Modern business is broken. Instead of automating things, innovating new technology and pushing things forward, too often it relies on throwing muscle at a problem with laborious manual processes rooted in the old methods.
Just look at the supply chain finance strategy suggested by Downing Street this week.
The good news: the underlying idea is sound. 38 giant enterprises including Vodafone, GSK and Diageo will now notify a small company’s bank as soon as they have approved an invoice, unlocking the ability to provide an early advance of the funds at a low interest rate.
Sounds good, right? Except for one thing - one word in fact: scheme.
The Government has created a single purpose, manual channel that it hopes to build by convincing enterprises, one by one, to get on board. And to do so alongside all their other complicated processes, with no mention of integration and actually little in the way of incentive other than “it will stop smaller businesses in your supply chain going bust.”
There’s one thing they do get right though -- supply chain finance is a function based on data signals. In this case, the signal sent when one company confirms its intention to pay another. What’s missing is one vital question: where is that signal already being sent today and how can you hook that up to the system?
We don’t need another scheme in isolation -- another protocol, governed and abstract that exists by itself and within the supervision of the already increasingly anachronistic institution of the banks.
We need a platform that hosts and manages all business data like this, making it available to any apps or smart innovations that each company chooses to use it within. Put in place the ability for a company to finally benefit from the data generated by its interactions and such a possibility could cultivate a whole system of new business scenarios.
And all this is with our the Government needing to do anything, freeing it up to concentrate on scenarios like the recent announcement of Sainsburys actually extending the time it’s going to take to pay its suppliers.
As ever, technology can execute this plan faster, more efficiently and with potential outside anything the limited remit of a public sector scheme may offer. And it’s already out there and available today.
If Cameron wanted to make a real improvement here, technology has already beaten him to the punch with more ambition and scale. How long does the Government want to play catch up instead of truly paving the way for the possibilities that the private sector is already imagining?
Posted by Christian Lanng, CEO, Tradeshift
Christian Lanng is one of the co-founders of Tradeshift, a platform for all your business interactions that helps companies run more efficiently by harnessing the power of their network to create new value from old processes like invoicing, payments and workflow.