Snowstorms and stuck ships: the need to digitise supply chains

As in many industries, the events of the past year have served as a watershed moment for firms in the commodities space, especially as they relate to the global supply chain. Last year, a report by McKinsey & Company found that 73 per cent of supply chain executives encountered problems with suppliers, 75 per cent struggled with production and distribution, and nearly half experienced delays in planning and decision making.

 

 

Just recently, the Wall Street Journal reported on massive supply chain disruptions stemming from the historic winter storm in Texas. Perhaps even more stunning was the Ever Given container ship becoming lodged in the Suez Canal for a full week, blocking passage through one of the world’s most important waterways. In both cases, recovery could take months, with broken contracts and pricing issues adding layers of complexity. These events underscore the fact that, even as we recover from the pandemic, the global supply chain will be rife with risk and uncertainty, meaning continuity and resiliency must be top priorities.

 

 

Historically, commodity market participants have taken numerous steps to mitigate this risk: diversifying portfolios, participating in exchanges, structuring contracts to hedge against loss. But these steps, while crucial, are just the beginning of a truly modern optimisation and risk management strategy. Risk lies not only in asset allocation, but in the myriad logistical processes that support global industry.

 

 

Organisations seeking to master this volatility must be able to scrutinise every step of the supply chain. They face a number of obstacles in doing so:

• Global complexity – raw materials often cross multiple international borders along the supply chain, inviting inefficiencies in terms of trade, compliance, consumer demand and weather
• Multiple systems for handling origination, handling and processing – most organisations rely on disparate and disconnected systems, hampering their ability to take a comprehensive view of the supply chain
• Little support for complex business processes – raw materials still move from production to storage to transport with little insight. Market behaviours and price fluctuations are often invisible, data capture is prone to errors and audit trails are nonexistent
• Multiple parties, too little communication – keeping suppliers and producers connected across multiple touchpoints is difficult, especially in remote locations where digital infrastructure is spotty and collaboration occurs mostly via smartphones

 

 

 

 

At Eka, we help our clients solve these problems through digital transformation. Our integrated tools and technologies help companies plan and execute the movement of goods across the trading value chain with more insight. Commodity producers can manage capacity, shipping and storage with greater flexibility, while other entities on the supply chain can automate process decisions, improve use of assets and gain real-time visibility into material movement, inventory and quality, whether in agriculture, energy, minerals or mining.