- Sustainable Finance Solutions
- Sustainability Perspectives - ESG Podcast by Refinitiv
- Episode 17: Supply chain risk: COVID-19 challenges
Kevin L. Jackson - CEO of GC GlobalNet and COO of SourceConnecte.
How to Manage Supply Chain Risk: COVID-19 Challenges, Digital Verification & Onboarding in 2020
Episode 17 | Duration: 21 minutes
With supply chain risk becoming a central issue in any ESG discussion, the current COVID-19 crisis has further boosted the importance of transparent and efficient onboarding and verification procedures carried out digitally.
Keesa Schreane [00:00:00] How are institutional investors, markets, and businesses managing through the COVID-19? Well, it's challenging, to say the least, right? America is managing through some very new-ish concepts, broad use of new collaboration tools, for example, working from home. Then there are the more important social issues that we're dealing with - quarantine, caregiving, giving care to ourselves, as well as our loved ones. Healthcare, paid time off.
Keesa Schreane [00:00:34] Clearly, there are a lot of things that we are unpacking as a society, but we're going to drill down just a bit into one specific area on the minds of many institutional investors right now. And that is supply chain management. Today, we're going to talk about all these things in the context of supply chain management. I mean, the first thing the business leaders really tend to do when we look at new phenomena, is to look at precedent in terms of precedent. Many people are comparing the current Covid-19 to Severe Acute Respiratory Syndrome, also known as SARS, in terms of impact on the global markets and impact on supply chains. But if we look at SARS as a benchmark, our precedent, we see a couple of things. First of all, it was nearly a decade ago. Things have changed. Then we look at manufacturing trends and outsourcing trends. Those things are very different in terms of where our vendors are located and how we're doing business with them at this point. So we see the situation that we have now is, in fact, quite unique and potentially has very little precedent. Now, as we talk about the supply chain and context of precedent, what's going on now, what we can expect in the future, we have here with us Kevin Jackson, CEO of GC GlobalNet. Kevin, thank you so much for joining us and so glad to see you. And to see that you're healthy too.
Kevin L. Jackson [00:02:03] Thank you very much, Keesa, really appreciate your invitation to talk about this.
Keesa Schreane [00:02:08] Great. First of all, Kevin, want to get your thoughts on what are the top three supply chain issues that businesses are seeing right now, with everything that's going on?
Kevin L. Jackson [00:02:20] Well, I'll tell you, one of the biggest issues is just communications. Many organizations are used to physical communications, using paper, and they use webexes and digital forms. But it's sort of an adjunct to the physical communication, as we have so abruptly been transitioned to the social distancing theme in the world. Everyone is now shifting 100% to remote. And some of the systems weren't designed to support business processes. Hundred percent.
Kevin L. Jackson [00:03:05] The other thing is, with the supply chain being stressed there, there's a critical need to identify new suppliers and new sources of some of the most basic needs. Toilet paper and hand sanitizers sort of come to mind for some reason. And most of those processes, again, all manual - companies really don't have automated digital means of looking for new suppliers and vetting the information about new suppliers, onboarding these suppliers to their procurement systems. The digital capabilities are there. But until now, companies haven't seen the need to invest because, hey, "I could always have a meeting and find where the actual transactions". I mean, all of us buy online like, you know, as a normal course of business...Who hasn't gone to Amazon to look for something and have it delivered on there by drone maybe the next day? This is a common thing for the everyday consumer. But believe it or not, this is not common for business to business. Transactions are still done in the old fashioned way for business to consumer. The seller has all the power. They say these are the products I'm giving. This is the price. And I take credit cards. But in business, the business, that's not the case. It's the buyer that has all the power. So these B2C Web sites actually don't work well when a buyer is purchasing or negotiating from a supplier. You need to be able to do things like, purchase orders or negotiate contracts, do digital signatures. And many of these things where none of these things are available in a B C market place online commerce. So there's a lack across the industry on doing these E-commerce for B2B transactions.
Keesa Schreane [00:05:40] So when we talk about e-commerce and the purchase orders and the digital signatures and that sort of thing, these are all terms and concepts that many of us have been using pretty frequently and we know quite well. How do you see that changing from the way that we're using those digital tools right now, say, in March 2020 versus the way we'll be using the digital tools and let's just say December 2020, Do you think the tools will change? Do you think they'll become more complex or do you think that we as operators of the tools, as business owners, that we will need to begin to roll out different sorts of tools to really get business done in a more efficient way?
Kevin L. Jackson [00:06:22] I think the tools are there. They can be used and it can be used quite effectively and efficiently. But it's the information and data with which we make our decisions. That's where the real change is needed to occur. I mean, you sign a contract digitally because you have spent time with the buyer or supplier. You've done your research. You verify the information with which you you're making decisions. But the need now is as we move forward, is to be able to do that verification in a digital manner. That's what's missing. You need to be able to verify that maybe your company is owned by diverse owner had their burse ownership. You need to look and check. Do they use slave labor as part of their supply chain? How do you verify that when you have to do everything over a digital channel? So you need to get third-party verifiers and this is really important when it comes to environmental and social governance.
Keesa Schreane [00:07:50] Great. So let's talk about what you and your colleagues are talking about. Now what you're hearing now, whether you're on your Linkedin and other tools, who they are talking now in the wake of COVID-9, what seems to be top of mind for you and your colleagues, those who focus on the supply chain? what are the the top two or three issues that you all are talking about? What sort of solutions are you seeing? What are the questions that haven't even yielded solutions yet that you're talking about in that social sphere? I'm assuming you're practicing the social distancing. So I'm saying, what are you talking about? And, you know, on LinkedIn, chats, groups, things that nature, what are you hearing specifically about supply chains?
Kevin L. Jackson [00:08:36] First of all, how to identify new suppliers if you're if your supply chain is strained. How do you identify a new supplier and establish a new supply chain with that supplier? How do you monitor the quality of a product starting from scratch? How how do you verify information that you may see online about the supplier and about the product? How do you verify the financials of a new supplier? How do you onboard, a new supplier to your procurement processes? Be it SAP or any other procurement system?
Keesa Schreane [00:09:33] Do you feel that onboarding now in the wake of Covid-19, in the wake of what's going on, how is onboarding different than it was two weeks ago? If I was scheduled to onboard a new vendor next week and, you know, now we're remote. So what's going to be different in terms of how we on-board next week versus how we embody the month ago? What are the differences there?
Kevin L. Jackson [00:09:54] Well, right now and it's mostly manual and it takes a long time. It's very slow and very inefficient. It can take between 30 to 90 days just to do the paperwork to onboard a new supplier. And these suppliers actually provide the same data to every new buyer. But every buyer has their own particular lab process, their own form that needs to be filled out. Also, bank account information and certification information, it's ripe for fraud when you're doing this in a manual way; and the regulatory requirements are changing very rapidly. Just today, in the United States, there's been the wavering of governmental rules and regulations around HIPAA in order to provide Telehealth. So how would you now extend supply chains from hospitals to people that are sitting at home? How do you verify those products? And there's a huge technology gap.
Kevin L. Jackson [00:11:19] So there are limits in receiving real-time updates across the supply chain because these systems that are in place, these manual systems, some of them may be digital, but they're all siloed and there's no way to get information or verified information from one system to another. All those things need to change actually quickly in the next few months.
Keesa Schreane [00:11:49] I love the example with Telehealth because I hadn't heard of that. And also, I'm just curious if we could just use that as a use case with Telehealth and that's something that's new. Number one, how does that play out in this new environment where things have to be done in a very digital hands-off format? How would Telehealth who's bringing health care services to people remotely? So it sounds like. Yeah, how are they operating when they're bringing , 1) services to people remotely, but also 2) they have to engage their supply chains remotely. How would that play out today versus two months ago, in that specific example?
Kevin L. Jackson [00:12:29] So let's say a doctor two months ago had a new patient. They would have to have that patient physically come in. They would have to use manually, their existing tools to do a checkup. If there was medicine that needed to be given to the patient, the doctor would just go to their medicine cabinet in his office or at the hospital and hand it to the patient. Today, if you're going to be using Telehealth, the patient is now going to be on some type of remote video. You may need to have a different type of medical device or you're looking at medical Internet of things that you may need to have delivered to drive up to the patient. What if it was a diabetic and they already had one of the modern diabetic tools that allow them to monitor? They now need to be able to transmit the data from home to the doctor's office, which is relatively easy. But how do you verify that that data is actually correct? And finally, if there's a new medicine that has to be delivered to the patient at home, how how do you deliver it? What type of transportation delivery system is qualified to deliver medicines? All these all the certifications driven by regulatory, federal and state regulations. How do you verify those regulatory requirements?
Keesa Schreane [00:14:30] That's great. So it sounds like many of today's firms are going to need these new services and at a very last minute basis because, you know, maybe a couple of weeks ago they didn't foresee this. And so onboarding these new vendors and your example, the Telehealth company onboarding a transportation company, who will deliver those medicines to the recipients. That's going to be something that needs to be done in a very quick manner, but also in a very last -minute matter. What are some of the issues if they don't do it? Well, even, you know, even though a lot of folks are saying, well, you know, we're in a different time. So what we're doing now, we're laying a new precedent. What do they need to be mindful of in this particular example with the Telehealth company that's onboarding a transportation company tua6 will deliver medicines to people who work in other locations who can't come in? What will they need to be aware of? What what does their future look like?
Kevin L. Jackson [00:15:26] Well, one of the most promising technologies around this is blockchain. Many people have heard of blockchain and its association with Bitcoin, but it's really a digital ledger that is shared by all members of an ecosystem. And in supply chain, it's very important with respect to validating information and the provenance of information and proving that any information has not been changed. For instance, if you have a new medicine and you need to report that it's it's being transferred from the hospital to someone at home. Well, you may be able to put a digital tracker on your medicine or you barcode scans with GPS to understand where that medicine is.
Kevin L. Jackson [00:16:33] Well, once you get the data, you can use blockchain to assure that that information has not been changed, that it's actually true, and that you could provide real-time updates of where that bottle of medicine is, who has access to it. And all this information, because it's secured by blockchain, is acceptable in a court of law. So it protects the business. Blockchain can also be used for contractual agreements and for leveraging information across all wireless networks, Wi-Fi and the upcoming 5G networks. All these things actually improve the velocity of information and your ability to verify the validity of information and to ensure that it can't be changed. What that does is provide the ability to do audits and enforce penalties. And it actually increases compliance.
Keesa Schreane [00:17:52] So that's amazing. Learning so much about blockchain and the ability of blockchain to help us protect our businesses and our assets; really also what's coming down the pipeline in terms of new ways do businesses that will help us to really think creatively and to bring to bear new ways of onboarding faster, more expedient ways of onboarding. That's great. Kevin would love to hear. What's your big idea? What do you think we can expect to see in the future around supply chain management and around vendor onboarding, especially during times of crisis that we haven't seen in the past? What do you think will surprise the marketplace around supply chain in the future? What's the big idea there?
Kevin L. Jackson [00:18:36] Well, actually, we have an online marketplace that is blockchain-enabled and we've partnered with an ecosystem called Trust Your Supplier, and it's built on top of IBM Blockchain. It's actually in use today for monitoring food, with Wal-Mart. And it does supplier qualification validations onboarding and lifecycle information management and through our online marketplace we call Source Connecte, we actually give suppliers an ability to present their products electronically, not just the list of contacts. And it also gives buyers an efficient way to get vetted information of their suppliers, their ability to electronically onboard these suppliers to their back-in systems.
Kevin L. Jackson [00:19:35] This actually accelerates the pace of commerce and it uses blockchain or token-based authentication, and to support the communications that are verifiable, and once again, immutable can't be changed. I think these types of systems are really going to expand globally and support the rapid adoption of advanced technologies.
Keesa Schreane [00:20:15] Great. Well, Kevin, thank you so much for that tremendous information around supply chains, the future, what we can expect post-crisis. Thank you for joining us. Thank you very much.
Keesa Schreane [00:20:27] And I want to just send the message out to our audience. Please send positivity out today, whether it's remote positivity or in-person positivity. Really, the best way to take care of our businesses right now is to really take care of ourselves. Also, send us your comments and thoughts on how we can serve you better and what type of content you want to hear more about. As always, feel free to subscribe and rate the podcast. Thank you and be well.