How to deal with supply-chain disruptions? WEF has an answer

WEF suggests companies and suppliers to digitize their supply chain processes as more data visibility helps stakeholders to deal better with disruptions like those caused by the coronavirus outbreak.

Hyderabad: Taking note of the tremendous challenges currently being faced by countries in keeping the goods and services flow at times of coronavirus-triggered lockdowns, the World Economic Forum (WEF) has suggested that suppliers globally should embrace digitization of supply-chain processes in order to deal with such crisis better.

WEF noted that technologies, accompanied by enabling policies, can play a significant role in rebuilding the trade and supply chain system, and making it more shock-proof in the decades to come.

Currently, companies who sell finished goods generally know production and shipment schedules for their direct suppliers, but they usually have little to no knowledge of suppliers further up the chain. This is because the direct suppliers are not forthcoming with this information as they mostly rely on paper-based processes, or physical records which are difficult to access.

“Operations dependent on physical assets, such as paper, can face serious disruption when physical presence is not a possibility,” noted WEF, adding that value chains that rely on this information lose access to that visibility very quickly and, hence, cannot react to changing conditions.

Digitizing such data lends it visibility and helps in managing supply chain risk, said WEF. “In the current COVID-19 pandemic, governments and businesses with strong digital infrastructure and enabling regulations such e-signature and e-transactions laws, are dealing with the supply chain disruptions much better than those without,” it noted.

Data privacy is important

However, WEF said that digitization would work only if data privacy is maintained effectively. “The reason why upstream suppliers will not reveal (supply chain) information to end customers, even if it’s easy for them to do so, is that they fear losing commercial advantage if their customers know even more about their operations, pricing and sourcing. Suppliers have to be able to control exactly who receives what data from them, and independently verify such controls,” said WEF.

It suggests that blockchain technology can address the privacy concerns as it can allow suppliers to audit their data-sharing permissions directly on their own, while distributing the data securely to others in the blockchain network at the same time.

For beginners, blockchain is a record-keeping technology that is managed by a cluster of computers not owned by any single entity.

It allows digital information to be distributed in a fully automated and safe manner across a network in which everyone involved is accountable for their actions.