Looking ahead to the upcoming conference, Tallinn Supply Chain Finance Summit 2023, SupplierPlus looks at the challenges of data digitalisation on an international scale. Sandra Särav, Deputy Secretary General for Business and Consumer Environment at the Estonian government’s Ministry of Economic Affairs and Communications, discusses the challenges of digitalisation, as well as the opportunities presented by interoperability and data standardisation.
The SCF conference will take place over 8-9 February, with the top trade and supply chain finance players in Europe attending. Sandra Särav is one of the keynote speakers, bringing her expertise and knowledge on how Estonia is advancing ‘real-time economy’. Below is a preview of how she and her team are working to improve Estonia’s DES Index ranking.
How big a problem do you think it is that, in the private sector, supply chains are not digitalised to a large extent?
Digitalisation is not an end in itself; the goal is to make processes more efficient, and digitalisation is a good tool for that. Therefore, digitalisation as a tool is one of the main factors in increasing the added value of companies.
According to the European Commission’s 2022 Digital Economy and Society Index (DESI), Estonia ranks 15th in terms of the implementation of digital technologies by companies. This is not a good result. But it is not only the place in the table that is noteworthy, since a low level of digitalisation also directly means poor competitiveness. And, for a country of our size, strong competitiveness is crucial.
Speaking of data, today and in the future, the collection and management of data is one of the most important factors in the operation of supply chains, and this can only be achieved by intelligently digitalising companies.
Estonia ranks 15 th among EU countries on the integration of digital technology by businesses. There are significant differences between traditional Estonian companies that do not benefit from digital solutions and newer, highly digitalised companies. In Estonia, only 54% of SMEs have at least a basic level of digital intensity, which is just below the EU average and far from the EU target of 90%.
However, in conclusion, the problem is not directly in the digitalisation of supply chains, but in the level of digitalisation of companies to be able to participate in competitive supply chains at all. However, it is possible to gain access to supply chains, using competitiveness as a motivation for companies to act by raising their level of digitalisation.
You have a wide range of international experience from both private sector technology companies and public sector digital and technology issues. But today you are a civil servant. How can one such official really help private entrepreneurs through business digitalisation?
First of all, I must say that I am very grateful that I have managed to work in both the private and public sectors. Without the experience of both, I could not be good in my role today.
Our ministry’s toolbox mainly includes positive nudges (financial subsidies), negative nudges (regulation), and (most importantly to me) partnering with each other in this process.
For example, my team works on ‘real-time economy’ development. If we talk about digitalisation in the practical sense of using data, then we as officials can do a lot here. The highest priority in reaching automatic and fast data exchange between parties in the supply chain is interoperability, and we can ensure this by standardising data so that it is unambiguous for machines.
Real-time economy focuses on improving business data, its availability, and data sharing to help increase the productivity and profitability of businesses. In other words, in business, data is generated every day with economic transactions; invoices, contracts, delivery notes, etc. are created. Simply, the data contained in them is not valued enough. Why not?
Because they are not in a uniform, standardised format, one which everyone can understand, i.e. machines too. Plus they cannot be used to their full potential to return added value.
Why we are talking about real-time is because, in today’s form, when we finally get the data from somewhere after a long request, it is already outdated and its value for us has decreased over time or disappeared completely. Therefore, real-time must be taken into account, according to context and upon the sound basis of reasonability.
One of the partnerships offered by our ministry, in terms of developing real-time economy, is the standardisation of business data that is already being created today, so that it can be shared easily, i.e. automatically, to create added value from your data; all this so that you can make fast, high-quality business decisions, e.g. data-based financial management, etc.
A concrete example can be in the cross-border key of Know Your Customer (KYC). In order to attract foreign investment across borders, entrepreneurs must prove their reliability, sustainability, etc., parameters that are important to the investor. Today, this process takes weeks, if not months.
In fact, to prove trust, high-quality data has already been submitted by the company to the host country today. However, these days, it could be easily gathered and sent to the investor across borders (subject to consent and upon the investor’s request) in hours, if not minutes.
The data has a digital stamp as a trust mark and, thanks to the secure digital infrastructure between the institutions, it is not possible to manipulate the data before sending/arriving. But for all this to work properly, we need standardised data and secure data exchange channels.
What is the guiding principle that you will share from the Tallinn Supply Chain Finance Summit stage?
Don’t be afraid to adopt a solution that already works for someone, somewhere else. There is no one-size-fits-all approach, but if someone has already solved a problem for you, it would be foolish not to copy that working solution or idea.
I will speak about real-time economy at the conference. Real-time economy equals practicality: using real-time economy solutions, it is possible to save an estimated 7,000 labour hours per annum.
That’s an insanely valuable resource which could be unleashed, especially relevant to entrepreneurs potentially able to then shift time spent on admin into time spent on more value-adding creative activities. Take advantage of the opportunity to see how many labour hours you could be saving!