The days of “just-in-time” supply chain management will end in 2022 with FinTech start-ups perfectly poised to tap this space as global trade is reset amid the Ukraine war, Covid-19 and climate change demands.
David Hansom, partner, global procurement at law firm Clyde & Co, told delegates at the Trade & FinTech forum hosted by the Arab-British Chamber of Commerce in London, that supply chain models as we know them will change from this year.
“From a geopolitical perspective, there are very real threats to the just-in-time supply chain,” Mr Hansom said. And this year will mark the end of businesses ordering goods that arrive days later to fulfil an order, he said.
This is not simply because of the Russian invasion of Ukraine but also the increasing physical, financial and non-financial barriers creeping into the market from sanctions, to the fallout from the Covid-19 pandemic, soaring shipping costs, tighter regulation and the complications of Brexit, he said.
“There are obviously a range of new sanctions. Those sanctions, whether we like it or not, impact on the trade we all do. There's the risk of blocked trade routes and the risk of deliveries being delayed,” Mr Hansom said.
However, Brexit and the imposition of financial barriers to trade are also having an effect, he said, despite new trade deals being introduced in the UK, many of which are a “copy and paste” of the exiting deals the EU has in place.
“In the absence of a trade agreement, new barriers are imposed [with] limitations on how much can be imported; limitations on when it can be imported and through what channels and the taxes that apply,” Mr Hansom said.
As a result, the just-in-time model, first adopted by goods and services producers across globe in the 1950s, could be coming to an end.
The concept came into play when Toyota engineer Taachi Ohno saw the model as a way of eliminating “waste” in the production and movement of goods.
Instead of wasting time, labour and money by storing key components in warehouses or next to assembly lines, Ohno’s idea required suppliers to only deliver what was needed – reducing the need for businesses to spend on maintaining inventories.
Fast forward to the modern day and every supplier is expected to deliver products promptly to the next buyer in the supply chain – an increasingly challenging prospect over the past two years after the Covid-19 pandemic hammered the global economy and closed factories and businesses.
While consumers are continuing to spend, shrugging off rising inflation, the just-in-time world is becoming increasingly prone to crisis as businesses grapple with the Ukraine war, rising fuel prices and escalating shipping rates.
As a result, retailers, anxious to ensure they are not again caught up in delays, are building up inventories to meet expected spells of peak demand, juggling "just in time” and “just in case” inventory management.
Add the heightened scrutiny on the environmental effects of supply chains, as well as ethical sourcing, and it is easy to see why the supply chain models of today will have to change.
“So, is it sustainable to fly beef from Australia? Is it sustainable to produce 80 per cent of the world's lithium from one country, against the backdrop of the electric vehicle?” Mr Hansom said.
'Bright future for FinTech'
With rising inflation – set to hit double digits in the UK this year – also posing a challenge, companies will increasingly need to adopt FinTech as a way of revolutionising the supply chain.
“Supply chains should be robust, sustainable and set up for success,” Mr Hansom said.
“That means that you've got people working together to drive change to deal with global problems head on ... and FinTech in all of its many guises is perfectly placed to tick all three of those boxes.”
With about 26,000 FinTech businesses operating globally employing 500,000 people, and 30 per cent of retail customers in banking using at least one service from a non-traditional bank provider, the future for FinTech is bright, said Mr Hansom.
Clyde & Co’s blockchain consultancy, for example, is already writing contracts for the shipping industry that are automated, a move that stops people making decisions about when payments are due or when an insurance premium charge can be refunded.
An example of this is the insurance premiums for cargo ships travelling to more dangerous waters where they are at risk of piracy.
Internet of Things' sensors report back to the insurer and the premium goes up for the duration of that part of the journey in which danger lurks, rather than for the entire crossing.
With more scrutiny on corporate social responsibility, and improvements needed in the audit trail and accountability of supply chains, Mr Hansom predicts “a real growth market in ethical contracting”.
“In the next five to 10 years, I see the trust that can build into supply chains through blockchain, through the use of distributed ledger technology," he said.
"This has been absolutely transformational, in the context of driving up trust, driving up security, speeding up supply chains and derisking transactions.”
With customers looking at how a business approaches technology and its compliance with best practices globally, as well as decarbonisation, Mr Hansom said there is so much scope to use technology to drive down carbon production and to improve supply chain flows.
"The market is ready for those bright ideas, ready for those seed funders, ready for those start-ups, ready for those investors to have a good idea and to run with it," he said.
GAC GS8 Specs
Engine: 2.0-litre 4cyl turbo
Power: 248hp at 5,200rpm
Torque: 400Nm at 1,750-4,000rpm
Transmission: 8-speed auto
Fuel consumption: 9.1L/100km
On sale: Now
Price: From Dh149,900
The specs: 2018 Mazda CX-5
Price, base / as tested: Dh89,000 / Dh130,000
Engine: 2.5-litre four-cylinder
Power: 188hp @ 6,000rpm
Torque: 251Nm @ 4,000rpm
Transmission: Six-speed automatic
Fuel consumption, combined: 7.1L / 100km
Emergency
Director: Kangana Ranaut
Stars: Kangana Ranaut, Anupam Kher, Shreyas Talpade, Milind Soman, Mahima Chaudhry
Rating: 2/5
The specs
Engine: 6.2-litre V8
Transmission: ten-speed
Power: 420bhp
Torque: 624Nm
Price: Dh325,125
On sale: Now
2024%20Dubai%20Marathon%20Results
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How to watch Ireland v Pakistan in UAE
When: The one-off Test starts on Friday, May 11
What time: Each day’s play is scheduled to start at 2pm UAE time.
TV: The match will be broadcast on OSN Sports Cricket HD. Subscribers to the channel can also stream the action live on OSN Play.
Joker: Folie a Deux
Starring: Joaquin Phoenix, Lady Gaga, Brendan Gleeson
Director: Todd Phillips
Rating: 2/5
COMPANY%20PROFILE
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What vitamins do we know are beneficial for living in the UAE
Vitamin D: Highly relevant in the UAE due to limited sun exposure; supports bone health, immunity and mood.
Vitamin B12: Important for nerve health and energy production, especially for vegetarians, vegans and individuals with absorption issues.
Iron: Useful only when deficiency or anaemia is confirmed; helps reduce fatigue and support immunity.
Omega-3 (EPA/DHA): Supports heart health and reduces inflammation, especially for those who consume little fish.
UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
The Prison Letters of Nelson Mandela
Edited by Sahm Venter
Published by Liveright
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Nepotism is the name of the game
Salman Khan’s father, Salim Khan, is one of Bollywood’s most legendary screenwriters. Through his partnership with co-writer Javed Akhtar, Salim is credited with having paved the path for the Indian film industry’s blockbuster format in the 1970s. Something his son now rules the roost of. More importantly, the Salim-Javed duo also created the persona of the “angry young man” for Bollywood megastar Amitabh Bachchan in the 1970s, reflecting the angst of the average Indian. In choosing to be the ordinary man’s “hero” as opposed to a thespian in new Bollywood, Salman Khan remains tightly linked to his father’s oeuvre. Thanks dad.
White hydrogen: Naturally occurring hydrogen
Chromite: Hard, metallic mineral containing iron oxide and chromium oxide
Ultramafic rocks: Dark-coloured rocks rich in magnesium or iron with very low silica content
Ophiolite: A section of the earth’s crust, which is oceanic in nature that has since been uplifted and exposed on land
Olivine: A commonly occurring magnesium iron silicate mineral that derives its name for its olive-green yellow-green colour
Desert Warrior
Starring: Anthony Mackie, Aiysha Hart, Ben Kingsley
Director: Rupert Wyatt
Rating: 3/5
Profile of Bitex UAE
Date of launch: November 2018
Founder: Monark Modi
Based: Business Bay, Dubai
Sector: Financial services
Size: Eight employees
Investors: Self-funded to date with $1m of personal savings
The biog
Favourite food: Tabbouleh, greek salad and sushi
Favourite TV show: That 70s Show
Favourite animal: Ferrets, they are smart, sensitive, playful and loving
Favourite holiday destination: Seychelles, my resolution for 2020 is to visit as many spiritual retreats and animal shelters across the world as I can
Name of first pet: Eddy, a Persian cat that showed up at our home
Favourite dog breed: I love them all - if I had to pick Yorkshire terrier for small dogs and St Bernard's for big
Monster
Directed by: Anthony Mandler
Starring: Kelvin Harrison Jr., John David Washington
3/5
MOUNTAINHEAD REVIEW
Starring: Ramy Youssef, Steve Carell, Jason Schwartzman
Director: Jesse Armstrong
Rating: 3.5/5
Other workplace saving schemes
- The UAE government announced a retirement savings plan for private and free zone sector employees in 2023.
- Dubai’s savings retirement scheme for foreign employees working in the emirate’s government and public sector came into effect in 2022.
- National Bonds unveiled a Golden Pension Scheme in 2022 to help private-sector foreign employees with their financial planning.
- In April 2021, Hayah Insurance unveiled a workplace savings plan to help UAE employees save for their retirement.
- Lunate, an Abu Dhabi-based investment manager, has launched a fund that will allow UAE private companies to offer employees investment returns on end-of-service benefits.
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
