Public Funding for Enspan Innovations Ltd

Public description Supply chain resilience is a widely studied topic of significant impact on our society. As organisations outsource production to one another they create economies of scale and reduce prices but also increase the risk of disruption that cascades throughout the entire supply chain if any member of the chain is disrupted. Typically, organisations act alone, rather than as an ecosystem when predicting disruptions and deciding on mitigation strategies. However, disruption data an individual organization can collect and analyse is small, imbalanced, and partial entirely to its own view. When uncertainties increase, this individualistic approach results in short-sighted decisions. Numerous studies proved that _increased data sharing_ and _collective decision-making_ would _increase resilience_, but this has not been plausible as members of the ecosystem fear that information shared can be used opportunistically by other parties. _Federated learning_ is an emerging approach in the Artificial Intelligence field that may help supply chain members collectively optimise resilience while keeping their data private. The approach enables organizational agents to collaboratively develop a shared prediction model. Here, if one organization is able to predict a disruption, its knowledge can be shared sending an early warning signal and giving companies time to respond. As the approach can be automated, costs of manual orchestration are avoided. In this project, we will develop, validate, and compare suitable federated learning models specifically for disruption prediction and collective learning in supply chains with real use cases in the aerospace and manufacturing sectors.

Enspan is a software company offering a range of digital supply chain solutions for small and medium-sized enterprises (SMEs). SMEs are well known for low tech adoption for a number of reasons, however, COVID greatly contributed to changing that and increasing digital adoption by businesses of all sizes. It also prompted a series of government initiatives around the world to support the growth of SMEs (who were greatly impacted by the pandemic). At Enspan, we believe this is a great opportunity to capitalize on the current trend of digital adoption and explore international markets, especially emerging economies. We identified South Africa (SA) as a potential market. A study of the manufacturing sector in South Africa reports that less than 75% of SMEs have digital stores and less than more than 90% perform procure-to-pay processes manually. This significantly inhibits SME growth! According to the same study, low tech adoption in SA is due to a general shortage of digital skills in the country, lack of access to suitable technology, affordability. SA has circa 200,000 manufacturing SMEs (Enspan's key target customer) creating a sizable target market for Enspan. Additionally (and what makes SA extremely attractive to Enspan), the government issued several regulations to support SME development and growth require corporations to source part of their materials from SME suppliers and spend part of net income on supply chain development. Corporations are currently struggling to comply with such regulations and are looking for solutions. This situation resulted in pools of corporate funding for companies like Enspan to localize and commercialize our product. Why Enspan is a good fit for South Africa and vice versa? We will answer this question during our study, but our going-in hypothesis is that we are perfectly suited to address SA challenges. Enspan has an innovative solution to offer SMEs a low-to-no-integration and low-cost solution to quickly activate e-stores (to support growth) and roll up such e-stores to a centralized marketplace accessible by corporations (to help meet government procurement requirements and spend). During this study we will assess/validate the market and product and develop a market entry strategy for South Africa.

The world has changed markedly with respect to transparency and need to know in the last years, particularly in relation to Personal Care formulated goods. Market trends for; cruelty-free, biodegradable, natural, 'free-from', coupled with increased social media and online influencers, growth in independent cosmetic companies and the need for established formulators to protect their brand image has meant "what" a product is, what it contains, and where it came from is as important as "how does it work". This project will explore the feasibility of developing a digital supply chain platform that is accessible to all in the Personal Care supply chain which furnishes Brand Owners with the data they require to support consumer needs. The platform will be developed by a UK-based technology start-up working with to UK based manufacturing companies producing specialty ingredients for Personal Care sector.

We don't know what a post-COVID world will look like. But it's becoming increasingly obvious that it will be fundamentally re-shaped. Social distancing and reduced 'contact opportunities' will be key to social and workplace safety. When it comes to the workplace, many of the requirements to be 'in the office' are driven by the location of documents, tools, machines, and non-portable devices. Physical meetings are less of a constraint. We are now able to Zoom ourselves together from any location to meet. But these other artifacts are generally located on-site or are harder to share virtually. The world is recognizing that now is the time to digitize. We are already seeing this - _en masse_. Microsoft recently reported a 775% increase in cloud services from regions with enforced social distancing. The silver lining in all of this is that businesses now have the opportunity (and frankly speaking, are forced) to re-imagine how work gets done. Which drives three extremely important side effects, starting with the most obvious: 1) **Efficiency** - Replacing the 'paper interface' drives significant process efficiencies. We see a 69% process step reduction in receiving goods using data exchange vs. paper for example 2) **Environment** - Removing paper greatly reduces the CO2 burden on the environment and helps ease water consumption (10 liters of water to produce a page;4 each page contributes 0.092 lbs of CO25 - meaning 22,870B liters of water and 210.4B tons of CO2 from European office workers each year alone) 3) **Employee morale** - Workers that previously labored over meaningless data entry, can now grow into problem-solvers -- which improves morale by making the job more interesting while increasing their sense of ownership Given the size of the opportunity, the question becomes: **How do we give all organizations the opportunity to easily digitalize and provide the means to participate in a digital-driven economy?** Our innovation is to **use existing supply chain data to remove the paper, reimagine processes, and drive efficiencies to contribute to environmental sustainability.** Every organization has data but most organizations rarely do anything with that data. Therefore, we are proposing to explore: 1. Using supply chain data to generate digital supply chain paperwork - providing access to the three benefits above, 2. Identify processes that would benefit the most from this approach, and 3. Re-imagine how these specific processes can operate anew in a post-COVID world.

The COVID-19 Situation has exacerbated a pervasive problem: Smaller U.K. companies (SMEs) often struggle to grow and invest in people (jobs), marketing (sales) and equipment (capacity) because of cash flow constraints. Typically, these constraints arise from a) being paid late by the customer, and b) limited access to institutional (bank) capital to invest in the business. Larger customers are notorious for paying their suppliers late because they too are managing the cash flow problem, only at a much larger scale: _"Large companies with lots of buying power carry substantial leverage in negotiations with suppliers. Delayed payments can free up working capital enabling finance chiefs to **strengthen financials at the quarterly close.**"_ - Wall Street Journal (U.K. Companies Penalized for Failing to Pay Suppliers on Time - July 17 2019) SMEs are left with three options: 1) Wait for customers to pay, 2) Apply for bank financing, or 3) Apply for invoice factoring. All of the above have their challenges. Banks have largely been uninterested in SME financing because the cost of due diligence outweighs the benefits of, what are typically smaller loans. Invoice factoring is more expensive to the SME (due to higher invoice fraud risk) and only partially funds the requirement. But primarily, **all of the above take time** - which is critical to solving the **immediate** cash flow problem. Enspan's supply chain financing innovation is to **immediately** advance cash to SMEs against the **actual deliveries** recorded by their customer. By this time, there is hard proof that the customer has taken custody of the goods and has an obligation to pay the SME based upon Purchase Order Terms. The credit rating of the customer is used to determine the interest rate of the SME (which is typically much more attractive than the SME's own interest rate). Enspan's current supply chain platform facilitates digital receiving of goods and provides proof of delivery. We propose to open this delivery information to institutional and retail investors as a way of connecting SMEs with pools of funding - bypassing traditional banks and invoice factoring points of friction and dramatically speeding up access to capital which is critical to keeping SMEs in business, protecting jobs and keeping the U.K. competitive. A byproduct of this is that it has the potential to connect pools of capital (largely private and seeking yield) with new investment opportunities and allow investors to directly support the nation. --- ADDITIONAL INFORMATION HERE --- During the extension, Enspan will conduct end-to-end testing activities with a lending partner to validate key features of the platform and ensure our lending partner is able to access data required to make the lending decision and ensure all relevant data is available from SMEs. Additionally, during these three months we will validate onboarding requirements for SMEs (KYC/AML, technical, process) and will create onboarding materials (playbooks) to facilitate onboarding activities.