In the age of eCommerce, supply chains must become more agile — and to become agile, they must embrace digitization.
Niall Murphy, CEO of EVRYTHNG, told PYMNTS in an interview that assigning individual items their own unique identities and data, and tracking it all across the cloud, can improve workflows (and payments, too).
EVRYTHNG, an Internet of Things company, seeks to foster real-time insight into how products are produced, and what happens to them after they leave the factory.
Earlier this month, EVRYTHNG said it raised $10 million to help boost its efforts to provide end-to-end supply chain traceability.
The vulnerabilities of the supply chain became stark against the background of the pandemic.
Supply chain resiliency, said Murphy, is a concept that has been tested — not just in this environment, but before the pandemic — because of antiquated processes.
“What’s always existed and is extreme in the consumer products industry, is the fragmentation of the supply chain,” he told PYMNTS.
Many brands owners, he said, don’t manufacture, distribute or retail their own products. The end result is a silo-ing of information tied to segments of the supply chain, and housed with individual, independent organizations that comprise those links.
The consequences of that fragmentation have manifested themselves in shrinkage, with wasted materials, and with inefficient management of working capital.
Murphy maintained that traditionally, there has been too much inventory held at different parts of the supply chain continuum. The hub-and-spoke setup of retail also introduces friction into the system, as warehouses may in fact be in the exact wrong location to satisfy seasonal demand for certain products.
As goods move less than optimally through these chains to end customers in disconnected flows, payments friction occurs, too.
“We have a series of settlement transactions that occur as the product moves through the supply chain,” he said. He offered up the example of a retailer not knowing if production runs on a line of shirts is finished — and having to phone the manufacturer to get that confirmation.
Linking Production And Payments
“Even if you get that confirmation, then the linkage between that confirmation event from an operational production perspective and the payment settlement process associated with that production are two completely separate events in the workflow,” he said.
To address the various pain points, said Murphy, supply chains need to see a much more dynamic flow of information that is connected to associated financial transactions. Robust information flows would include confirmation that items have arrived, have been dispatched or production runs are finished, all tied to fund flows, in real time. That eliminates the murkiness that exists as goods make their way beyond the points of production and final destination, especially where the landscape is fragmented, such as in textiles or food production.
“If we were able to validate [the item’s] existence at any point in its journey, then we have a much lower risk profile and hence a lower cost of finance,” said Murphy.
This is where assigning identities — through RFID or QR codes — to units of production (say, a shirt) come into play. He said that EVRYTHNG connects that physical identifier with a digital identity in the cloud and on the worldwide web for a unified, seamless view of an item as it moves across supply chains. He likened the process to LinkedIn, where any user can access the profile and post a comment – and anyone connected globally can access that same profile and view the comments.
In an age where data and commerce are increasingly mobile, he said that the smartphone, interacting with any item, anywhere, can become a data capture tool (and not the only tool that can be used to do so). Machine learning can help fill in any information gaps and build projections about what is happening on the ground, so to speak, as projects move ever-farther from the raw materials stage.
“The more data points we can connect about items as they flow through the supply chain, the more accurate a picture we have about the flow of the overall supply chain,” he said. The convergence of production, identities, and visibility afforded by high tech can enable, for example, a retailer to gain sales by authenticating items that are for sale in secondary markets.
“We have to have a high degree of confidence in linkage between the location of the physical item and its physical identity and that digital identity in the cloud. And we have to create confidence so that different parties can rely upon that information,” he told PYMNTS.