Air8, a digital venture under LFX Digital, was recently awarded ‘Top Supply Chain Management Solutions Provider 2022’ by CIO Applications and was listed among other notable supply chain and technology companies including Sigma Computing, Flexport and Inspectorio. View the full list here.
Air8, Supply Chain Finance Solutions – a digital venture powered by LFX Digital
LFX Digital develops digital ventures on its platform and creates an environment to nurture their growth. Building on its extensive domain supply chain knowledge and experience, LFX brings new ways of thinking and working to facilitate supply chain digitalization. One digital venture launched by LFX is Air8, a supply chain finance solution and an end-to-end technology platform.
In an exclusive interview with CIO Applications, Ed Lam, CEO of LFX Digital, and Alvin Ho, President of Air8 give valuable insights into the consumer goods supply chain industry and talks about issues within the industry Air8 is addressing.
The Reason for Air8’s Inception
Along the end-to-end global supply chain, various stakeholders are involved in raw material production and procurement, manufacturing, quality control, inspection, warehouse management, and transportation long before a finished product reaches the hands of consumers. During the production process, when goods are sold from one company to the next, payment terms usually range from 60 – 90 days, creating working capital requirements for all stakeholders involved. Over the past few years, disruptive events such as the US-China trade tensions, the Covid-19 pandemic, widespread store lockdowns, and the war in Ukraine have severely disrupted the supply chain and payment terms have been extended further, increasing the working capital gap along the supply chain and adding pressure to an industry already operating on thin capital bases and even thinner margins. According to Asian Development finance gap reached US$1.7 trillion in 2020.
Our new venture, Air8 has been created to address this widening working capital trade-finance gap, particularly for the many SMEs across the globe who find it more difficult to access capital from the traditional banking sector in their markets. We ensure that these SMEs gain quick and convenient access to affordable financing via our base of funding partners, both bank and non-bank financial institutions. The name Air8 was inspired by “aerate”, referring to the process of improving drainage in lawns so that soil can more readily allow air, water, and nutrients to reach the grass roots and make lawns healthier.
Being an affiliate of global supply chain manager Li & Fung via LFX, Air8 is deeply entrenched into the supply chain flows of our SME clients and intimately understands their working capital requirements. At the same time, our ability to acquire quality assets has attracted a wide base of financial institutions to partner with who can leverage our extensive industry insights and data. We can thereby seamlessly link our SME clients to our multiple funding partners via our technology-enabled, easy-to-use, crossborder supply chain financing platform to efficiently process transactions for all parties involved.
The Pain Points in the Supply Chain Industry, Addressed by Air8We serve multiple SME exporters from emerging markets across Asia, particularly Bangladesh, India, China, Vietnam, and Southeast Asia. They are growth- and finance-constrained and the finance sector is not as developed as in the OECD economies. As a result, they lack access to stable and affordable trade finance that would enable them to reach new customers, open up new markets, and grow their business. Banks have a tendency to overlook these SMEs as they are typically unable to gain sufficient access to data to meet their credit underwriting and KYC (Know Your Customers) requirements. Because of deep supply chain domain knowledge via our data-driven insights, we are able to resolve this issue.
Utilizing AI and machine learning, we aim to make better sense of the data extracted from the SMEs, and from other sources, such as credit bureaus to create a comprehensive supplier profile that helps evaluate crucial factors such as credit risk. We deliver this value to our financial institutional partners because they can use this actionable data to understand SMEs’ credit risk, thereby optimizing their credit decisioning through our technology.
Supplier Client Benefits of Air8
Submitting financial applications offline is time consuming and inconvenient. With Air8’s app-based platform, users conduct these transactions online in a simple, automated manner. It was this ease of online application that gained traction with our suppliers SME clients when we launched our platform earlier this year. A factory owner or finance manager can track their application’s progress on the platform in real-time, giving them the visibility they need to take on new orders.
Not only do we allow clients to upload documents online, but more significantly, we shorten the application process’ turnaround time getting the capital into their hands as quickly as possible. Internally, we also minimize operational risk by eliminating human errors caused due to mishandled documents.
The Future of Air8
We are laser focused on collaborating, designing, and creating an end-to-end technology platform to tackle complex funding-related issues. Our platform provides a seamless end-to-end customer journey, from onboarding to requests for financing to payment and settlement. We continue to enhance and upgrade our platform by leveraging even more efficient financing methods to deliver further value to our SME clients and our ecosystem partners. Since the soft launch of our new platform in early 2022, the feedback on our platform has been overwhelmingly positive.
Over the coming year, we will continue to fine-tune and scale our product offerings to seamlessly integrate both capital and data flows to create more value for suppliers and funders along the supply chain. Our goal is to enable interoperability with various ecosystem partners. Hence, we are integrating our products and services into multiple financial institutions’ networks via API connectivity. Such API connectivity allows our SME clients to enjoy a highly satisfactory client experience via a truly seamless client journey.
The future of trade and trade finance is digital; but if we want it to be inclusive and accessible to the millions of SMEs who rely on trade to grow and prosper, it must also be interoperable, using common protocols to exchange insights and work together seamlessly. Through our platform, our goal is to orchestrate the supply chain finance flow with data-driven insights covering the entire supply chain ecosystem and beyond. We will continue to reinforce our reputation as the go-to Fintech partner for SMEs in the apparel and general merchandising industries. We want to bring suppliers, buyers and funders together. Collectively, this ecosystem can help fund the trade finance gap and enable a more sustainable supply chain.