Graham Parker is the CEO and Co-Founder of Gravity Supply Chain Solutions Ltd. Headquartered in Hong Kong, Gravity is a cloud-based SaaS "real-time" b2b, Supply Chain Visibility & Execution Platform. This month Finance Monthly speaks to Graham about the company’s beginnings, growth period and vision for the next few years.
How did the idea about Gravity come about?
Gravity came about borne out of frustration and an obvious gap in the market. Logistics and Supply Chain Physical processes had and continue to evolve extensively; however, there was no one system giving a real-time view. The bigger the supply chain, the more bolt-on systems were required and ultimately - spreadsheet reporting. Many proclaim to do this and do that, but the reality was they simply didn't, and certainly not across the entire critical path. Darren Palfrey (Co-Founder and COO) and I decided to address the problem and this is how we started Gravity.
What have you managed to achieve with the company so far?
Gravity is now moving from a beta to full execution status with a number of successful POC's and fully deployed clients on board. We now have/are moving towards having contracts with some very large logistics providers, FMCG & CPG clients and Manufacturing companies, some of which are significant within their industry. We have an aggressive but achievable growth period, sustainable by the work we have put into building out a robust and scalable backend over the past three years. In essence, we are good to go, "concept to commerce" and the adoption rate is growing.
What are the key challenges that you’ve been faced with in the past 12 months?
Managing people’s expectations and keeping true to our core values. For example, when you initially start, everyone wants a little something extra. The danger is that you try to please everybody, all of the time. The challenge is not that you won't build these elements, it's just keeping the development teams focused and build to scope. Being able to say ‘no, not at this point’, however this is or will be planned into the next phase of development. From start-up, through scaling into Beta and execution, you have to remain focused. We also have a very loyal and keen investor base, who have been very patient and supportive, however, we are mindful that the business needs to move forward in line with our forecasts and projections. To date, we have raised circa US$8.5m and have hit/excelled every milestone along the way, including our MRR projections.
What is your vision for Gravity? Where do you see the firm in 3 years?
We intend to dominate the supply chain visibility space. We are a supply chain tech company providing "real-time" solutions for the supply chain industry built by supply chain users and industry experts. Gravity will push the boundaries and expectations for supply chain executives, the overall opportunity is endless and we will certainly evolve into for more than just the SCM visibility sector. We have a strong vision, growth plan and roadmap, plus a lot of future ideas will come from our clients as they evolve and use the platform.
Tell us a bit about your role within the company – what are your main responsibilities?
I'm focusing primarily on growth, customer adoption and business partnerships/collaboration. I also lead the BOD's and represent the interests of our investor base. We are a lean but fast growing team, and individually we all kind of jump in and help out where required. What we are good at is airing ideas, opinions and suggestions relating to product or approach. Key to this is the people, so making sure there is a good balance and allowing them to be creative, at the end of the day it's all about execution, experience and usability so I ensure we remain focused on the team and the business.
For more information, please email: hello@gravitysupplychain.com
Following the recent disasters that hit the US mainland, Finance Monthly reached out to Nalanda Matia, Lead Economist at Dun & Bradstreet, to gather thoughts on the overall impact felt by supply chains throughout the various industries, regions and markets.
Mother Nature hasn’t been kind to the United States in the past month or so; Hurricane Harvey left a trail of destruction on several counties in Texas, while Hurricane Irma devastated parts of the Sunshine State, most notably The Keys. The stormy season doesn’t look like it will abate anytime soon. The market impacts of these natural disasters are significant, particularly on densely populated and urban cities.
While the financial repercussions of Irma are still being counted, let’s take a closer look at the impact of Harvey, including affected industries, the supply chain and the future outlook of the affected areas.
Impacted industries
Early estimates have placed the impact of Category 4 Hurricane Harvey at around $75 billion, with losses from insured and uninsured residential and commercial properties making up the majority. With the addition of other costs associated with business interruptions, lapses in employment gains, and additional flooding or damage to contents of the properties, the toll could be much higher.
The top industries in the state with the largest number of jobs that have been potentially impacted by the hurricane are services; manufacturing; wholesale and retail trade; mining; construction; finance, insurance, & real estate and agriculture, forestry & fishing.
Supply chain concerns
The disruption in energy exports and other supply chain activities as ports in the state remained closed to vessel traffic until floodwater damage was assessed affected consumers and trade, creating build-ups and delays.
Many industry supply chains will take a hit as the transportation industry looks to get business back to normal. The Houston area in particular accommodates several major airports with flights to more than 70 international destinations. With some of these airports closed for a few days, the air transportation sector faced considerable backlog that they’re still coping with today.
Waterborne transportation is also in crisis due to the closure for several days of all major ports in the Houston and Corpus Christi areas. Large container ships headed to Houston to load cargo were stranded or diverted to nearby ports to wait out the storm and port closures. This caused severe supply chain disruptions in both parts of the United States and internationally. Based on the diverse nature of cargo that goes through the Houston area ports, the supply chain interruptions were not just limited to energy or chemicals, but extended to other commodities, such as agricultural products.
Business and economic impact
The parts of the United States affected by Hurricane Harvey have relatively high populations and are economically developed areas, which has contributed to high economic losses, perhaps one of the highest economic costs incurred due to a natural disaster in the US. With thousands of businesses and their employees stricken, the economic outlook for the region as a whole is expected to be lacklustre, but this prognosis may be true only in the short term.
Looking more closely at what businesses were affected, the vast majority were micro and small businesses with fewer than 10 and fewer than 100 employees, respectively. Also, close to 40% of the affected businesses are fairly young – within the first five years of their life cycles.
According to our estimates, the county of Harris, TX seems to have undergone the maximum disruption as far as the number of affected businesses are concerned. The county contains more than 60% of the businesses that have been declared at risk.
What to expect from Irma
While Irma seems to have been a slightly stronger storm in terms of wind, its financial impacts – without diminishing its severity – might be slightly less than Hurricane Harvey’s. Dun & Bradstreet estimates over two million businesses to have been in the monster hurricane’s path. This includes 49 counties in FL, three in Georgia, four in PR and two in Virginia that have been declared as disaster regions by FEMA.
Early estimates regarding these businesses are that nearly 60% of the jobs affected are in Services and Retail – with the affected regions in scenic and tourist-frequented areas. Pre-Irma, about 12% of the businesses located in the path of the storm were in the riskiest class of the Dun & Bradstreet Delinquency Predictor score. Because of the hurricane, these businesses, which were already at risk of becoming severely delinquent, will have an increasingly difficult time meeting their obligations.
Early estimates put the damage from Hurricane Irma in Florida and the surrounding areas at closer to $50bn, but the exact number is hard to predict exactly at this stage. As the southern coastal states count the cost of these disasters, we envisage a number of months until all services, transportation systems, supply chains and the economy are back to normal.
Although these current disasters are not expected to leave a permanent imprint on the economy of the United States, the immediate consequences of these increasingly frequent events cannot be ignored.
Here Kevin Wilbur, Senior Vice President of AP Automation at Tungsten discusses with Finance Monthly the practicalities of implementing new technologies in supply chains.
Trust in business is more vital than ever today. At a very basic level, it underpins what is required to agree employment contracts, retain customers and grow a business. However, when it comes to monetary transactions for the exchange of goods and services, trust is even more crucial.
Unfortunately, even when payment terms have been set and assets exchanged, trust can often be undermined. A delayed payment from a buyer is something many suppliers will have experienced, resulting in unnecessary stress and a loss of confidence in the trading relationship. Equally, supplier challenges, where data security is compromised or orders are not fulfilled, can cause headaches for buyers.
Certain sectors face greater supplier risk than others, making it even more important to ensure they have a robust supply chain. Finance businesses in particular hold a vast amount of sensitive data, so the ramifications of poor supplier service can be significant.
Widespread supply chain failures
Worryingly, our research shows that 84% of businesses have suffered from supply chain failures such as these. The biggest supplier risks were found to be security (ensuring data security and privacy standards) and information risk (accuracy, timeliness, and security of information exchanged with suppliers).
These risks or failures can have a huge financial impact, with 30% of firms reporting a loss in revenue or business partners. In addition, 22% of buyers said they faced higher insurance premiums, damaged reputation, a loss of customer trust, and/or significant legal and regulatory fines as a consequence of supply chain failures.
Many of these breakdowns in the supply chain arise from poor supplier management processes. Regrettably suppliers are often managed on an ad hoc basis with no consistency and very little attempt made to track and monitor spend. In many supply chains the sheer volume of suppliers involved means that it can be hard to stay on top of each relationship, and with the added pressures of cyber fraud, siloed customer data, insufficient cash for investment, and legacy technology systems, there are often layers of overlapping bureaucracy and confusion.
Managing and monitoring
To manage suppliers effectively and efficiently, supplier-related processes should be measured. From there buyers are able to optimise processes, which in turn enables automation. However, only 23% of buyers in our study achieved this level of maturity, and just 12% had optimised processes.
Buyers who describe themselves as having good supplier relationships have taken the time to map supplier activity, to establish a clear onboarding process, and to define a strategy that not only makes supplier management a priority, but also establishes responsibility between themselves and the suppliers they work with. Optimised firms ensure compliance with regulations and corporate social responsibility (CSR) standards by constantly monitoring their suppliers.
Low process maturity, revealed in more than a third of businesses (35%), can lead to poor sourcing decisions, because buyers lack high-quality, up-to-date information about suppliers’ past performance when awarding new contracts.
Technology that transforms
The research, which was conducted by Forrester Consulting on behalf of Tungsten Network, concludes that for businesses to thrive, they need to be properly managed using modern tools and processes that establish accountability, reduce uncertainty, and foster trust. This in turn enables the exploration of mutual growth opportunities for both buyers and suppliers.
Increasingly sophisticated technology exists that can genuinely strengthen supply chain relationships. For example, through a secure e-invoicing platform such as Tungsten Network, buyers and suppliers can have clear visibility on whether an invoice has been received and approved, and when payment is due. This means businesses have a single source of truth for invoice status information, which is monitored in real time. It can also help remove manual processes around invoice validation and compliance. This is a good example of where technology is enabling growth across the board, through developing trust in business relationships.
Often networks such as this provide value-added services that can serve as a source of competitive advantage. For example, through analysis of the real-time data generated from end-to-end e-invoicing capabilities, decision makers can more effectively predict demand and manage disruptions. Buyers and suppliers of all sizes can also find each other more easily and can build capabilities that benefit them both. They can also experiment with managing cash in new ways, such as by negotiating more flexible payment options like dynamic discounting and invoice financing.
The winners in the digital age will be the companies that best use technology to win, serve, and retain customers, and to enhance relationships throughout the supply chain. Technology can enable buyers and suppliers to more effectively use their data and manage their interactions, removing friction from the supply chain and strengthening trust, to the mutual benefit of all.
Lack of trust and transparency as a result of ideological and military conflicts are undermining the international supply chains linking the world, according to the Q1 2017 CIPS Risk Index, powered by Dun & Bradstreet. Prolonged conflict is creating supply chain no-go areas, cutting off local businesses and consumers from global markets and potentially causing a scarcity of goods.
Military conflict
The conflict between Ukraine and separatist rebels in the east of the country continued to hinder both physical and digital supply chains this quarter. A power cut in Kiev in December 2016 is now widely believed to have been the result of a cyber-attack, while in March, Ukraine suspended all cargo from entering separatist-held territory. Despite this, Eastern Europe and Central Asia only contributed 7.6% of global supply chain risk this quarter, down from 8.5% in Q4 2016. The change is the result of an update to the trade weightings used in the Index as the fall in commodity prices has reduced the importance of the region's trade flows in global supply chains. Businesses have been busy re-routing supply chains away from the conflict area, while sanctions have discouraged businesses from dealing with Russia. This process has accelerated as a result of persistently low commodity prices which have seen the value of the region's exports fall.
Civil wars in Iraq, Libya, Syria and Yemen are also disrupting traditional land-based supply chains across the Middle East, curtailing the flow of goods from Jordan and Lebanon through Syria and Iraq, and in North Africa between Egypt, Tunisia and Algeria. The conflicts look likely to continue disrupting supply chains beyond 2017. As with Eastern Europe, international supply chains have largely insulated themselves from the Middle East. The region's trade weighting has been updated following the collapse in oil prices which reduced the value of trade flows from the Middle East, lessening its importance in the global supply chain. The region therefore contributed just 7.9% of global supply chain risk in Q1 2017, down from 9% last quarter.
Ideological conflict
Q1 2017 has also seen an escalation in the ideological conflict between globalisation and economic nationalism, with the British Prime Minister, Theresa May's, visit to the White House in January 2017 symbolic of the shift in emphasis from multilateral to bilateral trade deals. Despite President Donald Trump's decision not to pull out of the North American Free Trade Agreement (NAFTA) in April 2017, the future trading relationship between Canada, Mexico and the USA remains uncertain. As a result, North America's contribution to global supply chain risk rose from 8.1% in Q4 2016 to 8.6% in Q1 2017.
In France, Marine Le Pen's advance to the second round of the presidential election raised serious concerns for businesses with supply chains in the region. The failed candidate had promised to close French borders immediately, abandon free-trade deals, tax businesses with foreign employees and leave the European Union. Collectively these measures could have significantly hindered businesses that rely on French suppliers. The election of President Emmanuel Macron should dissipate these fears.
Elsewhere in Europe, the ideal of a borderless Europe looks increasingly secure. Whether Chancellor Angela Merkel, or her opponent Martin Schulz succeeds in Germany's parliamentary elections, the German government looks likely to retain a pro-EU outlook. Although temporary border controls have been extended in Germany and Sweden, they look likely to be abolished by the end of the year, helping to reduce delays at these crucial supply chain interchanges.
In China, meanwhile, exchange controls implemented in November 2016 have prevented foreign businesses from transferring cash outside of the country. The rules prevent overseas acquisitions of more than USD10bn and require banks to keep net cross-border Renminbi transfers balanced. The controls make routine activity such as royalty payments difficult and pose a significant risk to businesses with supply chains in the region.
National disruption
Localised conflicts have affected local supply chains in Q1 2017. In Chile a six week strike ending on 24th March at La Escondida copper mine reduced global copper capacity by 5%. Terrorism also remains a risk for businesses working with suppliers in Chile. Fires destroying 238,000 hectares of forest are widely thought to have been caused deliberately, while a spate of bombings have continued in the capital, Santiago. Latin America's contribution to global supply chain risk has dropped however, from 7.5% in Q4 2016 to 7.15% in Q1 2017. The reduction is the result of falling commodity prices which have considerably reduced the value of the region's exports to the rest of the world.
The Indian Government's unexpected decision to withdraw 86% of the country's cash as part of a crackdown on the use of counterfeit money has left businesses struggling to pay suppliers and workers. Combined with prolonged congestion at major Indian ports, India has helped to push global supply chain risk upwards. Asia Pacific contributed 37.4% of supply chain risk in Q1 2017, up from 33% at the end of 2016. In the long-term, however, progress continues to be made to create a nationwide Indian customs union which would see local tariffs abolished and encourage investment in supply chain infrastructure across the country.
John Glen, CIPS Economist and Director of the Centre for Customised Executive Development at The Cranfield School of Management, said: "Supply chains are a shared resource between consumers, businesses and governments, with procurement and supply chain managers acting as the guardians. When these links are effective, businesses can benefit from lower prices, consumers from better choice and society from greater knowledge sharing. It is therefore crucial they are protected, made resilient and as effective as possible, particularly when faced with a barrage of challenges."
"Supply chain infrastructure can only function normally and efficiently when there is trust and collaboration between all nationalities and sections of society. Whether through military confrontation in the Middle East or political schism in Britain, supply chain infrastructure is one of the first casualties of conflict and the results can be devastating."
Bodhi Ganguli, Lead Economist, Dun & Bradstreet: "The improvement in the Global Risk Index (GRI) affirms that after a rather torrid start to the year, the global economy is settling down. The growth outlook is brightening, headwinds are diminishing, and forecasts generally point to better outcomes than we had expected a year ago. Yet, underlying this feel-good momentum, the global economy continues to face risks, both systemic and exogenous, that could flare up. From the fanning of protectionist inclinations by the rise of right-wing populism, to a one-off hit to supply chains from North Korean aggression, global supply chains and cross-border business strategies must remain cognisant of these risks, while utilising data and insights to take advantage of the opportunities created by the rising tide of global growth."
(Source: Dun & Bradstreet)
The life of the Pacific Salmon is an uphill battle. After years spent at sea, every mature salmon must return to the place where it was born to spawn, and make the arduous journey upstream to get there. Here Alessandro Evangelisti, Finance & Supply Chain Evangelist at Oracle explains to Finance Monthly that in business, the value stream perspective can be beneficial, but weak links are a risk.
As impressive as the physical challenge it faces is the salmon’s innate understanding of exactly how much energy it needs to clear each obstacle along the way while saving enough to finish the journey.
The modern business’ aspirations are not quite as singular as those of a spawning salmon, but there is a lesson to be learned here: efficiencies are found in processes, not in outcomes, and they add up to major gains in the long run.
If a salmon used all its energy at each obstacle, the upstream journey would be too tiring and fewer fish would make it. Similarly, a company that devotes resources to inefficient processes will see its bottom line shrink and jeopardise its future success.
Navigating the value stream
Companies have traditionally built their cost-allocating approach around their products and specific outcomes. However, this driver-based expenditure only allows them to redistribute costs between processes, giving them little hope of uncovering new efficiencies.
This is the same thinking that scares companies into divesting themselves of new product lines even if they show genuine promise, or of holding back on R&D and innovation.
A better approach is to for companies to organise themselves around value streams, which allows them to follow the flow of expenditure throughout their processes and uncover new opportunities for savings.
This is not easy an easy shift. Many CFOs have made their career out of traditional cost allocation, and shaking things up will be as culturally challenging as it is a logistically difficult.
For inspiration, finance leaders can look to supply chain and operations managers, who have adopted value-stream costing because it forces them to focus on productivity, which is key to their success.
Turning to telecoms, Orange France has taken a value-stream approach to managing supplier invoices and preparing financial profitability reports, which has allowed it to spot and clear bottlenecks in these processes. As a result, Orange’s finance, procurement and operations teams have never worked together more closely and deliver better results for customers, all at lower cost.
Three steps for a smooth j upstream journey
The transition to value stream-based costing cannot happen overnight, nor should it. The whole company first needs to be aligned in its approach, and data needs to flow freely between departments if costing is to remain consistent.
What follows are three steps to guide businesses along the way:
Step 1: Know your customers
Knowing what constitutes value for customers puts businesses in the best position to work backwards and develop processes that deliver on peoples’ expectations. From marketing, to warehousing and shipping to manufacturing, each leg of the value stream will be developed with the same focus.
Step 2: Always address the weakest link
Any chain of processes is only as strong as its weakest link. By spotting bottlenecks early in the game, companies can then build systems designed to avoid these. To gain the necessary visibility, businesses require a granular view of their data and of how processes are working together.
This approach has helped some supply chain organisations achieve 20% gains in year-on year productivity.
Step 3: Go digital
It’s no secret digital processes are easier and faster to manage. They can also be automated to help the entire business work faster. With new data from IoT sensors and increasingly automated processes at their disposal, value stream managers have more information than ever to help them overcome any obstacle.
Value begins and ends with finance
In essence, value stream mapping is a form of supply chain segmentation applied to the entire business. As the organisation’s “data impresario” the CFO sits at the centre of its value stream approach.
CFOs therefore need to a close-up view of process data from each line of business. Equally, they need a system that ensures consistent data across every value stream – the disparate systems many companies still use make it almost impossible to scrutinise processes side-by-side. Value stream costing is ultimately about teasing new efficiencies out from processes across the businesses, so a complex system that only allows for a piece-meal approach to change defeats the purpose.
Thinking back to the Pacific Salmon’s uphill battle, the difference between life and death can be a matter of centimetres and relies on how much energy a fish has stored to clear each obstacle (in addition to some luck). In a large business, even the simplest tweak to a manufacturing bottleneck can elevate a product from cost-centre to game-changer. Organisations simply need the strategies, people and infrastructure to spot and clear these hurdles on their way to growth.
