Event Notes: Creating Value - Enhancing the Supply Chain, The Asset, 02 March 2017, Singapore


• Supply chains have become international, complex and driven by customer and operational needs. Supply chain is also different for each country and entities, so as the need for financing. We have to leverage trade and supply chain financing through our trade, banking, insurance, logistics, packaging, and technology partners (using current account flows) to handle deliverable, subsidiary cross border finance, manage local currency and credit exposures, enjoy profitable arbitrages between local and international financing costs and structure financing and risks which is cost, tax and balance sheet effective. 

• People, teams, cross functional agenda and politics could be big challenge in integrating supply chain and financing. In managing supply chain, we have to believe in the adage that 'what is good for customers, markets and stakeholders is good for the company; what is good for the company is good for everyone' and that all efforts around collaboration, innovation, high performance, accountability are needed to focused and aligned around value creation for customers, markets and stakeholders. 

•  Technology is an enabler, aggregator, and integrator in supply chain and supply chain financing - it helps agility, scale-ability, efficiency and transparency, risk management, and connectivity across the organisation and with external stakeholders. Investment in technology is also essential to digitise and identify the location, ownership, encumbrances, title, tenor, payment and repayment obligations i.e. inventories, receivables and supplier's obligations through-out the entire supply chain. Supply chain technology, systems and process, and strategies of large companies and SME's are converging and being standardised to needs of OEM / large customers and/or the product offerings by technology providers. Technology, superior business systems and process and customer focused operating culture creates long term competitive advantage.

• Digitised supply chain provides a clear view on unencumbered assets, credit quality of obligations from debtors, risks, market dislocations/arbitrages (around FX/interest rates, funding pools, regulations etc.) which allows us to get long term and short term financing from banks by securing assets, credit and market risk mitigation solutions, arbitrage opportunities, and also connect systems with stake holders and cash pools and aligns company talent and resources. The clarity also helping credit teams and banks to assess and understand the credit, market and operations risks of our supply chain, the debtors and cash flows to our treasury team. Funding for local SME's is restricted to local banks given their credit quality, relationships, local functional currency, and regulatory restrictions though international banks and EXIM banks increasingly provide international banking, financing and risk mitigating solutions. 

• Compliance is a given and is non-negotiable for business and its reputation. In addition to financial and tax compliance, sustainability is an important focus that customers, banks and FI’s ensure and comply prior providing funding or buying products thus we need to ensure that we have a sustainable supply chain and transparent governance. Sustainability compliance requires close collaboration with sustainability and social responsibility teams; these team help in ensuring compliance around environmental policies, labour laws, land acquisition, social responsibility projects, etc.  Sustainable practices enhance competitive advantage, brand reputation and shareholders value.

• In short, we have to invest in technology to get clarity around the supply chain, assets, title and encumbrances over assets, obligations from customers, etc.; ensure sustainability, credit insurance, bank’s capital requirement compliance to be able to get funding at a competitive rate. Optimally structured-risk-return supply chain financing could be a quasi-long term solution for companies and banks. In the long run, the core technology helps in accessing and mining data for economic use; overlaying technology like robotics, shared ledgers, uberization, etc.

• The 'Trump effect' will soon be a passé but will create market disruptions, dislocations and arbitrage, risks and opportunities for business. Building capability, de-rising, deleveraging and investing in technology and talent will ensue long term sustainability, managing of risks, and harvesting of opportunities and arbitrages. There are technological changes (shared economy, uberization, robotics, etc.) in the pipeline that the corporate need to manage and be prepared for as these will change the customer's behaviours and market expectations, throw different risks, create new opportunities and challenges for the talent and company. 


Gopul Shah, director, corporate treasury & structured trade finance, Golden Agri-Resources.

** Golden Agri is the largest privately held palm oil privately held plantation company listed on SGX   and it has grown from a pure plantation owning/producing company to a global supply chain company in the last 4 years, supply chain includes procuring materials, processing, trading, bringing into ports and exporting globally in markets we serve primarily China, India, Asia, Europe and the US.**











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