Lori Systems is a logistics coordination platform that connects Cargo Owners and Transportation in East Africa. Find out how the company addresses Global Goals 1, 8 and 9 in this episode.
Summary
In this episode, Chandler interviews Ron Okello, the head of product marketing and PR at Lori Systems. Ron shows us how Lori Systems solves a major economic problem in East Africa: the relative cost of moving goods across East Africa is one of the highest in the world.
- 4:30 How the Platform Works | Lori Systems is a logistics coordination platform that seamlessly connects Cargo Owners and Transportation.
- 13:30 Why Does the Data Matter? | With data on transporter reliability and costs, the company helps suppliers optimize their business.
- 19:00 Business Model Insider | Ron talks about three pillars of their business: tech, operational excellence, and customer service.
- 27:00 Tech in Africa – Who Will Survive? | Hear the two main industries ready for tech innovation in East Africa.
- 32:30 Timeline for Exponential Technology | Ron expects exponential tech to come sooner than we think.
- 40:45 Lowering Costs, Alleviating Poverty | Find out how problem-solving in the cost margins can shift a whole economy.
Full Post
Lori Systems was founded in 2016 by Joshua Adam Sandler, a South African Native and Harvard Alumni. When they saw the inefficiencies in the transportation industry, they created a platform to revolutionize logistics in Africa.
Platform features:
- Manage invoicing and operations
- Visibility of where the trucks are
- Rates for product moves
- Which cargo is coming and going, and the cost
- Access to consistent cargo
- Centralized control system and reliability enforcement
- Consolidation of providers, products, trucks, and feedback on driver compliance
- Journey and performance monitoring
- Push notifications telling their driving habits and arrival times
Formerly, there was no certainty that trucks would show up when a company would call them to transport products. This way, the product companies and warehouses can dependably transport their products and optimize their business based on the data in the platform.
Getting from point A to B in East Africa is not as easy as ordering Uber Eats. Most cities in Africa have unmapped, unpaved areas between them. This makes driving and delivering product challenging.
“The driver is our number one priority. His compliance and reliability is important to us.”
What do you do with the data?
“Every month we have a sit-down with our clients, and have a conversation about performance. We give feedback and they give feedback, based on the data. We better ourselves and also scale with the data.”
Lori Systems decreases the cost of goods for their customers by 15% just in lowering transport costs. “When we do this we will be able to realize more of the global goals – bettering economies and reducing poverty.”
Lori Systems address the Economic Development Global Goal by providing transporters consistent wages, and also they address poverty by reducing the cost to move products.
“The biggest goal for me would be Industry Innovation and Infrastructure. We looked at the challenges within that goal, and we come in to bring the innovation to streamline the process and make it more efficient.”
Business Model Insider
“We are centered in 3 pillars. We have technology to drive decision making, Operational excellence to operate teams, and customer service – which is the biggest one if you ask me. The beauty with Lori systems is that 33% of a move cost goes into fuel. And how we solved that problem is through fuel financing. We provide them with fuel to execute the job, and when they come back they give us the invoice. Then, we handle the documents with the clients and ask for a contract.”
This means it’s an all-around win for the transporters. They have fuel, insurance and access to consistent cargo.
“We map out your future for you. On your journeys we are looking for your return journeys, or move you from town B to town C because we have a new customer there. We always make sure that your trucks are constantly moving. I can’t begin to stress how much time we save the transporters.”
Tech in Africa – Who Will Survive?
“Tech cannot solve all our problems. It needs to be supported by people.”
Ron talks about crowdsourcing solutions to the industry, since it’s an industry “build on relationships.” He sees opportunity in the growing workforce and the government’s support of indigenous companies.
Ron suggests that any tech company oriented toward the Global Goals will be more likely to make it. Agriculture and logistics will especially thrive in African markets.
Another area of tech opportunity is tech for finance. Any technology that can help create access to capital or make fund transfer simpler will go over well.
“In a nutshell, as long as its a problem that you can solve, the industry is ripe and open to solutions.”
Timeline for Exponential Technology
Ron explains that on the financial side, exponential tech could arrive “sooner than we think.” Blockchain is growing in Africa since transparency is an issue in developing markets. “Self-driving cars may take awhile,” he says, since the infrastructure to support exponential tech in transportation is still developing.
Trust is a key factor in adopting exponential tech, Ron says, even if the market is ready. Moving from carrying groceries on your head to riding a hoverboard is an unlikely leap.
Expanding Impact
As far as Lori’s expansion, Ron talks about moving into Uganda next. Expanding the company requires partnerships and tackling the infrastructure issues in the country. How will they bank? What roads will they use? Though Lori will have the advantage of access to landlocked ports, they will have to create partnerships to allow imports and navigate the existing infrastructure.
Lowering Costs, Alleviating Poverty
Though costs of goods increase as their source companies move more inland, Lori is able to maintain consistent pricing because of the services they offer. Ron says it costs 4x the amount to move product in Africa as compared to the United States.
Takeaways:
- Moving things is expensive! Margins are a critical problem-solving opportunity in an emerging market.
- What margins have you planned for in creating a business in an emerging market? How will increasing volume impact those prices and margins?
