Logistics for MSMEs: As mega-corporations seek to optimize every penny of cost, outsourcing to far-flung locations in search of cheap labor and raw materials has enhanced the supply chain. The COVID-19 pandemic, the Russo-Ukraine war, and related sanctions suddenly brought sunlight down a vast network of interconnected supply chains.
Logistics for MSMEs: After the incident of the Ever Given Congestion in the Suez Canal, it is clear that the global supply chain is more than a 'thread'. "In the absence of a nail, a kingdom lost," ... "a chain as strong as its weakest link," and "the sword of Damocles hanging by a thread" are some of the proverbs that have gained new life. The principles of globalization and competitive advantage have shifted entire industries globally. China and Asian economies have become the factories of the world. It buys from all over the world and in return supplies to all.
As mega-corporations seek to optimize every penny of cost, outsourcing to distant locations in search of cheap labor and raw materials has stretched the supply chain. The COVID-19 pandemic, the Russo-Ukraine war, and related sanctions suddenly brought sunlight down a vast network of interconnected supply chains. Food shortages, rising oil prices, dwindling supplies of semiconductor chips, and many other ailments are now facing manufacturers. How have these events and outcomes shaped the fortunes of small companies? What can they do to reduce the risks?
return of localization
The big topic of our time is finding local alternatives to global suppliers. The big step towards re-establishing the old outsourced industries is still in its early days, but local sourcing has gained immense traction. Location then becomes an important deciding point. Is it better to be near the place of sale, or is it better to be near the source? Governments are answering this puzzle with industry hubs that share utilities, address connectivity and internationalize domestic currency.
One response of the Indian government has been the internationalization of the rupee for cross-border transactions and investments. The emphasis on cross-border payments in rupees reduces dependence on the USD. Settlement transactions in USD are risky despite willing buyers and sellers, as the New York Exchange has the power to block access to the clearing houses.
online aggregator
The digitization of the economy has created a new class of enterprises that add value by simply providing information. Information on who sells what, in what areas and on what terms, local storage and procurement facilities, and access to this data come at a cost.
Typically, a small supplier finds that the price of obtaining information is to share its data. This is a double edged sword. Sharing information about customers gives access to new customers. Yet, suddenly the old faithful are hit by poaching! More than ever, a somewhat unique selling proposition is a determining factor in preserving customers.
embrace the digital economy
Covid forced people to go digital. Suddenly, Zoom, Google Meet, and a dozen apps that facilitated video calls were as essential as a pair of wheels. The transition to the digital economy has been dramatic with online ordering, reverse auction buying and remote working. Everything from restaurants to trucks and dam construction has had to be remodeled to work in a digital infrastructure. We now have central kitchens supplying hundreds of different brands and forms, and trucks are being driven in shifts and rerouted in real time to suit traffic conditions. The enormity of change has spawned dozens of new industries – such as doorstep delivery, ride-hailing and AI-based voice recognition to manage customer service.
But Indians were predisposed to switch to demonetisation and GST a few years back, and the crisis found that receiving and paying at least one payment was less of a challenge in India. The current global business scenario has resulted in companies opting for supply chain finance (SCF) solutions. With digitization, companies in search of competitive interest rates from different lenders overcome time constraints due to repetitive financing processes. This is where the digital SCF ecosystem bridges the gap between buyers, suppliers and lenders by providing easy access to working capital requirements.
Need for Supply Chain Financier
Money lubricates the wheels of commerce. Like everything else, financing has also gone online. Whole new currencies have come into existence, but the basic bread and butter principles remain the same. Businesses need money to bridge the time from purchase to sale. In its digital avatar, and with access to sales and payment data, lending decisions and delivery of funds can be made faster through the digital SCF ecosystem. Industry can take advantage of an accommodative regulatory framework for overco
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