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Funding a Globalised Supply Chain: A study of current and future corporate supply chain funding behaviours

Funding a Globalised Supply Chain: A study of current and future corporate supply chain funding behaviours

The World Trade Organisation (WTO) has forecast that global trade volume is set to increase by 2.4% in 2017i. This is up from 1.3% growth in 2016 and all-round weak trade growth since the global financial crisis. Despite the expected increase in world trade volume for 2017 it continues to be below predicted global gross domestic product (GDP) growth of around 3%ii.

While overall trade volume is down when compared to historical trends, supply chains nevertheless continue to lengthen and increase in complexity with increasing numbers of suppliers and transactions. The developing complexity of supply chains for the world’s largest corporates, as well as regulatory changes and cost of capital pressures have all contributed to the rise in importance of efficient supply chain funding and with it the rise in potential revenue pools.

Traditionally, management of the supply chain has been product focussed – sourcing, manufacturing and delivering. Recently, very large businesses have begun using their supply chain as a source of inexpensive capital, taking the focus away from product and making it firmly about funding.

Funding, or access to funding, has always been a top priority for suppliers who are generally the smaller counterparty to the buyer. Having a functional and efficient supply chain in place, one in which suppliers are kept front of mind ensures long term resiliency for both parties.

Amid geopolitical and economic turbulence, a resilient supply chain and the stable funding of it is of vital concern for global corporates. When a supplier goes out of business due to lack of liquidity or there be a delay in production or shipping of materials due to changing political legislation or cross border regulations, consequences for the end buyer are very real and result in considerable impacts on the business.

Macro factors such as the potential of US inspired trade wars and barriers and the dismemberment of the European Union are the two chief risk issues facing global corporates in regard to their supply chain. These issues are of far more importance to global treasurers than the cost of funding, physical stock security or counter-party exposures.

Technology has also played a large part in the development of the supply chain. As global sourcing patterns continue their drastic change and become increasingly concentrated in emerging markets, technological developments have had to keep up with the ever-extending geographical supply chains of major importing nations. While once the domain of large domestic and international banks, fintechs have recently entered the market with their tell-tale agility and focus on operational and technology enabled solutions. Simplified on-boarding and implementation as well as improved interfaces have worked to secure fintechs a rapidly growing place at the supply chain table.

The role of financiers in funding today’s supply chain lies in developing strategies that benefit the buyer/supplier relationship and enable both to ultimately sell more and hence grow together. The question is how do financiers go beyond their traditional role and what areas are their corporate clients most focussed on?


About the Report
Global trade and the development of corporate supply chains
How the ‘Samsung’s, Volkswagens and Apples’ of the world fund their supply chains
Vanilla trade finance and available working cap leading the way
Looking to tomorrow and increasing off balance sheet financing
How many providers does it take to fund a supply chain?
Supplier terms are going green
63 days to payment
The future for suppliers is sustainable and ESG compliant
Change, Opportunity, and the role of Technology
Clearing the path to China, Latin America, and Africa
Germans the most comfortable with current funding position
Smart contracts are top priority
Efficient supply chain means agile companies
References
Detailed Data Tables
Supply Chain Financing Funding Sources
Supply Chain Financing Funding Source Importance
Domestic vs International Supply Chain Volumes
Biggest Upcoming Supply Chain Funding Initiatives
Supply Chain Financing Funding Providers Used
Primary Supply Chain Financing Provider
Supply Chain Funding Position Satisfaction
Supply Chain Cross-Border Funding Accessibility
Most Challenging Countries/Regions for SC Funding
Current Supplier Payment Terms
Supplier Payment Term Change
Implementation of ESG Sustainability Policies
ESG Sustainability Policy Importance Ratings
Key Risk Issues
Supply Chain Management Platform Use
Supply Chain Development/Component Importance
Biggest Planned Global Supply Chain Initiatives
Biggest Non-Financial Benefit 32

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