Some 94% of supply chain executives expect to receive more real-time data from their distribution networks in the next five years, according to a major new report on the trade finance market.
Published by the International Chamber of Commerce (ICC), the report – Rethinking Trade & Finance – says that physical and digital supply chains are rapidly merging.
Corporates such as Caterpillar and Levi Strauss & Co are harnessing advanced technology “to better understand their global supply networks and respond to changes in demand or disruptions in the supply chain in real time, by connecting the physical supply chain to the data supply chain”.
Caterpillar harnessed digital technology to make its supply chain leaner, saving $250m in excess inventory costs.
Meanwhile, Levi Strauss & Co used a cloud platform to create a sharper picture of its suppliers, enabling it to identify its most ethical partners. Acting on that data, it began to provide lower-cost working capital to suppliers with the highest labour, safety and environmental standards.
The report notes: “One huge challenge [to corporates] is the massive amount of data generated in the supply chain today. The introduction of more systems and sensors is only making that ocean of data more immense.
“The better companies get at understanding the data throughout their supply network and acting upon it, the more agile and responsive they will become – ultimately helping to keep up with some of the unpredictability and consistent change that comes with global business right now.”
The report points out that these developments provide a “strong impetus for trade financiers” to move forward on long-term, aspirational objectives to build enhanced offerings for their clients.
“As with several initiatives in the trade space and in the area of trade finance, the importance of clients leading the way by creating demand will be important to market development and adoption,” the report says.
“Strategically,” it explains, “the alignment between expectations emerging in the market, the ocean of data that will enable rich analysis, and the technological capabilities to undertake analysis, as well as design and deploy solutions, is converging in a transformational way.
“The linkages between supply chain visibility, traceability and the growing desire to conduct business on a sustainable basis are clear and growing, with implications yet to be fully appreciated, but it is clear that finance – specifically trade-related financing – can be an important enabler of these developments, just as it is a key enabler of trade.”
It adds: “Tactically, developments in supply chain management and related practices demand a more comprehensive, informed and holistic dialogue between SME, commercial and corporate clients, and providers of trade-related financing.
“Front-line and operational trade finance staff, and those with supply chain finance remits, have a significant opportunity to develop professional skills and domain expertise that extends beyond areas currently covered by trade finance units, to better serve current and emerging client needs.”