Navigating Supply Chain Disruptions: A Treasury Perspective
Navigating supply chain disruptions:A treasury perspectiveSUPPORTED BYCompanies’ supply chains are increasingly under a microscope, bothinternally–as they recover from the covid-19 pandemic–and externally–asnew regulatory requirements emerge. In this quarter’s survey, EconomistImpact explores how treasurers are connecting with their suppliers,looking at the supply-chain risks they are facing and the supply-chainfinance strategies they are adopting.Long after the disruptive start of the covid-19pandemic in early 2020, businesses continueto grapple with supply-chain challenges. Theimpact of these disruptions goes well beyond theprocurement and logistics division of businesses.Indeed, in Economist Impact’s third-quarterglobal survey of senior corporate treasurers,supply-chain disruptions was the top trendimpacting the treasury function, cited by 27%of respondents. “You’ve got so many differentmarkets and so many variables likely to changeso quickly in the next three months,” saysChristopher Emslie, Asian regional treasurer ofGeneral Mills, a multinational consumer goodscompany. “There are still quite a few closedborders in the region with a lack of people beingable to get into markets. So it’s how quickly wecan adapt to that, and how quickly we want tomake changes once the new world starts again,which we’re assuming is probably 2022.”The concern stems from the need to continuallyreconfigure supply chains in response to ongoingpandemic-related disruptions, according to 36%of respondents. But it’s not just the companiesthat struggled to keep their heads above waterthat must rework their post-pandemic supplychain strategy. “[Even] for those of us that hadit good during the pandemic, we need to thinkwhether those supply-chain strategies aresustainable and can be built into a longer-termbusiness plan,” says Mr Emslie.Regulatory changes, both general and specific tosupply chains, are also top of mind for treasurersglobally, with a quarter of respondents citingnew regulatory requirements as one of the toptwo trends impacting treasury in the next threemonths. More specifically, 24% of respondentsbelieve that local regulations will impact theircompanies’ supply-chain strategy.This is unsurprising given that in the past yearalone, governments worldwide introduced anumber of regulatory measures focused onsupply-chain due diligence and compliance.For example, in April 2021, the EU Parliamentbegan paving the way for a new EU directive Economist Impact Limited 2021
Navigating supply chain disruptions: A treasury perspectiveon Corporate Due Diligence and CorporateAccountability, which aims to make companiesidentify and remedy the environmental, socialand governance (ESG) risks in their supplychains.1 Similarly, in June, Germany’s Bundestag2passed a law that requires companies to reporthuman rights and ESG abuses along their supplychains.2 These developments will test companies’adaptability and require them to be proactivein preparing for future regulatory shifts. TheFigure 1: Top treasury impacts and priorities in Aug-Oct 2021, by regionTop treasury impactsNorth AmericaEMEAAsia-PacificNew regulatory requirements coming into effect28%Supply-chain disruptions28%Accelerated adoption of digital technologies24%Supply-chain disruptions36%New regulatory requirements coming into effectChanges to the macroeconomic environment inkey marketsGrowing environmental, social and governance(ESG) requirementsChanges to the macroeconomic environment inkey marketsDisruptions due to cyber risks30%28%32%24%22%Top treasury prioritiesNorth AmericaEMEAAsia-PacificAccelerating treasury digitalisation48%Optimising treasury structure38%Optimising payment methods and suppliers36%Accelerating treasury digitalisation36%Improving working capitalOptimising investments30%24%Managing tax and regulatory impacts on treasury26%Optimising treasury structure26%Managing financial, credit and operational risk24%Source: Economist Impact survey August ics/a-57855174 Economist Impact Limited 2021
Navigating supply chain disruptions: A treasury perspectiveregulation changes in Europe will impactfirms with global supply chains, somethingthat treasurers in our survey are recognising,especially in the Asia-Pacific region wherethe growth of ESG requirements is the mostimpactful trend on treasury.3In the remainder of this article, we explore themost effective supply-chain finance strategiescorporate treasurers turn to in times ofdisruption, and technologies that can enhancemanagement of supply-chain finance.Strategies to overcome supply-chain financerisksWith supply-chain risks top of mind, treasurersare focusing on optimising supply-chain finance.When asked about the most effective supplychain finance strategies (see Figure 2), 28% of3respondents cited centralising accounts payableand receivable (AP and AR). The strategy offersmany benefits: it eliminates duplication ofefforts when processing at separate locations,improves the business’s negotiating positionacross branches, and reduces errors and the riskof missed payments.4 Research conducted byIdeal AP shows that centralisation also lowers theper-bill processing cost by more than US 25 andcan process 2,000 bills more than a decentralisedsystem.6However, Mr Emslie of General Mills argues thatdespite the appeal of centralisation, there aresome risks. “Many multinationals use sharedAP and AR services so that all systems workin harmony,” he explains, “but difficulties ariseacross multiple markets because of languagebarriers, different peoples’ expectations,Figure 2: Treasurer’s most effective supply-chain finace strategies in Aug-Oct 2021, by regionNorth AmericaEMEAAsia-Pacific32%Centralising accounts payable and receivableAllowing pre-payments in order to inject liquiditydirectly into the supply-chain processCollaborating with procurement unit to understandthe full impact of supply-chain disruptionsCollaborating with treasurers in other businesses toshare best practice22%Adopting advanced technologies (e.g. AI, blockchain)for real-time supply-chain insights and scenario planning22%26%22%Temporarily adjusting payment terms with suppliers28%Adopting advanced technologies (e.g. AI, blockchain)for real-time supply-chain insights and scenario planning28%Centralising accounts payable and receivable26%Centralising accounts payable and receivable26%Adopting dynamic discounting of supplier invoices26%Temporarily adjusting payment terms with suppliers24%Adopting advanced technologies (e.g. AI, blockchain)for real-time supply-chain insights and scenario planning24%Source: Economist Impact survey August entralized-payables5The average cost of processing a bill can range between 3 and 16 per invoice, depending on company size. 2.html Economist Impact Limited 2021
Navigating supply chain disruptions: A treasury perspectivewhether in emerging or more developedmarkets.” For companies with multiple entitiesscattered globally, there may also be securityand accessibility needs that cannot be satisfiedthrough a single centralised system.During the pandemic, there have been countlesscases of companies having to temporarily adjustpayment terms with suppliers, which is amongthe top three most effective supply-chain financeoptimisation strategies in our survey, cited by24% of respondents. But while this strategyhas been an essential crutch to companies,suppliers—particularly smaller ones—may bebearing the brunt as they see their customersfailing to pay on time. For example, mills in thedenim industry across the world have been hitparticularly hard due to bad buyer behaviourlinked to excessively delayed and withheldpayments. Some textile suppliers were forced todouble the length of their payment terms, onlyto find that their buyers were delaying paymentsyet again or worse, going bankrupt.7As a result of these supplier grievances, thereis a growing recognition that treasurers needto think beyond their own companies. Unileveris one such company, announcing 500m ofliquidity for its suppliers and customers in theform of prepayments, acceleration of paymentsor extension of payment terms. “With thesemeasures we aim to support our supply chain,”says Willem Scheepers, director of corporatefinance and treasury (Asia, Africa and Russia),“and we have been very successful in that wehaven’t seen major fallouts in that space, owingpartly to our already prudent supply chain andpartly to these measures.” While the need toadjust payment terms may be necessary, it neednot be the blanket solution for companies that4are looking to maintain strong relationships withtheir suppliers.8Another important strategy to optimise supplychain finance, for 25% of treasurers surveyed,is adopting advanced technologies such asartificial intelligence (AI) and blockchain. In thefinal section, we explore how treasurers are usingthese technologies for real-time supply-chaininsights and scenario planning.Technologies to optimise supply-chainfinanceThe acceleration of digital transformation wasthe top priority for treasurers in this quarter’ssurvey, top of mind for 35% of respondents,which was virtually constant since the previousquarter’s survey. But there are specific tools thattreasurers find particularly valuable for supplychain finance management (see Figure 3).An overwhelming majority of treasurers surveyed(78%) believe that digital payments are vital toenhancing operational efficiency, making it themost important technology for supply-chainfinance management. Our quarterly surveystrack progress on this: Optimising paymentmethods was the top priority for treasurersin our first-quarter survey, cited by 27% ofrespondents; in our third-quarter survey, it wasa priority for only 15%.9 This may suggest thattreasurers have learned from their pandemicexperiences and have adapted their paymentmethods appropriately within their companies.This may also be a reflection of online and digitalpayments being less of a priority for companiesas shoppers return to physical stores, althoughprobably to a lesser extent as online shoppinghabits are likely to /1603728222304/Transformers Foundation Ethical-Report /05/working-capital-in-the-new-normal/?slreturn -once-lockdown-ends/ Economist Impact Limited 2021
Navigating supply chain disruptions: A treasury perspective5Figure 3: Most important technologies in optimising supply-chain finance inAug-Oct 2021, by region78%Digital payments to enhance operational efficiency75%Electronic invoicing to facilitate faster finance requestsIntegrated supply-chain finance platforms to enableinteractions between suppliers, distributors, etc. in one placePredictive analytics to identify potential supply-chainbottlenecksBig Data analytics to assess the creditworthinessof suppliersApplication Programming Interfaces (APIs) to enhancecommunications and data transfer between platforms57%51%51%44%Big Data analytics for fraud detectionBlockchain for identity management andverification (KYC)Blockchain for smart contracts and reducedprocessing time39%19%15%Corporate treasurers’ most important supply chain-finance technologies, by regionNorth AmericaEMEAAsia-Pacific94%Digital payments to enhance operational efficiencyElectronic invoicing to facilitate faster finance requests90%58%Big Data analytics for fraud detection82%Electronic invoicing to facilitate faster finance requests80%Digital payments to enhance operational efficiency50%Big Data analytics for fraud detectionDigital payments to enhance operational efficiency60%54%Electronic invoicing to facilitate faster finance requestsApplication Programming Interfaces (APIs) to enhancedata transfer between platforms52%% of respondents that say the following technologies are 'very important' in optimising supply-chain financeSource: Economist Impact survey August 2021Three-quarters of treasurers are turning toelectronic invoicing to facilitate faster financerequests. This solution reduces the time togenerate bills, deliver statements and invoices,and resolve any disputes, thereby improvingefficiency. Additionally, e-invoicing lowerspaper and printing costs while reducingmanual intervention and human errors. DHL,a leading international logistics firm, leveragedthe e-invoicing services of Tradeshift, a cloudbased digital B2B network and supply-chainmanagement platform. Through this, DHL Economist Impact Limited 2021
Navigating supply chain disruptions: A treasury perspectivewas able to onboard 50% of its vendors withineight months, enabling them to process 21,000e-invoices per month, up from 12,000-15,000.11Furthermore, treasurers are introducinge-invoicing to comply with local regulations.Many countries are introducing e-invoicinglegislation, such as in India, where thegovernment implemented mandatory e-invoicingfor business-to-business (B2B) transactions in2020.12There are concerns that variations betweencountries’ regulations may cause furtherbureaucracy and inefficiencies for treasurers.However, this is becoming less of a concern ascollaborative efforts between multiple countriesare on the rise, such as in the EU, wherebusiness-to-government (B2G) e-invoicing hasbeen standardised and made mandatory acrossall European countries.13There is a role for Big Data analytics in supplychain finance optimisation too; just over 50%of respondents say this technology is veryimportant. Digital platforms that rely on machinelearning, AI and algorithms to process data andproduce actionable insights can reduce therisk of financial losses, allowing treasurers tointervene when issues arise.14 However, withthe plethora of supply-chain platforms in usetoday, treasurers are recognising the need forconsolidation. To avoid suppliers having to beon multiple platforms with different formatsand levels of compatibility, consolidation will bekey. “A longer-term strategy is a consolidation inthe market,” attests Mr Scheepers of Unilever.“Platform consolidation will happen over the next10 years or so, in order to smooth the interactionwith your suppliers.”6Deeper engagement and greatertransparencyUltimately, the priorities with supply-chainfinance are clear. As companies begin their returnto normality, there is a clear focus on embracingthe strategies that worked during the pandemic.“We’re looking forward and not looking backanymore,” says Mr Emslie of General Mills.“Now the aim is to operate as efficiently andeffectively as we did during the pandemic—it’salmost better business as a result of the crisis.” Aspart of this, Mr Emslie explains, it is essential tolisten to suppliers and external third parties andensure that the implementation of supply-chainfinancing is efficient and least burdensome forall.With supply-chain finance practices under amicroscope now more than ever, Mr Scheepers ofUnilever claims that treasurers, including those athis company, are pre-emptively moving towardsmore disclosure on their supply-chain financingprogrammes. “More transparency in this spacedoesn’t cause any harm,” he explains, “but, at thispoint in time, there is no uniform approach, soeach company has the freedom to report whatthey want and conceal what they want.” This ischanging, however, as international accountingbodies are set to formalise standards for supplychain financing over the coming months.15Mr Scheepers also advises that there is astrong need to instil trust in non-bank supplierfinancing, especially as each party wants to havecertainty and security around the existence of aprogramme. Our survey reveals that a majorityof treasurers are yet to recognise this risk: a ‘lackof trust in non-bank supply-chain financiers’was cited as a supply-chain risk for only 11% XT/?uri rticle/building supply chain finance goals with plan/supplier-finance-arrangements/; es-finance-in-financial-statements#115 Economist Impact Limited 2021
Navigating supply chain disruptions: A treasury perspectiverespondents. This is surprising as supply-chainfinancing remains shrouded by the collapse ofGreensill Capital, a ten-year-old supply-chainfinance firm that collapsed after its insurerrefused to cover a multi-billion-dollar contractfor the loans Greensill was making. Ultimately,7as the risks of supply-chain financing get moreattention, the need for better governance willbe driven by requests from investors, ratingagencies, stock exchanges, and eventuallygovernments.While every effort has been taken to verify the accuracy of this information,Economist Impact cannot accept any responsibility or liability for reliance byany person on this report or any of the information, opinions or conclusionsset out in this report. The findings and views expressed in the report do notnecessarily reflect the views of the sponsor. Economist Impact Limited 2021
management of supply-chain finance. Strategies to overcome supply-chain finance risks With supply-chain risks top of mind, treasurers are focusing on optimising supply-chain finance. When asked about the most effective supply-chain finance strategies (see Figure 2), 28% of respondents cited centralising accounts payable and receivable (AP and AR).
When Supply-Chain Disruptions Matter William Schmidt Ananth Raman Working Paper 13-006 January 3, 2012. When Supply-Chain Disruptions Matter William Schmidt, Ananth Ramany November 13, 2012 Abstract Supply-chain disruptions can have a material e ect on company value, but this impact varies considerably and countermeasures can be costly. Thus .
These three types of shortages or material disruptions are as fol- lows: 1. Shortage or supply disruptions in base materials from earth extraction or agri- culture. 2. Shortage or supply disruptions in chemical intermediates. 3. Shortage or supply disruptions in supply of compounding ingredients or base polymers (rubbers). Introduction
Accenture reports how a microchip company created a more resilient and sustainable supply chain to respond in almost real-time to disruptions. Read more. Keywords: sustainable supply chain, supply chain resilience, advanced supply chain, maturity assessment, proactive risk management, supply chain digital twin, supply chain stress test Created Date
Supply chain management 1.1.2.1. Supply chain processes: the integrated supply chain point of view To describe supply chains from a process point of view, we refer to the supply chain operations reference (SCOR) model. SCOR is a cross-industry standard for supply chain management and has been developed and endorsed by the supply-chain council .
companies. In this case, supply chain management mainly focuses on cooperation between the supply chain actors. 1.1.2. Supply chain management 1.1.2.1. Supply chain processes: the integrated supply chain point of view To describe supply chains from a process point of view, we refer to the supply chain operations reference (SCOR) model.
Qlik for supply chain: forecasting and planning 6 Qlik for supply chain: sourcing and supplier performance 8 Qlik for supply chain: production insights 10 Qlik for supply chain: warehousing and distribution 12 Qlik for supply chain: transportation, storage and logistics 14 Qlik for supply chain: fleet management 16
Introduction: Climate change and supply chain risk 10 Investors will pay more attention to supply chain GHG emissions 9 Supply chain disruptions will occur in more places 13 Bridging strategies . during the pandemic about the supply chain resilience that we need in the light of climate change risks. Just like the impacts experienced during .
functional elements in human DNA. This includes: protein-coding genes non-protein-coding genes regulatory elements involved in the control of gene transcription DNA sequences that mediate chromosomal structure and dynamics. The ENCODE Project catalog of functional elements ENCODE has catalogued functional elements in human, mouse, Drosophila, and a nematode. Conclusions of the ENCODE project .
