Supply chain diversification is an absolute must for organizations operating on a global playing field.
In Western Europe, Brexit disruption has mixed with pandemic-fueled supply chain mishaps to force organizations buying and selling across borders to seek new trading partners.
The pandemic has highlighted just how risky working with unknown business partners can be as numerous cases of personal protective equipment (PPE) supplier fraud have surfaced. But these kinds of risks can occur in any industry, said Kwayga Chief Technology Officer Chris Kennedy, including the food and beverage arena.
As he told PYMNTS, the biggest pain points aren’t necessarily a matter of finding new business partners, but rather being able to trust them.
“It’s quite easy to discover new suppliers and new business opportunities,” he said. “But what’s very difficult is for them to go do due diligence and understand who is that supplier, and what do they actually supply?”
The Nuances Of Trust
Some of the most obvious instances of fraud that emerged amid the pandemic involve cases in which suppliers of supposed PPE failed to deliver the products purchased or delivered products that did not meet certain specifications. But supply chain fraud can be much more subtle than product forgery.
Kennedy pointed to an example of a PPE vendor that displayed its European CE certification.
“When you dug into their actual certification, it turns out, it had nothing to do with PPE equipment,” he noted. “It had to do with a plastic toy they manufactured.”
Similar cases can emerge in the food and beverage supply chain, which, as Kennedy noted, is not only an operation of trading raw materials. Indeed, the sector is vast, including the trading of various food and beverage items as well as machinery and a variety of services.
At a time when supermarkets are overhauling the way they meet buyers’ shopping needs, and when restaurants and bars are struggling amid lockdowns and reopenings, the food and beverage supply chain has certainly seen its fair share of disruption. The current climate makes it even more imperative that supply chains flow uninterrupted — and that B2B buyers can access the products and services they need, when they need them, to remain viable.
In the U.K., Kennedy said Brexit had prepared businesses for supply chain diversification well ahead of the pandemic. But that doesn’t mean companies aren’t facing friction in their efforts.
“Here in Ireland, there was a huge dependency in the food sector on products coming in from the U.K., particularly in the last 12 to 18 months,” he said. “There has been massive diversification into other markets, particularly in Europe, that has been difficult because it’s not a very digital process.”
Firms often rely on quick Google searches and manual due diligence to source and assess potential new trading partners. Kwayga aimed to ease that pain point through digital-first, robust compliance checks at the moment of onboarding to its matchmaking platform.
Avoiding mishaps, from product fraud to delivery delays, can often be an effort that begins well before any contract is drawn up or financial transaction occurs. Mitigating risk from the onset means supporting buyer-supplier discovery and fostering trust, as Kennedy noted.
Setting Up For Payments Success
Tackling this pain point from the very beginning of the sourcing and discovery process can also have widespread ramifications much further down the B2B trading process, particularly when it comes to financing and payments.
There are opportunities for matchmaking platforms like Kwayga to integrate third-party lenders, for instance, using the compliance checks at the moment of onboarding to support those financiers’ own underwriting initiatives. Further, driving B2B trust within the supply chain at the start can also ensure companies avoid a major financial fiasco.
“As you promote a trusted engagement between buyer and supplier through the entire deal flow, you’re going to see a massive reduction in invoice fraud and payment fraud,” Kennedy said.
With monumental pressures on supply chains forcing businesses in all industries to prioritize agility, speed and security, the ability for a third party to mitigate risk as soon as a B2B partnership is struck can ease major pain points further down the road.
It can also open up more opportunities for businesses to strike meaningful, valid partnerships with firms in new markets that have historically been avoided thanks to cultural and language barriers, as Kennedy explained. Despite significant challenges, organizations can access the tools they need to weather supply chain storms and modernize operations.
“There’s definitely going to be a huge move towards digitization with regards to supply chain and discovery,” he said. “It’s not just about discovery, it’s going to be about trust, and establishing relationships of trust between buyer and supplier, getting them engaged as quickly as possible, and speeding up supply chain diversification.”
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