Supply chain digitization: Change is in the air
Read more: Fragility in the just-in-time global supply chain
“As a result of this digitization, there is much more data available, creating more opportunities for financial and insurance services to interject in a moment of need,” he said. “It’s really starting to foster the interconnectedness between these ecosystems and platform-based supply chain programs.”
The COVID-19 pandemic truly exposed how fragile certain aspects of the supply chain can be. Understanding where technology can help smooth out some processes could help relieve the stress ensured over the past two years.
Lindstrom noted that a big pain point when it comes to digitizing the supply chain is the number of intermediary bodies that are involved.
“From moving cargo to expecting it, there are roles within that process such as forwarders, carriers, customs agencies, and brokers that are all involved,” he explained. “Whether it’s cargo insurance, credit insurance, or bonds for customer duties, aligning all the payers becomes essential in digital efforts.”
Lindstrom said there is now an opportunity for the insurance industry to change some primary features of a distribution model. As a cargo insurance client matures and its volume of business increases, technology can help build a more comprehensive policy that reflects that growth.
The insurance industry, specifically carriers, need to be looking at how to integrate and exchange data seamlessly with all the different parties involved along the supply chain, and Lindstrom noted that as API capabilities become more robust, that exchange of data will be much more efficient and accurate.
“As we build our internal API infrastructure, it becomes very easy to change endpoints, whether it’s traditional APIs or distributed ledger technology,” he continued. “Both of those technologies rely on everyone in the supply chain having access to the same technology.”
Updating internal systems to API-based products and services allows external API innovation, and enables intermediary partners and clients to access real-time information in a secure manner.
“Data transfer is where we see a lot of delays coming about, such as waiting for proof of insurance or a bill of landing,” he said. “All of those things can slow down the movement of goods and services.”
Data is also helping underwriters to assess risk across the supply chain. Lindstrom said there are numerous facets where it can be beneficial.
“There are obvious financial risks, which is our area of expertise when assessing the credit worthiness of all those players – how delays at a port may affect billing down the supply chain, or the movement of cash up the supply chain,” Lindstrom emphasized. “It’s extremely interesting to look at how much data is available and the non-traditional ways it can be applied to underwriting.
Read next: Which technologies bring the most value to the industry supply chain?
“Another area that is becoming increasingly important, especially to the end consumer, is ESG data that can flow through those supply chains,” he added. “Understanding who is producing what components and where they are being sourced from will be a focus for most carriers moving forward.”
With data that was not previously accessed, a more holistic view of the entire supply chain is becoming a reality.
“We can now see where a specific client has strengths or weaknesses, and it is done with a higher degree of certainty with the use of data,” said Lindstrom. “A growth opportunity for most lines of coverage is the ability to provide your services at the moment of need, and that’s something that digitization really provides for that we’ve never seen in the analog world.”
