AFTF 2021: how tech is building better supply chains

The COVID-19 pandemic has exposed a number of vulnerabilities in global supply chains already facing disruption from shifting geopolitics, a growing focus on sustainable development and a relentless push by companies for more efficient and cost-effective alternatives.

As business leaders navigate both new and legacy hurdles in their quest for fresh growth amid an ongoing global economic recovery, they must also account for the pandemic’s catastrophic impact, which has likely forever altered the dynamics of supply chain management.

The need to adopt technology – ranging from automation and artificial intelligence (AI) to advanced data analytics – in order to build a smarter and more resilient global supply chain is undeniable.

Technology is being leveraged to simplify communications, improve logistics management and boost transparency across the supply chain – as well as preempt potential vulnerabilities.

Additionally, business needs are evolving as they move away from just-in-time inventory management systems, which means trimming excess stock and ordering only when needed, to a just-in-case model involving larger stockpiles.

“This has prompted corporates to buffer up their lines of credit, a pattern we saw through 2020 across industries,” Adesh Sarup, Head of Transaction Banking for Greater China and North Asia at ANZ said. “They don’t want to be caught short.

“In order to build more resilient supply chains, corporates are moving towards increased diversification in sourcing and distribution while also investing in better forecasting capabilities.”

Disruptive solutions

Predicting, planning for and mitigating supply-chain disruptions with technology naturally requires capital support. At the same time, customers want payments to be quicker, smoother and more transparent, so financing solutions need to be customised. This is where supply chain finance providers are keen to kick things into higher gear.

Banks increasingly recognise the need to transform their proprietary platforms and digitise trade-finance models. Those keen to break down legacy systems that tend to operate in silos, including lenders such as ANZ, are collaborating with fintechs to deliver the best solutions for their customers.

“Tech is facilitating banks,” Balaji Natarajan, ANZ’s Head of Payments Cash Management in Asia said. “We are seeing an emergence of a tech-driven platform marketplace for supply chain-backed assets.”

This is proving highly beneficial, especially for lower-tier suppliers, according to Natarajan. While financing is typically not hard to come by for larger suppliers, smaller suppliers can see cashflow in fits and starts.

“This is where technology platforms come in,” Natarajan said. “Banks can now finance these suppliers and help sell down those assets.”

As companies across industries accept the need to revamp, realign and upgrade how they manage products and services, traditional supply chain models are poised to morph into agile and flexible networks with end-to-end visibility.

“Technology helps make supply chains more adaptable and resilient,” Ashok Devidas, Head of Trade Supply Chain International at ANZ said. “It can enhance the transparency of data so disruption can be predicted and potentially resolved faster. It speeds up turnaround times, leading to faster cash conversion.”

As customer requirements evolve, lenders are increasingly engaging in a number of initiatives to drive, facilitate and foster a nimbler global supply chain. ANZ is participating in, and in some cases leading, several industry alliances aimed at raising standards through the use of technology in working capital and supply-chain management.

Ultimately, as economic activity bounces back and trade volumes return to pre-pandemic levels, the uptake and incorporation of technology into supply chains is certainly here to stay, according to Vijay Shankar, ANZ’s Head of Transaction Banking for ASEAN, India & Regional Sales.

“It’s true what they say,” he said. “What no chief technology officer or CEO could push for years in terms of technology adoption, COVID-19 has done in one fell swoop.”