The state of logistics is representative of the state of commerce.
As shippers and carriers alike deal with spotty spot demand, inflation, and geopolitical tensions across key supply chain points, observers believe it’s time for a reset, one driven by digital innovation.
And with the announcement Monday (Aug. 19) of Freightos’ acquisition of Shipsta, a freight-tender procurement platform, it’s clear that businesses in the transportation, shipping and logistics sector are turning to technology — artificial intelligence (AI), real-time data analytics, and embedded supply chain finance — to enhance resilience, drive efficiency, and ultimately transform their operations.
Inflation, driven by a variety of factors including supply chain bottlenecks, labor shortages and energy price hikes, continues to squeeze profit margins for businesses worldwide. At the same time, demand remains unpredictable, with some regions experiencing slowdowns while others see surges in consumer spending. This uneven landscape makes it difficult for businesses to plan and execute their supply chain strategies effectively.
As stressors intensify, businesses must find ways to adapt and build more resilient supply chains that allow for managing the current challenges and position businesses for long-term success.
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As businesses navigate the global economy, embedded supply chain finance is emerging as a powerful tool for improving financial resilience and liquidity. Embedded finance refers to the integration of financial services — such as lending, payments and insurance — into non-financial platforms or ecosystems. In the context of supply chain finance, this means providing financial solutions directly within the supply chain management process.
One of the primary benefits of embedded supply chain finance is that it enables businesses to access working capital more efficiently. For example, suppliers can receive early payment for their invoices through integrated financing solutions, which are embedded within the procurement or logistics platforms they already use. This reduces the need for suppliers to rely on traditional financing methods, such as bank loans, which can be costly and time-consuming to secure.
Embedded finance also facilitates more flexible payment terms, which can help improve cash flow for both buyers and suppliers. By leveraging real-time data on buyer and supplier performance, embedded finance solutions can tailor payment terms to the specific needs of each party. For instance, a supplier with a strong track record of on-time deliveries might be offered more favorable payment terms, such as shorter payment cycles or lower interest rates on financing.
Similarly, embedded supply chain finance can help mitigate the financial risks associated with supply chain disruptions. For example, integrated insurance solutions can provide coverage for losses incurred due to delays, damage or other unforeseen events. This financial protection not only helps businesses recover more quickly from disruptions but also gives them greater confidence to invest in growth and innovation.
“We’re likely to see larger firms take up the embedded finance mantle, and smaller enterprises will follow suit,” Alan Koenigsberg, senior vice president and global head of Large & Middle Market Commercial Solutions, Working Capital and Embedded Finance at Visa, said to PYMNTS.
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Amid a sea of uncertainty, real-time data is becoming an indispensable tool for businesses to improve their supply chain performance. The ability to access and analyze data in real time enables companies to make more informed decisions and respond more quickly to changing conditions.
By sharing data across the supply chain, businesses can improve communication and alignment, ensuring that all parties are working toward the same goals. This collaborative approach enhances efficiency and fosters stronger relationships with suppliers and other stakeholders, which can be a competitive advantage.
“The integration of AI, ML [machine learning], and vast computing power, coupled with an abundance of data, has transformed our approach to demand forecasting, inventory flow and cost optimization,” Parvez Musani, SVP, End-to-End Fulfillment, Walmart U.S. Omni Platforms and Tech, told PYMNTS. “Customers who can count on you during challenging times will reward you with their continued business. … Businesses must be able to adjust to disruptions quickly.”
With the ability to monitor supplier performance in real-time, businesses can quickly identify potential issues, such as production delays or quality problems, and take corrective action before they impact the broader supply chain. This proactive approach to risk management is particularly important in today’s uncertain environment, where even minor disruptions can have ripple effects.
Firms are also turning to AI to unlock insights from data. By analyzing data on inventory levels, lead times and demand patterns, AI algorithms can recommend optimal inventory levels that minimize the risk of stockouts while reducing carrying costs.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
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