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Technology propelled supply chain management innovation in 2016, and may be equally important in 2017.

2016 in Review: Supply Chain ManagementARTICLE

By Christine Parizo

Both the digitisation of business as well as growing economic and political uncertainty reverberated throughout the supply chain in 2016. New supply chain management concerns arose – and new technologies emerged to help mitigate those concerns, expand supply chain management capabilities, and drive ROI.

Enhanced B2B Payments Technologies Accelerate Supply Chain Management

Improvements in cross-border payment technologies began to emerge in 2016, providing companies with new, faster ways to settle invoices and receive payments.1 Integrated global trade management (GTM) solutions helped automate calculations of shipping cost, taxes, and risk analysis. The Society for Worldwide Interbank Financial Telecommunications (SWIFT) successfully completed the first pilot phase of its global payments innovation (GPI) initiative, which is expected to enable same-day cross-border payments starting in 2017.2

Omni-Channel Become Mandatory for Retail Supply Chain Management

For retailers, omni-channel sales became mandatory rather than optional.3 That drove requirements for retail supply chain management systems to support online orders and delivery, as well as the ability to fulfil online orders at brick-and-mortar locations. Many supply-chain management systems, including transportation management solutions, have become cloud-based, lowering the cost of entry and total cost of ownership.

The Internet of Things, Driverless Vehicles and Blockchain

During 2016, the Internet of Things (IoT), driverless vehicles and blockchain entered the supply chain management lexicon. These technologies offer the potential to create significant supply chain management efficiencies and innovative new capabilities.

Blockchain was still in its infancy in 2016, but many banks and other companies began experimenting with the technology. In the supply chain, blockchain has the potential to cut out middlemen and increase transparency, providing an authoritative record of the parties involved in a transaction as well as the price, date, location, quality and state of the goods.4 It may also allow companies to trace products’ content back to the origin of the raw materials used.5 In 2016, Wal-Mart began using blockchain in a trial to track food items, while IBM offered a platform designed to let companies test blockchain technology for tracking high-value goods.6

IoT devices such as GPS trackers and other sensors create opportunities to transform supply chain management and third-party logistics by tracking assets in real time, whether they are in the warehouse or in transit. According to a joint GT Nexus/Capgemini global study of executives at large manufacturing and retail organisations, 70 percent said they have already launched a digital supply chain transformation effort; and 94 percent said that in five years, they expect to receive more real-time status updates from across the entire supply chain.7

As self-driving vehicles grabbed headlines in 2016, Uber Technologies’ Otto delivered the world’s first shipment by a self-driving truck, transporting more than 50,000 cans of Budweiser beer 120 miles to its destination.8 While we may be a long way from seeing highways full of self-driving trucks – not to mention captain-less ships and pilot-less planes – companies are expected to continue further enhancing self-driving technologies in 2017. Legislative and regulatory hurdles remain, of course; however, driverless trucks have the potential to change supply chain management significantly as the technology is refined.

The Takeaway

Technology propelled many supply chain management innovations in 2016, and may be equally important in 2017. Improved payment solutions, IoT and blockchain are among the technologies helping to accelerate interactions among suppliers, mitigate risk and increase transparency. Driverless vehicles may present a whole range of new possibilities for automating the supply chain.

The Author

Frances Coppola

With 17 years experience in the financial industry, Frances is a highly regarded writer and speaker on banking, finance and economics. She writes regularly for the Financial Times, Forbes and a range of financial industry publications. Her writing has featured in The Economist, the New York Times and the Wall Street Journal. She is a frequent commentator on TV, radio and online news media including the BBC and RT TV.

Sources

1. “Put-Call Parity Definition,” Investopedia; http://www.investopedia.com/terms/p/putcallparity.asp#ixzz4aGrAFoPW
2. “Synthetic Forward Contract,” Investopedia; http://www.investopedia.com/terms/s/synthetic-forward-contract.asp
3. “Managing currency risks with options,” CME Group; https://www.cmegroup.com/trading/fx/files/ManagingCurrencyRisksWithOptions.pdf
4. “Currency option combinations,” Madura; http://www.cengage.com/resource_uploads/downloads/0324288417_68116.pdf
5. Ibid
6. Ibid
7. “Strap options”, Investopedia http://www.investopedia.com/articles/active-trading/071514/strap-options-market-neutral-bullish-strategy.asp
8. “Currency option combinations,” Madura; http://www.cengage.com/resource_uploads/downloads/0324288417_68116.pdf
9. Ibid.
10. “Synthetic forward and put-call parity,” Actuarial Files; http://www.actuarial-files.com/examples/parity.pdf
11. “Hedging: Combining Options with Forwards,” Commerzbank; https://fim.commerzbank.com/CorporateRisk/EN/FXTransactions/files/assets/basic-html/page38.html

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