All too often, today's supply chains are vulnerable to disruption. They continue to suffer from a lack of transparency, human error, fragmented data in silos, and limited or no automation. They are often (too) costly and labor-intensive and sensitive to factors such as inflation, the political climate, wars, and natural disasters.
Let's take strawberry yogurt as an example. After all, even this simple product clearly demonstrates the complexity of supply chain management.
A pot of strawberry yogurt comprises many elements. The corn for the label comes from China, the wood glue from Canada, the tinplate from India, the milk from Germany, and the strawberries from Poland. As many as 10,000 small farmers can be involved in supplying natural products like these.
The manufacturer must transport the yogurt quickly to the refrigerated supermarket shelf – chilled the entire way there and protected in break-proof, cost-effective packaging.
Complicated? Not by a long way. A far more complex supply chain becomes evident when the financial transactions of all parties and companies involved in the shipment, from the strawberry field to the supermarket, are considered. The Boston Consulting Group estimates that a single transaction can involve more than 20 companies and financial services dealing with up to 20 paper documents.
Now, instead of yogurt, imagine a more complicated use case, such as a car made from up to 10,000 individual parts.
Moreover, recent crises have placed significant pressure on supply chain operations and supply chain leaders. High shipping costs, sharply rising prices, and increasingly uncertain cash flows along global supply chains have created a game of musical chairs in international trade.
This is because trade routes are no longer operating as usual, and minimizing supply chain risk has become paramount, overtaking "just-in-time" production in importance and focus.
The result: production sites are relocating, inventories are increasing, and new supply chains are being created. These changes do not only demand high liquidity; they require optimizing entire supply chains’ financial and physical processes from procurement to delivery and payment.
T-Systems and Commerzbank have combined their technological and financial expertise to solve the daunting challenges around procurement, payment automation, inventory management, and end-to-end supply chain visibility.
The technology group and the financial institution have taken steps to automate all processes involving financial transactions or services and ensure that payment targets are met on time. Thanks to Supply Chain 4.0 digital solutions, including IoT and blockchain, they have connected the physical and financial supply chains.