More than three-quarters of companies have accelerated plans to digitise trade and supply chain finance processes, according to a poll of participants in the latest SCF Community webinar.
76% of respondents said their plans had been brought forward, with 16% saying they hadn’t changed. That audience view was echoed by the opening speaker, Viktor Elliot of the University of Gothenburg. “Covid-19 has shown us that digital can work, and accelerated the digitisation of the world,” he said.
Elliot’s remarks came after some ‘scene-setting’ from moderator Mike Hewitt of Adaugeo Media, who highlighted the big ambitions of proponents of ‘supply chain 4.0’ back in 2016 and contrasted them with the reality of slow progress since then. In a 2017 report from ARC Advisory, companies put forward several reasons for a reluctance to digitise, with security, lack of a business case and lack of budget as the top answers.
So, could the coronavirus be the stimulus that prompts companies to reassess the benefits of digitising processes – or the pitfalls of not doing so?
At Trafigura, the global commodities firm where Nicolas Marsac is CFO for Asia Pacific, digitisation started early and has continued at the same fast pace. “For us, it’s a competitive advantage”, he said, pointing to the use of real-time data on ships loading cargoes to improve forecasting and risk management in what is a very competitive, low-margin business.
One effect of the virus and its associated lockdowns has been the slowing down or halting of movement of physical documents. Marsac mentioned that, where physical documents were still required, they had sometimes been delivered far too late because of transport and courier issues, and had slowed payments as a result.
Sriram Muthukrishnan, Group Head of Trade Product Management at DBS Bank, has also seen an acceleration of the move to digital processes. Supply chain disruption caused by Covid-19 has delayed cash realisation, so that cash conversion cycles have been elongated. For many SMEs, this has caused struggles with adequate cash flow and access to capital.
Muthukrishnan had three action points for corporates considering how fast to ‘go digital’.
- Eliminate manual workflows and go digital
- Large anchors need to provide early support to suppliers
- Prepare now to take advantage of the re-opening of the global economy post-Covid 19.
For all the participants, it was clear that digitisation was both essential and likely to increase in pace during and after the Covid-19 lockdowns.
The recorded webinar is available to view here.
The next SCF Community webinar will tackle the subject of speeding up the onboarding of suppliers to support them during the crisis. It takes place on Thursday, June 25th 2020 at 4pm (SGT)/10:00 AM (CET).