Supplier Spend Solutions Redesigning Your Supply Chain Payment Architecture

Transcription

1 Treasury and Trade Solutions 8 May 2014 Supplier Spend Solutions Redesigning Your Supply Chain Payment Architecture Panel Discussion

2 Supplier Spend From Cost Savings to Value Creation Need for Cash Access to Cash Size Complex Supply Chain Location Spend Category Can companies improve working capital, reduce costs, generate returns, minimise supply chain risk, and support their suppliers, through the way in which they pay suppliers? Payment Terms Suppliers differ by Criticality Free Cash Flow Co st Payment Frequency Value of Spend Reduce Costs Client Goals Support Suppliers Minimise Risk Generate Returns 2

3 Approach & Best Practice Mondelez The Challenge MDLZ s European SSC faced challenges in working with multiple banking providers and using multiple electronic banking channels. The One Bank project focused on three material objectives: Bring simplicity, consistency and transparency to treasury operations with the goal to rationalise the number of accounts. Collaborate, preferably, with just one bank across the entire region. Establishing a foundation to build on by migrating to a corporate SWIFT solution and implementing one global ISO XML file format. The Solution Bank rationalisation single bank provider MDLZ has adopted best-in-class instruments provided by Citi to manage MDLZ s account payables MDLZ and Citi worked in close collaboration to accommodate local requirements The Result The One Bank solution in place with Citi has achieved the following benefits for MDLZ: Higher operational efficiency through the automation of operational and treasury payments, which have considerably increased STP / STR rates and allows the focus on value-adding tasks MDLZ is one of the first companies to implement ISO XML Version 3 as single global file format, using Citi s expertise in this field, and reducing banking interfaces from 25 to 1 Integrated approach and infrastructure to managing supplier payments end to end, including accelerated payments through supplier finance and efficient disbursement of low-end spend through commercial cards Significant improvement on bank KPIs at a glance: Reducing clearing from 29 to 1. Reducing bank accounts from 475 to 300. Increasing STP payments from 0% to 95%. Reducing file formats from 110 to 2. Reducing bank EB connections from 25 to 1. Reducing payment methods from over 40 to 4. 3

4 Approach & Best Practice Ericsson The Challenge Networks and network services in 180 countries with employees in 150 countries Telecom crises, reduce cost SOX complains and global processes Local companies and branches with multiple banks Local payment and administration solutions with multiple ERP system Standard loan netting of intercompany payments The Solution; Globalise, Standardise and Centralise One ERP SSC structure Global Master data Team Global processes 5 cash management banks and account structure H2H Automated payments solution for vendors and Travel and expense The Result Improved efficiency Cost reduction Reduced risk Close corporation between Treasury, SSC, CC, procurement, and IT Governance structure for payments incl. cash in regulated countries Global targets, Follow up Regular review of quality, services and conditions Clear directives Treasury involved in business processes Reduced number of banks and bank accounts Automated payments in 85 countries SSC, Vendor payments in Manila, No. invoices processed yearly 5m SSC, T&E in Beijing 95% automated payments via H2H Corporate credit card program 50 countries with cards > cards issued 4

5 Supply Chain Payments Toolkit A Simplistic View Spend per Supplier Suppliers Supply Chain Finance (SCF) Focus: Improve Working Capital Negotiate payment terms or discounts based on benefit to supplier through SCF Suited for suppliers with >$1MM in annual invoice volume, usually the top suppliers, plus other strategic suppliers Supplier receives early cash as non-recourse payment (reduce DSO) at competitive financing rate Business to Business (B2B) Card Solutions Focus: Improve Operational Efficiency, Earn Rebates Reduce volumes of PO and invoice processing Benefits from float days and rebates enabled by vendorfunded costs of card acceptance Suited for high volume/low value spend suppliers, plus a growing range of card-accepting spend categories Integrated Payments Focus: Improve Operational Efficiency For all other suppliers not needing early payment options Centralized, automated mass payments structure for straight through processing Pay just-in-time, through most cost-effective payment method 5

6 Advisory Approach One size does not fit all Citi works with clients to review and implement core and innovative payment solutions to meet working capital and efficiency targets to deliver shareholder value Supplier Spend Solutions Strategic Assessment Opportunity Assessment (S 3 Analytics) Qualitative Assessment Quantitative Assessment (S 3 Analytics) Implementation Roadmap Supply Chain Finance Strategic objectives Key pain points and priorities Best fit timelines Evaluation tools based on publicly available information Includes working capital and peer benchmarking Workshops with key stakeholders On receipt of client data Transaction/ supplier-specific recommendations Solutions based on in-depth analysis and insight Implementation roadmap bundled or modular B2B Cards Solution Ramp-up and Performance Tracking Once solutions are live, Citi continues to drive programme adoption and spend ramp-up Integrated Payments 6

7 Live Audience Polling Question 1 What is your experience with Supply Chain Finance? a) Successful programme in place b) Recently launched and being expanded c) Evaluating the business case d) None but interested to explore e) None not suitable right now 7

8 Live Audience Polling Question 2 What is your experience with B2B Card Solutions? a) Successful programme in place b) Recently launched and being expanded c) Evaluating the business case d) None but interested to explore e) None not suitable right now 8

9 Live Audience Polling Question 3 Which Integrated Payments strategy are you most interested in implementing next? a) Payment instruction warehousing to ensure just-in-time payments to suppliers b) Payment batching to minimise payments issued c) Reduce number of systems and connectivities needed to process payments d) Shift to lower cost payment instruments where possible e) None we ve achieved most of the above 9

10 Live Audience Polling Question 4 Which advisory and analytics approach do you prefer Citi to take to help you redesign your supply chain payment architecture? a) Modular respond on a single payment product basis Instruction b) Holistic provide a holistic review of products available based on my needs, giving me the option to implement on a modular or bundled basis Collaboration 10

11 Scope of Analysis Analytics and Insights There are distinct characteristics within your supplier base that are favourable for different payment strategies. Citi can help quantify benefits of various solutions (1). Citi Big Data Infrastructure Supply Chain Data Source Total Benefit Overview Client Vendor Master Data Insights External Supply Chain Data Citi Transaction Data (2) Accuracy Segmentation Results Proprietary Analysis Methodology Data Cleansing & Enrichment Rules & Algorithms Entity resolution Augmenting with internal & external data feeds Supplier profiling Parameterisation Formulaic analysis of cash flow & efficiency optimisation Supplier segmentation Tailored Client Experience: PDF Reports, online interactive simulation, bespoke advisory service 11 (1) On showcase at Digital Experience room (2) Proof of concept

12 Questions?