By Karen Lynch
ANSWER: True. According to The Economist magazine, “Research suggests that the container has been more of a driver of globalization than all trade agreements in the past 50 years taken together.”1 Before the International Organization for Standardization (ISO) standardized containers in 1961, most commonly at 20-foot and 40-foot lengths, goods in barrels, sacks, and wooden crates had to be loaded and unloaded individually from land transport to ship and back again in a slow, cumbersome process, according to research from the World Shipping Council. Gradually, the ISO standard enabled moving containers seamlessly among ships, trucks, and trains worldwide. “Implementing this idea led to a revolution in cargo transportation and international trade over the next 50 years,” the council said.2
a) Big companies increasingly delay payments to optimize their own working capital management
b) Extended payment terms run up to 120 days
c) They affect the majority of SMEs
d) All of the above
ANSWER: d. The trend is driving days sales outstanding (DSO) to a 10-year high, according to the 2018 Working Capital Survey from the Hackett Group, a business transformation consultancy.3 Across the Americas, over 90 percent of survey respondents reported late payments by B2B customers in a 2018 Payment Practices Barometer from Atradius, a trade credit insurance specialist.4 In Western Europe, 58 percent of respondents experienced financial distress due to late B2B payments in 2018.5 Supply chain financing has been one way of bridging the gap.
a) Moving aggressively from pilot projects to implementation
b) Still struggling to find a use case
c) Fatigued with the hype
d) All of the above
ANSWER: b. According to the Gartner market research firm, most supply chain pilots to date have focused on either verifying authenticity, improving traceability and visibility, or improving transactional trust. “However, most have remained as pilot projects waylaid by technology immaturity, lack of standards, overly ambitious scope, and a misunderstanding of how blockchain could or should actually help the supply chain.”6
a) It’s a highly concentrated industry dominated by a few major players
b) It’s a totally fragmented industry with too many players to count
ANSWER: b. Digital transformation is bringing the following players into more direct competition: Startups (digital freight forwarders, online marketplaces), established forwarders and logistics companies, transportation companies (think ocean carriers), and e-commerce companies, according to a recent report by the Boston Consulting Group. Among the thousands of companies in the space, no single company dominates, and the top five companies account for less than 50 percent of the over $130 billion sea and air freight-forwarding market.7
ANSWER: Customer demands. In the Annual Industry Report for 2018 by MHI, the logistics and supply chain association, nearly three quarters of survey respondents rated customer demands on the supply chain as either extremely or very challenging. Drilling down, the problem involves demands for faster response times and better customer service. Other challenges, such as forecasting, supply chain synchronization, and omni-channel fulfillment paled by comparison—though all could be seen as related.8
b) A third
d) 90 percent
ANSWER: c. In a 2018 survey released by CrowdStrike, a cybersecurity technology company, 66 percent of respondents said they had experienced a software supply chain attack (38 percent were hit on several occasions). These attacks occur when malicious code infects an otherwise trusted application, and they have become more prevalent in 2018.9 Cybersecurity topped the list of concerns in SCM World’s annual “Future of Supply Chain” survey in 2018.10
ANSWER: False. An International Chamber of Commerce survey of bankers in 2018 broke it down this way: Over a third of respondents have not eliminated paper in the initiation and settlement stages of a transaction (which actually makes these two of the more automated parts of today’s transaction lifecycle). About half have not eliminated paper in the area of document verification (which is the most costly and time-consuming stage). Only about a quarter use electronic bills of lading or other electronic transport documentation, while the same percent reported using optical character recognition.
Hope you did well on the quiz. But it’s more critical, of course, to get real-life international supply chain management right these days—but harder, due to challenges including unpredictable tariffs, non-tariff barriers, and trade flows; volatile shipping costs; cybersecurity concerns; and disruptive natural disasters (not to mention longer waits for B2B payments). Read the review of 2018 supply chain developments and look ahead at what is yet to come in 2019.
Karen Lynch is a journalist who has covered global business, technology and policy in New York, Paris and Washington, DC, for more than 30 years. Karen also is a principal at Content Marketing Partners.
1. “The Humble Hero,” The Economist; https://www.economist.com/news/finance-and-economics/21578041-containers-have-been-more-important-globalisation-freer-trade-humble
2. “History of Containerization,” World Shipping Council; http://www.worldshipping.org/about-the-industry/history-of-containerization
3. “U.S. Companies Improve Working Capital Performance; Deterioration in Receivables and Inventory Management Masked by Significant Slowing of Payments to Suppliers,” Hackett Group; https://www.thehackettgroup.com/news/hackett-u-s-cos-improve-working-capital-performance-deterioration-in-receivables-and-inventory-management-masked-by-significant-slowing-of-payments-to-suppliers/
4. “The Americas: An Increase of Overdue B2B Receivables in 2018,” Atradius; https://group.atradius.com/publications/payment-practices-barometer-americas-2018.html
5. “Late Payment, Growing Problem in Western Europe,” Atradius; https://group.atradius.com/press-releases/payment-practices-barometer-western-europe-2018.html
6. “Gartner Predicts 2019 for Supply Chain Operations,” Gartner; https://www.gartner.com/smarterwithgartner/gartner-predicts-2019-for-supply-chain-operations/
7. The Digital Imperative in Freight Forwarding, Boston Consulting Group; https://www.bcg.com/en-us/publications/2018/digital-imperative-freight-forwarding.aspx
8. 2018 MHI Annual Industry Report, MHI; https://www.mhi.org/publications/report
9. “Global Survey Reveals Supply Chain as a Rising and Critical New Threat Vector,” CrowdStrike; https://www.crowdstrike.com/blog/global-survey-reveals-supply-chain-as-a-rising-and-critical-new-threat-vector/
10. “Farewell to 2018: The Year of Trading Turbulence,” SCM World; http://www.scmworld.com/farewell-2018-year-trading-turbulence/