On November 21st, the eleventh edition of the Supply Chain Finance Observatory (SCF) convened its third meeting with the International Workshop, a collaborative effort with the Supply Chain Finance Community. The event featured insightful company testimonials and two research presentations, shedding light on the dynamic landscape of supply chain finance. Diverse companies from the Observatory’s community, including both users and providers of SCF solutions, actively participated.
The initial presentation, delivered by Elisa Medina, a researcher at the Observatory, delved into the theme of sustainability within the realm of SCF. Medina underscored the burgeoning role of sustainability in supply chain management, citing compelling cases from industry giants Levi’s and Puma. Two prominent strategies emerged to bolster sustainable SCF solutions: the increasing influence of relevant regulations, such as those pertaining to sustainability reporting, and a collaborative approach wherein buyer companies incentivize suppliers to enhance their sustainability practices. Despite these positive strides, persistent barriers include past unfavorable experiences with SCF adoption, internal departmental coordination challenges, non-standardized ESG evaluations, limited awareness of solutions, and inadequate regulations.
Siemens subsequently shared its experience implementing a Reverse Factoring program, affirming the remarkable growth of this financial instrument. The program strategically extended payment terms to suppliers, facilitating accelerated collection of trade receivables and fortifying the resilience of the supply base.
The Haier Group followed with a presentation on projects optimizing credit management business processes. Incorporating advanced technologies like artificial intelligence and RPA, the company streamlined the Order-to-Cash cycle, enhancing operational efficiency and significantly impacting order management and debt collection.
Luca Gelsomino, the academic director of the Supply Chain Finance Community, presented research findings on SCF solution disclosure. Analyzing the accounting practices of the Forbes-listed 1000 companies from 2010 to 2022, the study noted a significant surge in transparency, especially in the last two years, driven by impending regulations. However, questions persist about the accuracy of forthcoming requirements in representing SCF programs and the potential opportunities they may unlock for the sector.
Continuing the discourse, BayWa, a German conglomerate in agriculture, energy, and construction, addressed the challenges posed by the Ukraine crisis and escalating energy costs. In response, BayWa devised an innovative strategy to enhance its working capital. Introducing an SCF program, the company opted for a 60-day extension of payment terms for BayWa coupled with immediate payment to suppliers, efficiently managed through a service provider. Notably, this solution streamlined the onboarding process for suppliers, eliminating unnecessary hurdles.
In summary, the event showcased a diverse array of insights and experiences within the supply chain finance domain. From sustainability considerations and technological integrations to innovative working capital strategies, companies are navigating a dynamic landscape, poised for growth and adaptation. As the sector continues to evolve, collaboration, transparency, and strategic initiatives will play pivotal roles in shaping its trajectory.