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Supply Chain Finance Lecture: Levels, Instruments & Business Impact

Explore the strategic value of supply chain finance instruments like equity, dynamic discounting, and more in enhancing business efficiency and liquidity. Study recent contributions in SCF and learn about the importance of SCF for companies like Maersk and Unilever.

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Supply Chain Finance Lecture: Levels, Instruments & Business Impact

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  1. IntroductionSupply Chain Finance (SCF)Lecture # 12 Jan H Jansen E-mail: jan.jansen@han.nl

  2. Round # 5The Cool Connection

  3. Lectures period 2 or 4

  4. Levels of SCF instruments Source: SCF, its practical relevance and strategic value, Boer de, R. et al, SCF Community, 2015 (adapted by the author)

  5. Recent contribution in SCFAn exploratory study into supply chain finance: The relevance of supplier segmentationSteeman, M.A. et al., 2015, Paper VervoerslogistiekeWerkdagen, University Press (Zelzate)

  6. Supply chain finance instruments • Equity / Joint venture / Minority stake • Reversed factoring • Long-term loans • Vendor managed inventory (VMI) • Buyer manager inventory / Tolling / Natural hedging • Dynamic discounting • Contractual risk / profit sharing

  7. Research outcome

  8. Recap Lecture 11 Blockchain in Logistics

  9. Source: http://www.blockchain-lab.org/#publications

  10. About Maersk A.P. Moller - Maersk is an integrated container logistics company working to connect and simplify its customers’ supply chains. As the global leader in shipping services, the company operates in 130 countries and employs roughly 76,000 people. For more information about Maersk, visit maersk.com or follow us on Twitter at @maersk. About IBM IBM is the leader in open-source blockchain solutions built for the enterprise. As an early member of Hyperledger and active contributor to the Hyperledger Fabric and Stellar blockchain projects, IBM is dedicated to advance cross-industry blockchain technologies supporting the development of openly-governed transactional business networks. IBM has worked with more than 400 clients across financial services, supply chains, IoT, risk management, digital rights management and healthcare to implement blockchain applications. For more information about IBM Blockchain, visit ibm.com/blockchain. Source: https://www.maersk.com/news/2018/06/29/maersk-and-ibm-introduce-tradelens-blockchain-shipping-solution

  11. New business models unlock value we.trade brings together fierce banking rivals to create new business value in offering liquidity to small and medium-sized businesses. https://www.youtube.com/watch?v=1Zgz28tkV0w

  12. Source: https://www.maersk.com/news/2018/06/29/maersk-and-ibm-introduce-tradelens-blockchain-shipping-solution

  13. Source: https://www.maersk.com/news/2018/06/29/maersk-and-ibm-introduce-tradelens-blockchain-shipping-solution

  14. Lecture 12 Case study

  15. Questions • Why is supply chain finance for Unilever so important? • Why is supply chain finance for Unilever’s Tier 1 & Tier 2 suppliers so important?

  16. Source:https://www.google.com/finance?q=OTCMKTS%3AHINKY&ei=ARs6V4PzLca4U_WnlZAL

  17. Case Unilever • SCF Forum (10-12-2014) • Jean-Christian Dumas • Senior Procurement Finance Manager /Business Controller at Unilever

  18. Source: Annual Report 2014 Unilever

  19. Our growth model is enabled by a leaner, fitter, more agile Unilever, with costs being reduced through our supply chain efficiency programmes. These have been boosted by our low-cost business model initiative, which has delivered €450 million of savings since 2011. Source: Annual Report 2014 Unilever

  20. The USLP is embedded into our business model. It helps to drive long-term shareholder value by: driving growth through innovations that bring new sustainability benefits to consumers and retailers; reducing waste and energy and thereby saving cost; and managing risk in our supply chain, for example by securing long-term sustainable sourcing of materials. Source: Annual Report 2014 Unilever

  21. SUPPLY CHAIN Our business depends on purchasing materials, efficient manufacturing and the timely distribution of products to our customers. Our supply chain network is exposed to potentially adverse events such as physical disruptions, environmental and industrial accidents or bankruptcy of a key supplier which could impact our ability to deliver orders to our customers. The cost of our products can be significantly affected by the cost of the underlying commodities and materials from which they are made. Fluctuations in these costs cannot always be passed on to the consumer through pricing. Source: Annual Report 2014 Unilever

  22. Finance Source: Annual Report 2014 Unilever

  23. Source: Annual Report 2014 Unilever

  24. Recent contribution in SCFRedraw the map to reduce suppliers’ finance costs, by Professor Michiel Steemanhttp://www.scfbriefing.com/viewpoint-redraw-the-map-to-reduce-suppliers-finance-costs/

  25. Quadrant 4: Contract farming In this model, where finance costs are high across the supply chain, the large buyer purchases the seeds, fertiliser and all the other things needed by a farmer who then becomes a contract manufacturer. The buyer keeps ownership of the produce throughout the supply chain. This is a model often seen in developing countries, for example, where much of the supply chain is financially weak. These farmer/suppliers’ margins may be smaller under this model than they otherwise would be, and the profit upside is more limited as farmers have less opportunity to deal with other buyers; they are more tied in to just the one supply chain. But they benefit from having a more certain income stream, relieving them of the downside risk.

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