Reimagining
resilience
Connections Light
50 ptfortomorrow’s supply chains
Character style Conn Reg 18 pt

Against an unpredictable backdrop, forging supply chains robust enough to thrive requires a strategic rethink ofconventional practices. Achieving this means fostering greater collaboration, harnessing data-driven insights andembedding sustainability considerations throughout the entire ecosystem.
In an era marked by increasing uncertainty, organizations worldwide findthemselves caught in a continuous cycle of adaptation and reaction. The
key to breaking free from this often costly and inefficient pattern lies inenhancing supply chain resilience — a journey that requires a shift from areactive to a predictive stance.
“Today’s business climate — characterized by inflation, supply chain
disruption, and escalating social and environmental expectations — iscompelling organizations to rethink their supply chain strategies,” says
Kaylee Karumanchi, North American trade product head at Bank of America.
“When organizations account for risk, they try to identify it, quantify it
and be prepared for it. But as the pandemic showed us, you can’t predict
every shock. A knee-jerk reaction to crises can often amplify their impact,
and since there isn’t a one-size-fits-all response, the key lies in building in
inherent flexibility to empower teams to strategize on the fly.”

Predictive versus reactive: a new paradigm
for supply chain management
A common response to uncertainty is risk aversion — stockpiling raw
materials, reshoring or diversifying supply bases. However, these strategies

bank of america article

are often challenging to the balance sheet, casting a shadow over theirlong-term sustainability.
“Reshoring might be an option to reduce transportation costs and offer
greater control, but the process can be time-consuming and fraught with
unforeseen issues, especially when organizations lack the experience,” says
Karumanchi. “Locating a new supplier can also require significant resources,
but many times procurement teams find there are no alternative options
due to suppliers owning proprietary technology or the next best option
being too costly. Meanwhile, increasing inventory can tie up crucial working
capital that could otherwise be used for growth.”
As pressure builds on corporate treasurers to improve cash control andshore up the balance sheet, short-term tactical actions such as lengthening
days payables outstanding are an obvious lever to pull, but doing so risks
stretching already vulnerable supply chain partners.
“While safeguarding one’s own financial health is paramount, doing so
at the expense of suppliers can ultimately be counterproductive,” says
Karumanchi. “Striking a balance is vital. Overly squeezing suppliers canjeopardize their financial stability and, in the long run, potentially harm thebuyer’s position, undermining the robustness of the entire supply chain.”This article was recently
published in Global Trade Review.

“A knee-jerk reaction
to crises can often
amplify their impact,
and since there isn’t
a one-size-fits-all
response, the key lies
in building in inherent
flexibility to empower
teams to strategiseon the fly.”
Kaylee Karumanchi
Bank of America

reimagining resilience for tomorrow’s supply chains

Supply chain finance, which can enable buyers to benefit fromextended payment terms while also ensuring suppliers have theworking capital finance they need, offers a win-win solution,
enabling corporates to buttress the financial health of their suppliers,
particularly those responsible for critical components or services.
And by leveraging data and digital tools from their banking partners,
organizations can steer a proactive strategy, overseeing the healthof the supplier base and better managing supply chain risks.
“As clients increasingly rely on data and digital transactions,
we’re replacing traditionally manual processes with digitizedones,” says Karumanchi. These include embedded platform
solutions, which can seamlessly integrate into ERP systems,
providing extra visibility that can inform decisions on where todirect financing.
“Data — both internal and external — helps equip you with theinformation that you need to deploy your liquidity where youneed it, such that you’re actually resolving some of these issues
as they’re happening,” says Karumanchi.
“Sharing information between each link in the supply chain is amajor lever for greater resilience.”

Breaking down the silos for supply
chain strength
In this interconnected era, data sharing can uncover hidden
trends, opportunities and potential disruptions, creating a realtime road map for navigating unpredictable terrain.
“Benchmarking in this context is vital, both as a way of gaining
insight into factors such as payment terms among industry
peers but also to expose potential vulnerabilities in the supply
chain,” says Karumanchi.
This includes issues such as insufficient liquidity for suppliers
to maintain operations, or even instances where suppliers find2 | bank of america article

themselves in precarious financial situations due to tightly
negotiated margins that inhibit cash flow and compromise theirability to meet key obligations.
“Across industries, we’re seeing forward-thinking organizations
develop much more collaborative relationships with suppliers,”
she says. “Often that might simply take the form of aconversation with their accountant or treasurer to unveil issues
that might be putting them under financial pressure.”
Meanwhile, within the organization itself, facilitating informationexchange between different internal functions can pave theway for a more holistic approach to supplier relationships thatmanages operational risks instead of focusing merely on costmanagement.
“Aligning procurement with treasury has historically been
an overlooked aspect of supply chain management,” says
Karumanchi. “Procurement professionals often focus primarily on
the supply side, but they can significantly benefit from a morecomprehensive financial view of their suppliers. Factoring this in
to sourcing decisions and encouraging these collaborations cangreatly improve resilience.”
This enhanced collaboration across departments can yieldsignificant benefits, particularly when the strengths of treasury
and procurement are unified.
“Treasury traditionally excels in nurturing core banking
relationships, while procurement specializes in cultivating
supplier relationships. By bridging these departmental gaps,organizations can foster a comprehensive approach,” says
Karumanchi.
“Supply chain finance, for instance, doesn’t always need to beleveraged for payment term extensions,” she adds. “It is also atool for buyers to provide liquidity for their suppliers, which canhelp procurement solidify that relationship and secure the supplyof constrained materials amid shortages or disruption.”reimagining resilience for tomorrow’s supply chains

Sustainability and supply chain
resilience — two sides of thesame coin
This integrated perspective of supply chain risk management
can also support organizations in achieving their sustainability
objectives, which have become an urgent priority as growing
consumer and regulatory pressures worldwide push companies
toward greater transparency and accountability.
A myriad of risks can threaten supply chain stability including
evolving regulations around carbon emissions disclosure andlabor standards, to extreme weather events that could disrupt
logistics and affect raw material availability.
“Sustainability and supply chain risks intersect at several points,”
says Karumanchi. “In our experience, suppliers who are consciousof their broader impact tend to be more resource-efficient,contributing to overall supply chain resilience. Assessing suppliersourcing can identify potential weak links in supply chains,and even help gauge how sensitive a downstream supply is toenvironmental disruption.”

As such, sustainability considerations and supply chain resilienceneed not be disparate corporate objectives. Instead, they canbe woven together into a cohesive strategy that fortifies supply
chains and advances sustainability. Regular supplier audits canuncover high-carbon operations, and strategic incentives canencourage greener practices. Moreover, by broadening supplierassessments to include these factors, organizations can gain
deeper insight into the health of their supply chain.
“Often, businesses already have the resources they need to evaluate
whether a supplier meets certain criteria,” says Karumanchi.
Financial institutions can provide invaluable support in thisendeavor. By integrating sustainability criteria into their lending
and advisory practices, they can reward and promote suppliers’
sustainability initiatives, nurturing a collaborative relationshipthat benefits the entire ecosystem.

“As a result of this initiative, we can help buyers assess theirsuppliers for their potential eligibility against the bond, which
can be a powerful tool for addressing social inclusion goals,
while outside of the bond, we can provide enhanced accessto funding for qualified suppliers on an SCF program,” says
Karumanchi.
In the ever-evolving global landscape, building a robust supply
chain requires moving beyond the well-trodden path of reactivity
to the use of proactive, datadriven strategies.
Corporates can’t undertake this journey in a vacuum, but by
taking advantage of the support, cross-industry collaboration
opportunities and digital tools that are available, they canconstruct supply chains that can weather future shocks andemerge stronger, sustainable and more resilient.

One example of this is Bank of America’s Equality Progress
Sustainability Bond, a first-of-its-kind security, part of theproceeds of which are being used to drive greater inclusivity
in trade through supply chain finance loans to women- andminority-owned business enterprises.

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