As supply chains become longer and increasingly interlinked, managing them has become a considerably challenging task. Moreover, external factors like market volatility, pandemic-induced fluctuations, and increased attention to the environmental impact of supply chains have triggered regionalization and created a demand for optimization. Interestingly, this has spurred the advent of trade-tech to help SMBs and stakeholders focus on supply chain resilience to make global trade more efficient, inclusive and equitable. While it will take some time for this tech to fully integrate into the trade ecosystem, I believe it is important to share more about the types of technologies available and what they can do.
In December 2020, the World Economic Forum’s global survey revealed five emerging technologies: IoT in supply chains, digital payments, e-commerce platforms, cloud computing and 5G, which promise to change the traditional international trade landscape.
These new-age technologies do not just promote buy-seller discovery platforms but also allow service providers like trade financiers, insurance providers and logistics companies to communicate within themselves and ensure interoperability within the ecosystem. Simply put, technology has the power to make cross-border trade more efficient, inclusive and equitable for SMBs worldwide.
AI-Enabled Supply Chains
Small companies have increasingly started adopting artificial intelligence (AI) based solutions, taking supply chain management to the next level. These include demand forecasting models, end-to-end transparency, dynamic planning optimization to manage inventory and automation to reduce waste. All these aspects are crucial to building predictive models and conducting correlation analysis to understand the causes and effects of supply chain performance.
Additionally, as data becomes more ubiquitous, data-driven technologies and correlation/predictive analytics help to predict customer behavior and improve supply chains. Although it has been around for a while, it is only recently that predictive analytics has become affordable for SMBs, building a new generation of tech-savvy, more innovative entrepreneurs. Research also suggests successful implementation of AI-enabled supply-chain management has enabled early adopters to improve logistics costs by 15%, inventory levels by 35% and service levels by 65%.
After the supply chain crisis, more SMBs are committed to leveraging modern technologies to deliver scalable, easy-to-use digital experiences for employees and customers that will help solve supply chain constraints. Companies are finding innovative solutions to manage their supply chain, from developing cloud-based applications for employees to perform routine tasks to creating information systems that provide real-time insights on port call estimates.
A blockchain-powered supply chain can aid in the systematic documentation of shipment/transaction records concerning the price, date, location, quality and certification of goods. This results in improved supply chain transparency, enhanced traceability and compliance and reduced administrative costs, boosting a company’s reputation. It also ensures all stakeholders in the supply chain can access the same information digitally and safely while potentially reducing miscommunication or human errors occurring during complex paperwork and data transfer.
Blockchain and AI technologies that eliminate physical documentation like receipts, invoices, tax forms, contracts, financial reports, etc., allow SMBs to connect to external stakeholders in the ecosystem for seamless communication, enabling industry innovation and promoting global trade.
An Internet of Things (IoT) inventory system ensures the supply levels of several critical elements remain monitored on a real-time basis to enable business decisions and prevent shortages. In addition, as modern supply chains depend on the proper functioning of various machines, IoT sensors can be used to analyze different performance metrics. For instance, by using predictive maintenance within the supply chain, businesses can take necessary steps to prevent breakdowns ahead of time, extending the equipment’s overall lifespan.
Traditional trade and supply chain flows involve a host of connected participants, making the reconciliation and verification of information tedious. Although such payment cycles vary, human intervention is often required to verify information, which can affect the speed of payment. This is where distributed ledgers, which operate as secure, shared databases where each participant has a copy of the stored data, come in handy. When funds are transferred, or shipment information is recorded, it is instantly validated, made available to all supply chain stakeholders and updated almost immediately.
In addition, only certified parties can start transactions by using digital signatures. This system’s design helps support a fund transfer that is often faster, cheaper, and safer than manual systems. Such innovations can also significantly reduce the current $3.4 trillion global trade financing gap, which heavily impacts SMBs with no financial records.
Optimized supply chain cloud platforms can be used to develop tools and mechanisms for connecting stakeholders like importers, exporters, insurance providers, transport carriers, etc., to improve communication between entities in the ecosystem and ensure globally standardized processes.
Smart packaging solutions, for instance, enable product tracking and provide delivery partners’ and shippers’ warehouse information, thus addressing the demand for security and safety during transit. Moreover, such initiatives usually help companies improve sales and reduce expenses by improving key logistics processes, reducing theft and managing waste.
As the world becomes increasingly connected, the sheer importance of global supply chains cannot be overstated. Trade-tech solutions, such as those mentioned above, will continue to find a place within international trade. They are a digital component of the path forward for the trade ecosystem that strives for efficiency, inclusivity and equity.
The article was first published on councils.forbes.com