Inwha Huh, a Partner & Practice Leader and IBM Industry Academy Member in the Banking & Financial Markets industry, highlights some of the components that may be required to strengthen resilience across global supply chains.


The global pandemic has been a catalyst to re-define how trade finance businesses are run and transactions processed. Covid-19 did not necessarily unearth brand new challenges; these issues have been present for decades. The disruptions caused during the pandemic have highlighted what has been known all along: the trade finance environment is of inefficient and untransparent processes, with too many manual workarounds, and difficult to support a remote working model.

At the same time, the pandemic has highlighted trade finance’s criticality to the world’s economy and global commerce. Trade finance businesses in banks are typically low return on equity, with steady single digit growth that “keeps the lights on”, but are saddled with operations that are largely manual, paper based, leading to high human errors, false positives and inconsistent customer experience. Key will be to convert the critical business to a digitised, self-service and analytics-based model with higher return on equity.

True change and trade finance industry transformation is long overdue. And the current environment means there is a window of opportunity for winners to prevail. They will do so by re-engineering end-to-end processes, investing in proven technologies that are scalable – such as AI and automation – that can be operationalised and embedded into their current operational environments.


Trade finance and intelligent workflows

Operational transformation is achievable by creating intelligent workflows with actionable insights, by automating the repetitive work, creating business rules-based decisioning, and by verifying source shipment data while creating auditable, transparent analytics around the transactions, escalations and verifications.

At IBM, we are partnering with banks to enable the industry to re-think trade finance transactions – with efficiency and intelligence – that are scalable. The days of launching pilot after pilot without transforming the way business is done are over. By operationalising solutions that leverage exponential technologies including AI, machine learning and blockchain technologies, our client enterprises are establishing new trading partnerships, enhanced customer experience and creating new business models. They are relying on enhanced security, built-in governance, actionable insights, extensive control and integration capabilities for real-time access to trade data.


It’s not all about technology

However, technology alone will not be sufficient to achieve aspired outcomes. Roles and culture are equally important. Trade finance businesses in banks tend to have traditional, hierarchical organisational models with centralised decision-making and control at the top levels. Redefining what employees do and new ways of working across cross-functional deal and solution teams are key. Trade financiers presently mired in doing manual and mundane tasks must be enabled to transform into decision-makers who are freed to focus on high-valued complex transactional work. Ultimately, re-defining this future of work will also create an attractive career track for the new generation.

Furthermore, as true operational changes are underway in the banks, enabling integration with corporate treasury and ERP environments will be critical to enable a global trade ecosystem of the near future. Also, understanding sector-specific challenges and insights, providing connectivity and creating new fee-based solutions will enable banks to leapfrog competition in the future.


End to end supply chain connectivity

During 2020, corporate sellers and buyers were faced with an unprecedented disruption in their supply chains. This caused an enormous demand for supply chain transparency, seeking better ways to manage suppliers and inventory, and monitor the business in a smarter way.

The persistent challenges of volatile customer demand, new digital channels and low predictability, limited visibility across the supply chain, as well as high operating, carrying and inventory costs all have put supply chains under extraordinary pressure.

End-to-end visibility is critical now more than ever, and enterprises are turning to advanced data orchestration and visualisation to provide them with 360-degree visibility across the supply chain, and any potential disruptors. This unlocks new levels of forecast accuracy and downstream optimisation through advanced AI that focuses on predicting and learning, sensing and responding, visualising and automating.

Enterprises are now utilising supply chain controls to deliver this end-to-end visibility, providing them with clear opportunity to see and then act upon insights faster and with high confidence.


What is a supply chain control tower?

A supply chain control tower is traditionally defined as a connected, personalized dashboard of data, key business metrics and events across the supply chain. A supply chain control tower enables organisations to more fully understand, prioritise and resolve critical issues in real time.

Corporate supply chain executives are under enormous pressure to provide customers what they need – when and where they need it – while also optimising supply operations and achieving cost saving goals.

This is especially challenging in times of unpredictable yet inevitable vulnerabilities and disruptions.

A smarter control tower should provide end-to-end visibility and sector specific data across the physical supply chain. It should leverage advanced technologies, such as AI with machine learning, to help break down data silos, reduce or eliminate manual processes, improve resiliency, manage exceptions, and respond to unplanned events. A smarter control tower will enable collaboration across teams and partners and preserve organisational knowledge to improve and accelerate decision-making and outcomes. Ultimately, this helps to better predict disruptions.


How can purpose-built solutions help achieve end-to-end visibility?

World events in 2020 have driven home the need to strengthen resilience across global supply chains. As businesses start to emerge and reopen, the day-to-day challenges faced by supply chain and fulfilment leaders are being amplified by enormous disruptions in supply and demand.

The need to act quickly has never been more crucial. To respond effectively, companies need real-time intelligence and actionable recommendations to help mitigate disruptions and risk.

That’s best achieved with purpose-built solutions designed to optimise core supply chain functions. For example, a purpose-built inventory control tower could provide essential real-time insights to manage inventory more effectively and address sustainability issues across the supply chain.

It provides accurate, real-time available-to-promise inventory to drive improved decision-making and outcomes. This aids not only in predicting possible vulnerabilities and disruptions, but also understanding the up and downstream impacts, enabling a more rapid response.

Corporates are looking for tech-enabled integration across their supply chains, including the financing piece. Smarter and sustainable ways of managing supply chains will continue to be a fundamental theme and operationalising that change for corporates and banks will be critical.