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As global trade
volume continues to increase, corporates are
increasingly looking for further supply chain
efficiencies in both their day to day operations and
in terms of their financial performance.
Combined with the importance placed on the success
and longevity of supply chains, the question arises
as to how providers can best service the market’s
demanding and dynamic requirements to ensure
efficient financing arrangements that actively
contribute to corporates’ supply chain strategies.
As technology plays an ever-expanding role and is
inherently tied to increased and efficient trade, it
must also be asked how and where this will continue
to be seen. In the context of supply chain
financing, and as technology drives further cost
decreases, it is important to understand exactly
where corporates are looking for their financial
provider to add value and efficiency to the supply
chain.
As new research from East & Partners (E&P) has
identified, a key difficulty for all parties quite
simply lies in the size and complexity of MNCs’
supply chains. As seen in the chart below, MNCs in
key Western European markets average over 230
suppliers with Germany leading the way at 278. The
size of this makes servicing daunting for providers
with resource and investment being allocated
accordingly, based mainly on supplier risk profiles
which generally leads to just the top suppliers
meeting financing criteria.
This allocation of resource is played out in E&P’s
new research which shows that provider capability
corresponds directly to the size of the trade
corridor. While this seems common sense, it also
highlights the opportunity outside of the key Asian
and North American corridors for providers where
capabilities are not meeting corporates’ supply
chain challenges, such as in Latin America and
Africa.
De-risking the supply chain associated with the
lesser trade corridors is really the only option for
finance providers but, importantly, they share this
same goal with their MNC clients across all markets.
As such, effective supplier onboarding is a shared
objective and with over 85 percent of corporates
reporting credit assessments and 84 percent
reporting efficient KYC as key tools needed this
aligns well with providers’ requirements. How
technology addresses these needs will be vital in
the coming years as new entrants look to carve out
niches in the market. Interestingly, French
corporates also report multi-lingual capability in
the top two tools needed to perform this function.
Alongside key product enhancements that include
integration with ERP platforms, easy onboarding and
integration with procurement and purchasing ledgers,
service is what corporates most want. An experienced
relationship team that understands both the business
and its supply chain as well as the market(s) they
trade across is what corporates are crying out for –
perhaps also a cry for the “old days” when
relationships drove business and trade.
As geopolitical issues, market forces and technology
continue to open up the global market, how
corporates and their supply chain finance partners
manage a supply chain that is unlikely to become
less complex will be fascinating to watch.
These new supply chain finance insights are derived
from the Supply Chain Finance: Voice of the
Customer – Insights and Analysis report, a
collaboration between East & Partners and BCR
Publishing, the leading provider of receivables
finance market intelligence. |
