‘Pandemic-proof supply chains with digitalization’
DIGITALIZATION will help protect the world’s supply chains from future pandemics and climate change, according to an expert from the Asian Development Bank (ADB).
In an Asian Development Blog, ADB Trade and Supply Chain Finance Program Head Steven Beck said the Covid-19 pandemic has exposed the fragility of global trade and supply chains.
These weaknesses can be addressed by digitalization which will not only promote transparency but will also “green” and make global trade “socially responsible.”
“Digitalization will transform trade and supply chains but it won’t be an easy task. Industry and regulators need to agree on common systems and practices, governments need to upgrade or alter laws that now insist on trade deals being tracked by a paper trail, and tools like distributed ledger technology for transactions and Qr codes rich in information about traded products need to become normalized,” Beck said.
Beck added that the lack of transparency in supply chains led to problems such as shortages of key medical goods early in the pandemic. Supply chain problems also cropped up during the pandemic which led to more expensive goods.
“Supply chain issues that have persisted across a range of items ever since, have left everyone hyper-aware of the importance of that key global system. Multiple problems facing people in their daily lives are being explained by ‘supply chain issues,’” Beck said.
Apart from future pandemics, Beck stressed the importance of responding to climate change, which has been cited as one of the primary concerns particularly in light of global efforts linked to the Paris Agreement.
He said a 2016 study by Mckinsey estimated that more than 80 percent of greenhouse-gas emissions and more than 90 percent of the impact of the operations of consumer goods companies on air, land, water, biodiversity, and geological resources came from their supply chains.
“It is clear that supply chains need to be the focus for any serious climate change alleviation. But other globally important issues need to be addressed through supply chains too,” Beck said.
“Better-run and more transparent supply chains will help guarantee that unfair labor practices are weeded out of the global trading system, that gender equity exists in the workplace, and that poverty reduction is a side effect of growth,” he added.
last year, Businessmirror reported that shipping costs for exports have increased “10-fold” with outbound shipments being delayed by a month to three months at worst.
Industry sources said the cost of shipping one dry container from Manila to the European Union has ballooned to $5,000 from the usual $800 (about P38,424.40 at current exchange rates).
Shipping one 20-foot container from Manila to the US West Coast used to cost only about a maximum of $1,000 (P48,030.50); it’s now hitting $5,000 (P240,152.50). (Read the Businessmirror story here: https://businessmirror.com.ph/2021/05/06/global-shipment-woes-additionalshocks-to-phls-food-supply-chain/).