Each quarter, we compile data anonymously of all the transactions carried out across our platform in order to bring you the Index of Global Trade Health. Chock-full of insights, and trends, our report helps organizations to understand their current climate and better prepare themselves and their supply chains for the future. Our latest report breaks down what a remarkable recovery rate means for supply chains and cash flows and discusses the rising need for digitalization to create a resilient organization.
Tremendous growth following unmatched disruption
The COVID-19 pandemic brought disruption to supply chains all over the world. Order volumes dropped, cash flow halted, and organizations had to make tough decisions about how to continue operations. A year after the onset of the pandemic, our Global Trade Index shows signs of a remarkable recovery underway. Manufacturing order volumes on the Tradeshift Network were up 80% year-on-year in March and a surge in consumer demand gave businesses an optimistic view of the year ahead. However, as businesses began to enjoy growth and recovery, questions are arising about their ability to manage a sharp increase in orders and demand.
“Digitalization promotes agility. Those that resist moving processes online and haven’t embraced a path to digital transformation will continue to lag behind in the course of normal operations and certainly when the next crisis hits.”
— Alexander Malaket, President of OPUS Advisory Services International
The double-edged sword
Is too much growth a bad thing? As manufacturers and suppliers ramp up their production, many roadblocks are causing additional strains on supply chains. Order volumes are increasing at a much quicker rate than invoice volumes, highlighting an emerging delta that suggests that working capital isn’t supporting customer demand. As 1 in 3 suppliers have noticed a deterioration of their cash flow in the last six months, the longer payment terms that suppliers are working with create barriers for organizations to maintain their operations. With 1 in 5 suppliers concerned with their ability to keep up with the rise in order volumes, it begs the question — what can be done to help alleviate these pressures?
The key to reducing the strain on suppliers lies in implementing digital processes and tools along the supply chain. With easier management and tracking of e-invoices, digitization allows more control over the AP process through automation and coding for supplier analytics. And, with enhanced financing options, suppliers can rely on consistent cash flow that supports upticks in demand. When organizations embrace digitization in their AP process, they create a collaborative and resilient process, better equipping their supply chains for future disruption.
“Digitalization is seen as a way of building more resilient, collaborative supply chains. But we need to take the conversation beyond simply delivering transparency for buyers and look at whether the systems we are deploying are also delivering equivalent value and support to suppliers.”
— Christian Lanng, CEO and Co-Founder, Tradeshift
Read more about the latest insights, trends, and predictions in the Tradeshift Index of Global Trade Health. Our Index of Global Trade Health analyzes the anonymous data of transactions carried out across our platform, giving us insights into the timely performance of business-to-business commerce. With forward-looking statements backed by data, our Index of Global Trade Health helps organizations understand the current state of affairs and prepare for the future. Download the full report now for all our latest findings.
About the Author