This startup is revolutionizing ecommerce logistics with data analytics

To say that the Philippines is a big country is an understatement. With 145 cities and 1,489 municipalities spread across more than 7,000 islands, the archipelago is home to over 100 million people packed in a 300,000 sq km land area, making it the eighth most populated country in Asia.

In a country with such scale, the ecommerce market is expected to reach a value of US$10 billion by 2025. However, simply delivering a parcel to its destination is still a massive challenge, says Jojo Añonuevo, chief innovation officer of digital logistics company QuadX.

The Manila skyline / Photo credit: bensonkua

“The Philippines is made up of more than 42,000 barangays (roughly translates to barrio or village, the smallest administrative unit in the Philippines), and there are over two dozen ways residents of Manila City state their city,” he says. Additionally, there are even more inconsistencies with barangay names, he adds.

With successful and timely deliveries being an integral requirement for a logistics company like QuadX, Añonuevo quickly realized that the address standard in the country was sorely lacking.

“In the Philippines, the zip code system is made up of four digits, which only allow for 10,000 combinations. This is not enough to uniquely identify each of the 42,000 barangays,” he explains.

This is where QuadX’s proprietary data analytics platform, known as X Analytics (XA), comes in handy.

A solution from scratch

In a world where ready-made solutions are increasingly common, why would a startup bother to create one from the ground up? According to Añonuevo, it all comes down to cost and agility.

Working with big software companies to deploy big data solutions would have cost “hundreds of thousands of dollars,” while relying on a cloud-based infrastructure only cost “thousands of dollars a month,” he explains. As a startup, looking at the bottom line made the decision easy.

In addition, QuadX adopted Agile software development principles that allow it to continually improve and update. Añonuevo reveals that XA captures key performance metrics and transactional data that allow for revisions to be launched every two weeks.

To build the foundations of XA, QuadX collaborated with data science company Thinking Machines, which helped identify an analytics toolkit to serve as a launchpad for the new platform, supplemented with expert advice.

Like most of QuadX products, XA runs on Amazon Web Services. However, the company shifted to a hybrid cloud strategy that utilized Oracle Cloud Fusion Apps and Google Cloud Platform as key enablers in its vision of building a data-driven culture, says Añonuevo. In addition, QuadX adopted machine learning toolkits, which are used for several functions, including image and natural language processing.

Analysts and engineers use a combination of tools to apply data science in transforming raw data into actionable insights. With Thinking Machines’ assistance, Añonuevo says QuadX was able to launch the initial XA data warehouse within four months, which enabled the company to grow its internal team of analysts.

According to Añonuevo, this was a critical move as “analysts need to be an integral part of business teams with ownership of their part of the customer journey.” He further elaborates that XA consolidates these touchpoints to provide visibility across marketing, sales, finance, customer service, and logistics operations, transforming real-time data into actionable insights.

A new standard

Working with the data science company also helped QuadX to create a more efficient alternative to the Philippines’ postal code system. Añonuevo breaks down the entire logistics industry into a very simple explanation: It’s based on moving an object between two addresses: the source and the destination.

This is why the absence of standards for denoting addresses in the Philippines posed a challenge for QuadX. With no way to quickly decode addresses, processing parcels caused major headaches. In January 2017, the company started working on the Address Management System project, aiming to create a new internal address standard for QuadX in the Philippines.

The first six months were spent mapping out the various districts of Manila before working with the Philippine Statistics Authority to iron out the kinks. By mid-2017, the limited four-digit zip code system was replaced with an internally defined seven-character alphanumeric system that offers enough permutations, providing a unique label for each city, province, and barangay.

Known as XCode, the new standard helped cut down processing time, reduced errors, and was critical in the deployment of robotic process automation in its sorting centers and hubs, allowing it to process thousands of parcels per hour. Its introduction also enabled more granular insights from deliveries, granting the startup the ability to validate new addresses by leveraging data gathered from its clients’ orders.

What’s next?

Recognizing the demand across the Philippine archipelago, Añonuevo says the next natural step for QuadX is to gradually reduce its delivery time.

Photo credit: 123RF

“Amazon is already doing same-day deliveries,” he says. “So, we need to shift our measuring metrics of deliveries from days to hours and minutes.” However, Añonuevo admits that this entails a transition to on-demand services, which require a “reengineering of business processes” to respond quicker to customer demands.

With the help of data analytics, logistics companies like QuadX will be able to predict demand volume and adjust their infrastructure accordingly, whether by building more hubs or hiring more couriers.

“Most companies are still transitioning to a “mobile-first” or “cloud-first” strategy in rolling out products,” notes Añonuevo. “We’re going beyond that and implementing a “data-first” strategy by leveraging machine-learning, various analytics toolkits, and the wealth of information that we’ve collected about our operations and customers.”

As the Philippines’ first customer-centric digital logistics company, QuadX is dedicated to helping Filipino entrepreneurs by providing simple and seamless commerce solutions.

Visit QuadX’s website to learn more about integrating digital logistics and payment processes into your ecommerce business.