The supply chain is an entire system of procuring raw materials, manufacturing products, and shipping them to the customers. The smooth functioning of this massive aspect of a business depends on suppliers, distributors, and end-point contacts. Due to the high-value transactions and the involvement of multiple entities, supply chains frequently expect cyberattacks and fraud cases. Since trust goes a long way in this industry, companies require a robust solution to mitigate these threats. Verifying businesses using a know your business solution can help identify potential dangers and curb fraud. Moreover, it can strengthen the partner and client relationships of the company. This post discusses the importance of business verification services in the supply chain industry.
Understanding Modern Risks
The procurement and supply chain industry is essential to the smooth functioning of the business world. While digitization provides opportunities to strengthen businesses, it also opens up new alleys for economic crime. Moreover, cybercrime exceeded any other crime in this category during the post-Covid era. In the US, a survey reported that 22% of respondents experienced cybercrime due to pandemic disruption. Even though Covid is now almost over, the trend of cyber-enabled economic crime is still rising. According to reports, digital fraud can cause $348 billion in losses between 2023 and 2027. This increase in modern risks can be fatal, therefore, it is vital to implement a know your business solution for verifying companies to safeguard business interests.
Regulatory Compliance
Typically, financial institutions are more concerned with anti-money laundering and counter-terrorism financing policies. However, since fraud cases are rising in procurement as well, regulatory authorities enforce stringent rules. These protocols encompass proper verification of the business a company deals with. It includes the authentication of business registration documents, licenses, and significant stakeholders in the business. Any violation of the regulations can lead to monetary fines and legal repercussions. Moreover, such cases typically tend to hurt a company’s reputation as well. Therefore, it is crucial to design and execute a know your business policy in the company. However, some companies shy away from these processes as they can be manually time-consuming and resource-intensive. Therefore, a better option is to invest in a know your business solution that provides automatic business verification services.
Strengthen Partnerships
Each phase of the supply chain usually involves companies and entities from various industries. For instance, partnerships for procuring raw materials might be different from the wholesale and retail distributors. Thus, verifying a business in each phase becomes challenging for the company. However, invalid endorsements can disrupt the functioning of the entire supply chain. This can be troublesome for valid partners as well. Trust and commitment are important pillars of the supply chain industry. Therefore, it is essential to have a know your business solution that performs deep KYB verification on each partner and client. In the long run, it will boost partners’ confidence in the company, thus, strengthening the relations. Similarly, clients prefer to work with companies that perform internal due diligence and scrutinize their operations.
Leverage Technology
As mentioned, manual business verification can be troublesome in the supply chain industry. Companies require a know your business solution that leverages modern artificial intelligence tools to provide unparalleled accuracy and increased efficiency. According to a study, digitization in the procurement industry results in a 97% reduction in manufacturing-related issues. Similarly, technology can yield an 82% improvement in the delivery phase of the supply chain. The advantage of AI is it automatically checks a business against global databases to identify potential threats. Compared to human verification, the error rate is extremely low as well. Moreover, the neural networks keep upgrading, so know your business solution will never become outdated.
Future of Supply Chain with KYB Solutions
The supply chain is a crucial pillar of the business world. From the production and procurement of raw materials to the delivery of final products, it encompasses numerous phases of the business. However, the entire industry is experiencing increased economic crime, especially cybercrime. One reason behind this increase is poor business verification. Companies often overlook this step, prioritizing expected revenue over its importance. This oversight can lead to grave legal and reputational consequences. A modern know your business solution that provides enhanced business verification services is necessary to mitigate these risks. Verifying businesses can help stay compliant with regulations and strengthen relations with clients and partners. In the long run, a know your business solution is the only viable option to tackle modern risks while streamlining business operations. You can also create your products QR Code for quick access.
