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Our Marketing Director Mia Iwama Hastings looks at three key trends in supply chain finance and management: agility amid uncertainty, leveraging data and automation and sustainability.
2020 has commenced with an uncertain geopolitical outlook with increasing isolationism and protectionism and the looming threats of global warming, finite resources, trade wars, retail woes and concerns about a global economic downturn. Banks are reining in lending, and in the final three months of 2019, UK business loan availability was under the most pressure since the financial crisis according to the Telegraph.
Yet, amid the warnings of a bleak and dystopian future, there emerges the exciting potential of technology to enhance efficiency, transparency and sustainability and positively impact global trade and strengthen relationships between corporations, suppliers and consumers.
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Agility is crucial since the pace of change is unprecedented
Look at Business Insider's list of the top companies by market cap (as of 17 January), and it's readily apparent that seven of the top ten are tech companies, with Alphabet recently joining Microsoft and Apple in the ranks of a $1trn valuation, displacing traditional corporate giants and industries. The Visual Capitalist provides an insightful visual history of the largest companies by market cap from 1999 to 2019. To put the pace of change into context (thanks to Fortune): 16 years ago, Facebook, YouTube, Twitter, Airbnb and Uber didn't exist, and 10 years ago, Instagram, Snapchat and Lyft didn't exist.
With this unprecedented rate of change and rapid evolution of dominant companies, industries and consumer behaviour, it follows that reactive strategies and static 12-18 month plans won’t work. Companies need to be agile to keep up. Savvy companies won’t merely react to trends and the direction of travel; they will lead us into the future and respond to changing consumer behaviour and data in real time.
A prime example of this is Inditex-owned retailer Zara. As Professor Hau Lee at the Stanford Graduate School of Business notes in the Financial Times, Zara has an agile, data-driven supply chain strategy enabling it to take products from design to sales in four to six weeks. It flips the traditional retail approach and, contrary to traditional models, begins by analysing customer demand data and catwalk and retail trends to inform Zara’s design decisions and enable quick-response design and manufacturing.
Zara’s robust IT system and automation of production enable it to increase the speed and efficiency of its operations and get the goods to market as quickly, efficiently and cost-effectively as possible.
Data leverage means unlocking its full potential and automation can help reduce your workload
It seems almost redundant to preface anything with “digital” or “tech-enabled” since so much is tech-enabled from the design, sourcing, production, promotion and selling of goods and services to delivery of everything from pizza to portfolio analysis. Consumers are constantly producing and consuming data on a multitude of devices (see the Visual Capitalist's 'A Day in Data' infographic for some incredible statistics). As Cisco's data on year-by-year global mobile data traffic growth and social media consumption last year illustrates, mobile accounts for approximately half of web traffic worldwide, and many developing digital markets are mobile-first.
Time has become a precious commodity. Digital solutions to automate repetitive manual processes and enable teams to maximise their productivity are being embraced across industries. Leveraging technology and driving digital transformation are therefore high on the C-suite’s agenda. But what does this mean?
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“Data is the new oil” has been a popular analogy for the past few years. However, it’s not enough just to accumulate lots of data and the legal permission to store and process it.
Ultimately, data leverage is about unlocking its full potential and deriving actionable insights to enhance your company’s productivity, growth, customer acquisition and customer retention.
It also means having greater visibility of your end-to-end supply chain for your company and your customers.
While artificial intelligence (AI), machine learning (ML) and robotic process automation (RPA) may seem like buzzwords, these powerful technologies enable unprecedented data capture, aggregation, analysis and insights at scale and are being used to derive insights, enhance customer experience and automate boring, repetitive and error-prone manual processes.
Gartner points out that machine learning is already being used daily for supply chain management, and “digital dexterity”, the “ability to adapt to technology at a rapid pace and the readiness to use advanced analytics and AI,” will be critical for the future supply chain workforce.
CFOs should leverage technology to reduce workload. As Jack McCullough, founder and president of the CFO Leadership Council, observes in Forbes: “While artificial intelligence, machine learning, robotics and crypto currency offer amazing potential to CFOs and their teams, many are simply too overwhelmed to focus adequate attention on these technologies… The irony is that if CFOs had the time and resources to assess new technologies, they could invest in those that would reduce their workload, which would then allow them to become more strategic.”
ESG and sustainability will impact your bottom line
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Gone are the days when environmental, social and governance (ESG) issues, sustainability and transparency were considered merely glossy PR and corporate-social responsibility (CSR) messages, with corporations remaining largely opaque and secretive about disclosure of data and ethical labour and supply chain practices.
Consumers, shareholders and employees are increasingly aware of, and vocal about, ESG, transparency and sustainability concerns, which directly impact purchasing decisions, revenue, staff retention and long-term corporate reputation.
As The Times reported at the end of last month, a six-year-old in London discovered a note in her pack of Tesco charity Christmas cards from Shanghai prison inmates stating that they were forced to work against their will and were seeking help. This brought the issues of ethical supply chains and labour practices (and how these touch consumers and the products they purchase) into the spotlight.
This week, the FT reported that Larry Fink, CEO of BlackRock with $7tn AUM, “warned that the world’s largest asset manager will take a ‘harsh view’ of companies that fail to provide hard data on the risks they face from climate change.”
Following Fink's call-to-action in his letter to CEOs to disclose in line with guidelines from the Sustainability Accounting Standards Board and the Task Force on Climate-related Disclosures, public companies are facing increased shareholder pressure for transparent reporting.
As a result of increasing pressure from consumers and shareholders, companies are stepping up and seeking digital solutions to enhance the end-to-end transparency of the supply chain.
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According to the FT, experts hope that in the future, shoppers will be able to scan a product and have full sight of the product’s supply chain and trace the complex links between financiers, traders and farmers, and tech platforms are already helping to enhance transparency and tracking data across the supply chain.
Corporate CEOs must lead by example and respond to consumer pressure. The UN Global Compact encourages CEOs to see the supply chain as "an extension of their workforce and community".
Aligning physical and financial supply chains is also helped by increasing transparency and efficiency for supply chain finance. Crossflow’s platform is powered by technology to provide corporates and their suppliers with fast, flexible access to supply chain finance. Crossflow’s working capital marketplace connects corporates and their suppliers with a deep pool of global funders, including global financial institutions and alternative investment funds, and helps corporate buyers and their suppliers work together more efficiently and transparently.
Crossflow's platform provides suppliers with instant finance for invoices with auto-payment in global currencies. Crossflow drives sustainable growth by helping corporates release millions in working capital and leverage automation and data to manage their working capital position and their supplier payments.
If you’re interested in learning more about how to implement a supply chain finance programme and leverage automation and data to enhance your supply chain relationships, efficiency and transparency, contact Crossflow.
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Mia Iwama Hastings is Director of Marketing at Crossflow. She is a marketing specialist and was included on the Innovate Finance Women in Fintech Global Power List 2017. Originally from Silicon Valley, she has worked with startups, led the marketing strategy for the British Private Equity & Venture Capital Association and was fintech lead at London & Partners, the Mayor of London's promotional company. She has spoken at international conferences and investor events; been quoted in the Irish Times, Global Finance Magazine and FS Tech; and contributed articles to the Chartered Institute of IT’s magazine and Funding London’s online journal.
