The Impact of AI and digital tools on Supply Chain Efficiency and transparency

John Simkins,Head of Sector & Country Specialists, Corporate and Commercial Banking, Santander UK plc

At a recent Supply Chain Tech conference, it was brilliant to see how businesses across the logistics and wider supply chain industries are using AI and digital tools to drive efficiency and transparency across key elements of the supply chain. Until recently, many processes were carried out manually – using spreadsheets to track shipments, completing paperwork by hand, and doing physical verification checks on suppliers to name a few – resulting in limited visibility across the supply chain. But now the landscape is changing, and it’s great to see that the UK is leading the way in some of this digitisation, with the UK government’s recent approval of the Electronic Trade Documents Act 2023. Hopefully, acting as the catalyst for more countries to follow suit and drive us towards a digital, more transparent, and more efficient customs process.

And that is key; businesses are looking at how they can build resilience, have greater visibility, and drive efficiencies across their whole supply chain. With new regulations coming into force, whether this be around ESG or financial reporting, businesses are going to have to find ways to understand each element of their supply chain better and be able to use this to shape their future sales model.

Business expectations are changing. In the digital world in which we all operate, businesses expect to see instant fulfilment, personalised solutions, and omnichannel experiences. As a result, more businesses are using AI and digital solutions to meet these expectations. 

Global supply chains are complex by nature, so anything that can be done to simplify this for businesses will be welcomed with open arms. Business models are changing, with businesses now moving from a ‘just in time’ to a more ‘just in case’ approach primarily driven by the COVID-19 pandemic and disruption to logistics. The growth in e-commerce throughout COVID-19 is driving ‘small is the new big’ when it comes to consignments, with parcel volumes growing by nearly 70% since 2019. This trend, which is likely to continue, will partly be down to shippers not waiting for whole consignments to be consolidated before shipping. Instead, shipping goods as soon as they are ready, while no doubt also being a result of the slowdown in global consumer demand. It will, therefore, be interesting to see how this trend evolves in response to inflationary pressures and the ongoing role of e-commerce. 

We’ve seen a shift with diversification across supply chains, as the number of businesses moving from sole sourcing to multiple sources is growing as they look to reduce supply chain dependencies. In fact, our own data (Santander Trade Barometer, Autumn 2023) indicates that 20% of all businesses are still looking to prioritise investment in supply chain transformation and diversification. Businesses are now thinking about building resilience into their business model in a way that they weren’t even 12 months ago. According to the data, of the 40% of businesses whose supply chains operate in China, 62% plan to reduce dependence (of which only 14% plan to move away from China completely). This is slightly up on the Spring wave (+6%) when this value was reported as 56%. The evidence is clear – there appears to be a concerted effort in the minds of leaders to start reducing exposure and reliance on one market to service their production needs. In other words, there’s a growing trend for businesses to be armed with relevant and timely insight to make better decisions moving forward. This diversification, or at least reduced dependence, is also being supplemented by ongoing investment from businesses in digitisation and automation to drive future resilience.

Like many businesses, we’ve been through our own digital journey and look to support more companies and help them make the most of global opportunities. Launched in June 2022, Santander Navigator is a digital platform designed to support businesses with every step of their international trade journey – from identifying the right global markets, making connections to buyers, sellers, and distributors, and helping them overcome the regulatory trade barriers they face right the way to connecting them to logistics providers who can provide tailored, efficient solutions to meet each business’s individual requirements.

We’ve developed a global network of innovative solution providers, aimed at helping businesses to simplify their individual trade journeys, whether they’re entering a new market for the first time or  experienced in international trading business.

The solutions we have are aimed at simplifying the journey and saving businesses time and money while supporting them with their international growth. This goes hand-in-hand with supporting them with their key objectives of building resilience, providing greater end-to-end visibility, and driving efficiency across their global supply chain. To find out more about Santander Navigator, please visit www.santander.navigator.co.uk.