on the business.
 
Courex solved this challenge by looking at, of all technologies, Microsoft Corp’s Kinect, which started out as a controller-less games device but is increasingly finding all sorts of new use-cases. Courex is not the only company which is adapting Kinect for commercial purposes – companies such as DHL are also doing so, leveraging the device’s sensor abilities.
 
“The Microsoft SDK (software development kit) for Kinect is quite powerful,” Choa said.
 
The Kinect is a motion-sensing input device. Courex developed what it calls the Kinect Dimension System (KDS), which integrates the Kinect sensor with a weighing machine, as well as a barcode and RFID (radio frequency identification) printer for package labels.
 
Similar machines are commercially available, but lack the RFID capability and cost about twice as much, according to Chao.
 
KDS automates the process of measuring packages and inputting this data into the company’s backend system. It also comes with a battery for mobile use in a warehouse.
 
Being an SME, Courex applied for the Capability Development Grant from Spring Singapore, a government agency that helps SMEs and startups, to help develop KDS.
 
This innovation has also caught the eye of Microsoft, with its tech evangelists taking an interest in KDS, according to Choa.
 
Investing money into developing the KDS machine was to ‘future-proof’ Courex, as it wanted to be ahead of the curve, he said.
 
“If I spend the money on what is currently available, we would only have one machine – but if I spend it on developing the machine, we would be one step ahead of other companies, as this would be our own intellectual property,” he said.
 
A ‘techie’ logistics SME

Courex has also developed its own warehouse management system, StoreViva, which gives customers access to its inventory and ongoing deliveries.
 
The system comes with its own API (application programming interface) that allows it to be plugged into any e-store or point of sale (POS) multichannel system, Choa claimed. This automates orders from the e-store to the warehouse, capturing the necessary information for deliveries, updating StoreViva in real-time.
 
“We have plug-ins for customers to use at their own e-commerce stores or with current Internet marketplaces like eBay and Lazada,” he added.
 
Meanwhile, Courex intends to develop more capabilities for its KDS machine, to make use of the full capabilities of the Kinect sensor, including the voice and facial recognition features.
 
“Next year we will start looking into voice commands for the warehouse,” Choa said, adding that “facial recognition can become a big part of warehouse security.”
 
Courex is also working on turning its warehouse management system into a Software-as-a-Service (SaaS) offering – or rather, Fulfilment-as-a-Service (FaaS) – with StoreViva 2, providing the backend infrastructure for other logistics companies to use.
 
“We no longer look at customers and say, ‘You must use our logistics service, or must use my warehouse’ – now it is, why not use my software to run your warehouse?” Choa said.
 
Embedding Courex’s logistics service inside the software gives customers the option to use their own services, or to use Courex’s delivery service and drivers.
 
Courex is also working with Nanyang Technological University to improve its route optimisation capabilities, and is looking to automate its current processes.
 
“We want to move people into higher functions and replace basic functions like checking routes for delivery drivers with technology,” Choa said.
 
Finally, the company wants to improve its grading system and better understand drivers – this includes determining which driver is better, how to bring more on board, as well as training and motivation.
 
“While technology is great, it’s still about the man and whether he wants to update or deliver on time,” said Choa.
 
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