The Legal Entity Identifier system can play its role in easing the current global Supply Chain disruption
It is not uncommon for many businesses to experience unplanned supply chain disruptions.
Traditionally, bad weather and natural disasters were the main culprits, however, other issues were at fault on occasion also. Since 2020 we experienced a new entrant, COVID-19; which caused major havoc for companies on a global scale in relation to their supply chain distribution.
Precipitated by the COVID-19 pandemic and industry shut downs, recent supply chain delays have caused once again a rise in popularity in cargo shipping. We recently discussed the benefit of the LEI to the cargo shipping industry.
This includes bottlenecks and cargo build-ups at ports and warehouses, causing fears of “empty shelves” across the UK and US.
The pandemic has brought many things to light, including the fragility of the global supply chain.
How can the Legal Entity Identifier play its role in easing the current difficulties with global supply chains
By utilizing the free, publicly accessible LEI database for supply chain visibility we can reduce complexity and achieve a higher operating profit than those who do not have a proper tracking system in place.
Another issue highlighted by the pandemic is a core fundamental principle to international trade; trust. Trusting that a supplier located on the other side of the world is who they say they are. With many digital fraudsters seizing the opportunity presented by high volumes of demand for goods such as PPE in a global pandemic, we witnessed increasing levels of intricate scams and fake businesses, all of which cast doubt on the global economic landscape and burden financial institutions with delays and setbacks.
The current system used in 'supply chain identification' is overly complex, fraught with risk and sometimes inconsistent data. For example, a survey conducted by GLEIF highlighted that 50% of financial institutions use approximately 4 identifiers to identify corporate clients. By using the LEI we can more easily identify would-be fraudsters and bring an extra layer of uniformity to the industry.
According to the GLEIF, the LEI system offers:
✅ One universal digital identity
✅ Instant identity verification
✅ Verified company info
✅ High-quality data
✅ Open & free of charge data
This means the LEI is in a unique position to be the single trusted identifier for all entities not just in the supply chain, but globally.
The can therefore play its role by consolidating a fragmented global identification system, easing blockages, time costs, and shortening delays in the global supply chain.
The views expressed in this blog belong to LEI Worldwide.