Around the world – and in the MENA region – the onset of the COVID-19 pandemic caught many businesses off-guard. Raw material shortages, delivery challenges, and difficulties obtaining financing for supply chains were among the most pressing dilemmas companies had to face. Ultimately, buyers and suppliers learned that they needed to work more collaboratively to overcome these hurdles.
By working together with the right supply chain finance company, international firms can support collaboration and streamline operations for an entire supply chain, resolving immediate cash flow challenges that could significantly impact a business and its operations.
Maham Siddique, Head of Global Marketing, Tradewind Group: “Connectivity, transparency, technology, and flexibility will empower buyers and suppliers to overcome future disruptions and avoid costly complications. The resiliency-building lessons learned from the pandemic have taught us that establishing collaborative solutions can drive better trade outcomes. With an international trade finance company, buyers and suppliers can align their goals and secure financing to address their cash flow obstacles.”
There are four distinct principles that have been starkly highlighted by the COVID-19 pandemic. The first is that a company should know its supply chain. While disruptions can happen to companies of all sizes, the most critical factor remains how the company handles these circumstances.
By identifying weaknesses in the supply chain, buyers can adapt their business contingency plans accordingly and use methods to monitor and mitigate potential risks. Suppliers should also have contingency plans in place. Currently, many businesses are already leveraging real-time analytics to track changes that could alter suppliers’ risk profiles. Companies would be well advised to consider suppliers an essential asset, for which investments in efficiency can improve decision outcomes.
Additionally, companies need to know which risk factors are present in their particular industry, which could range from cyber threats and natural disasters to legislative changes and demographic challenges. Preparation and forward thinking will ensure that a supply chain remains resilient during periods of disruption.
A second guiding principle is to embrace technology and trade financing. Both buyers and suppliers can benefit from third-party risk management software and other technologies that enable informed decision-making during business interruptions.
By integrating real-time risk management platforms into operational infrastructure, the supply chain system becomes more transparent, which, in turn, supports faster and more appropriate responses during a crisis. Documentation digitization is another technological advancement that facilitates smoother trade transactions amid disruption.
Other trade finance services, such as non-recourse factoring, can increase trade visibility and mitigate risk through credit monitoring and vetting protocols, both of which are crucial in cases in which supply chains need additional security. By ensuring compliance with local regulations, these services can also reduce operational expenses and allow for efficient cross-border shipments. A strategic allocation of working capital enables buyers and sellers to respond to emergencies with greater flexibility.
A third principle is the adoption of a flexible approach. In practice, this means communicating openly with supply chain members about trade financing possibilities that optimize cash flow and operations.
Today’s global trade market is evolving rapidly, and conditions change frequently. The need to adopt flexible and digital trade solutions has been present for years.
However, it was not until COVID-19 exposed the infrastructure’s inability to function during a crisis that change became inevitable. In a post-pandemic economy, trade disputes, duties, quotas, and the introduction of new regulatory measures will require the same level of flexibility to keep supply chains robust.
Lastly, supply chain transparency is a key component of business resiliency, and involves combining fragmented supplier systems into a single collaborative infrastructure. The ability to share data in real-time keeps all parties informed and up-to-date on changes that could otherwise require multiple communication efforts.
Companies should be aware that visibility of the supply chain can minimize production delays before issues have the chance to impact vital elements of the production or distribution process.
Increasing transparency in the supply chain also ensures buyers can make more responsible sourcing decisions. Meanwhile, multitier supply chains can resolve additional concerns regarding sustainability, business continuity, and regulatory compliance. Instead of only examining the first tier of the supply chain, procurement strategies should focus on the supplier network as a whole.