Digitalisation in supply chains is not new. What is new, however, is the pace of that change – the speed at which new technologies are emerging and being adopted has intensified. The pandemic has also catalysed that change as companies accelerate digitalisation initiatives as they adapt to working from home and realise that a lack of digitisation can lead to supply chain processes grinding to a halt.
Even today, many organisations retain a surprising number of inefficient or paper-based processes, which simple, well-developed and accessible digitisation capabilities can help to automate.
There are many immediate and practical opportunities for treasurers to digitalise the processes they have with their banks. They can leverage new tools to manage onboarding documentation digitally and use eSignature to accelerate the legal documentation cycle. While electronic payments are not new, many trade and supply chain finance capabilities have traditionally remained highly paper-based. Now companies can use character recognition technology to move from paper to image to data-based communication, shortening cycle times, eliminating cost and reducing risk.
Treasurers should also focus on the “back to basics” approach of driving manual and paper-based processes out of their supply chains. Simple digitalisation initiatives can remove many dependencies from supply chain processes, improving agility, reducing risk, and ensuring the continuity of treasury processes regardless of physical locations. Most importantly, such digitalisation initiatives lay important groundwork to prepare for future innovations – like DLT – by having already automated and streamlined a company’s supply chain and the financial processes that sit around it.
Global supply chains are very complex and one of the key challenges lies in digitalising the end-to-end value chain. There are diverse constituents, often in countries with disparate rules, practices and standards. End-to-end automation is at the mercy of the least sophisticated actor in the supply chain, often determined by local market rules. Where standards and platforms exist, it’s often a battle between you adopting mine, or me adopting yours.
This has impacted uptake and eroded the benefit of digitalising global supply chains. But as more regulators and other players recognise the importance of digitisation as a way to keep economies moving, we should expect to see more of a drive to align legal and regulatory standards to facilitate greater – and more consistent – digitalisation of all the participants in a supply chain.
Digitalisation is also only one of the many drivers influencing supply chains today, which treasurers need to consider: reshoring, geopolitical uncertainty, shifting supply chains, and driving sustainability to name just a few.
The pandemic has emphasised the importance of digitisation, moving it from being merely a driver of incremental efficiency to an imperative that could determine whether a company has the ability to continue operating in the face of significant global disruption for them, their counterparties and their banks.
Finally, it is not all about new, revolutionary technology. Those will continue to emerge and evolve; but many of the opportunities for treasurers are much closer to home – as simple as continuing to drive paper-based and other physical processes out of the financial supply chain.