On SMEs, Globalization, and the Role of Blockchain-Powered Supply Chain Management

Globalization, the developing trend in which businesses expand their operations internationally, has been both a blessing and a curse. Globalization has been a blessing in that it opens business opportunities beyond natural borders; enhances free trade, and it improves the global economy at scale. In contrast, it has been a curse because it sets up an unlevel competitive landscape between SMEs and bigger global players.

A study conducted by World Bank Group submits that there are as much as 445 million SMEs in emerging markets with up to 70 million of them classified as formal SMEs. The Competitiveness of Small and Medium-sized Enterprises (COSME) program of the EU submits that SMEs provide 85% of new jobs.

The chart below showing the turnover of business in the micro, SMEs, and global corporation strata reveals how the odds are stacked against SMEs in terms of turnover relative to the important position they occupy in the economic scheme of things. Hence, there’s an incredibly strong reason to ensure the sustainable survival of SMEs in an increasingly competitive business climate.

Interestingly, SMEs can compete effectively against bigger brands by leveraging their size to use proactive supply management systems. Supply management solutions can deliver new levels of efficiency by optimizing product lead times or ensuring minimum stock levels. Optimization in supply chain can help reduce cost, eliminate wastage, and ensure increased customer satisfaction. This piece provides insight into the current challenges with supply chain management for SMEs and how Blockchain technology might be a disruptive solution.

Supply chain problems facing SMEs
Supply chain management systems can level the competitive landscape for SMEs and bigger corporations. According to a LLamasoft study (see chart below), about 91% of customers using SCM have reported 31% efficiency in their overcall costs. Specifically, they had 8% savings on inventory costs, 19% savings on production costs, and 13% savings on transportation costs.

However, the current supply management systems are somewhat incapable of delivering the proactive efficiency needed in today’s fast-paced business environment. Firstly, many of the supply chain systems in the market are custom built for large corporations to manage their sourcing logistics, and distributions. SMEs often have a hard time using the same systems because they are costly or sometimes unsuited for their smaller supply chain operations. SME often find themselves locked out of the benefits that supply chain management systems provide. Without an effective supply management system SMEs will find it increasingly difficult to;

• achieve supply chain visibility
• control costs, especially those related to transportation
• identify and mitigate logistics risks
• build and maintain vibrant supplier and partner relationships
• meet high customer-service expectations.

Another challenge with the current nature of supply chain management (especially in retail) is that consumers have no way to monitor the pre-delivery stages of their orders. Consumers are increasingly health, eco, and socio-political conscious – consumers want to be sure that their food products have not been in contact with toxic insecticides, they want to be sure that they are not buying cloths made in sweatshops with child labor, and they want to be sure that their purchase is not inadvertently funding terrorism.

Blockchain solution for supply chains

TEMCO
Blockchain technology has introduced an unprecedented level of disruption across industries, markets, and economies. As the mass-market adoption of Blockchain technology continues to take shape gradually, you can reasonably expect the business environment to experience some of this disruption. TEMCO is a blockchain-powered project that wants to solve some of inherent problems in the supply chain management ecosystem.

TEMCO is developing a supply chain data platform based on RSK blockchain – this is the same blockchain that powers Bitcoin. Using blockchain technology, TEMCO connects isolated supply chain systems to provide improved data services. Companies get to utilize its BI (Business Intelligence) Tool is gain business insights while consumers can use an app to track supply chain data in real time on an online market platform facilitated with a cryptocurrency payment system.

IBM Blockchain
Blockchain technology can make a difference in supply chain management and IBM has been promoting this narrative over the last couple of years with its IBM Blockchain for supply chain platform.

IBM Blockchain provides comprehensive insight on supply chain management with a focus on logistics. IBM is particularly interested in ensuring traceability and transparency in logistics and supply chain management. The firm boasts that its blockchain can optimize business transactions and trading relationships with robustly secure, global business networks.

Will Blockchain survive the downtrend in crypto? Over the last several months, Blockchain-powered projects and ICOs in general have suffered a great deal of criticism, vilification, and outright disdain as cryptocurrencies suffered a harsh bear market. The huge losses suffered by cryptocurrencies and negative fallout that Blockchain projects suffered is enough to force people to rethink investments in the industry.

However, Asian VC firms have ignored the general air of pessimism in the market. KIP, a South Korean VC firm has invested in TEMCO and its potential to disrupt the supply chain management industry, and that's just one example.  These VC investments at a period when all other crypto investors are scampering for the exits furthermore passes a vote of confidence in TEMCO’s potential to alter the narrative for the supply chain industry.