Supply Chain Finance continues to grow
Seventy-five percent of top European banks still believe growth prospects for Supply Chain Finance (SCF) will remain “strong” or “very strong”, according to Demica’s latest research report on the Supply Chain Finance market conducted amongst the top 40 European banks.
This represents a somewhat more cautious outlook compared to 2010 opinion, but shows the enduring appeal of SCF despite slow economic recovery and concerns in the Eurozone. Respondents anticipate annual SCF growth rates between 10 and 30 percent per annum in mature markets, and 20-25 percent in emerging markets where the need for financing is particularly pressing to help cope with rapid expansion. ‘
Growth over the next few years will primarily be driven by developed economies such as the US and Europe, along with larger emerging economies including China and India.
Respondents to this latest Demica research noted that the financial markets crisis, followed by anemic economic growth and current concerns about the spread of the sovereign debt crisis across the Eurozone, has propelled optimum liquidity management to the top of the financial management agenda, prompting a heightened interest in supplier financing.
In mature markets, working capital optimization and reduction of supply chain risk have been identified as the primary drivers for establishing SCF programs. In emerging economies, access to liquidity and enabling suppliers to keep pace with buyers’ growth are the key motivations.
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Although SCF is seen as having growth prospects in both mature and emerging markets, corporations and banks still face a number of challenges in order to maintain and increase the momentum of adoption. Especially in emerging markets, bank financiers believe that legal and jurisdictional issues and access to technology platforms require further work to accelerate SCF growth.
However, with the growing popularity of domestic SCF facilities, respondents expect that supplier financing solutions will take on a new dimension as corporations and banks are increasingly interested in extending this success into global programs.
“The corporate credit squeeze triggered by the financial crisis has made companies much more aware of the need to optimize working capital and to protect their smaller suppliers in order to avoid supply chain disruptions,” Phillip Kerle, Chief Executive Officer of Demica, said. “Particularly in emerging markets, suppliers might not have sufficient working capital and often have poor access to bank credit. By binding suppliers into a structured SCF program, buyers can ensure the financial health of their suppliers and thus secure their supply chains.
“This strengthened awareness has contributed to the accelerated growth of SCF in the past few years across a wide spectrum of industry segments such as retail, consumer goods and manufacturing as well as different geographic regions including Europe, the Americas and Asia.”
Edited by Kevin Scarpati
SAP Ariba to digitise procurement for Expo 2020 suppliers
The global trade event, this year hosted in Dubai, was rescheduled from last year and will now take place between 1 October 2021 and 31 March 2022.
As the event’s Innovative Enterprise Software Partner, SAP Ariba solutions will fully digitise and automate the procure-to-pay lifecycle, providing a streamlined experience for thousands of market leading, global suppliers and strengthening the global supply chain with enhanced transparency and efficiency. The cloud-based platforms operate through on SAP Ariba’s UAE public cloud data centre and connects to the Ariba Network.
Expo 2020 "a long-term investment"
Mohammed AlHashmi, Chief Technology Officer, Expo 2020 Dubai, said the world trade event is “a long-term investment in the future that aims to enhance opportunities for sustainable business connectivity and growth”, which stretches beyond Expo 2020’s six-month window.
“Our partnership with SAP is an example of what can be achieved with the invaluable support of our technology partners to host one of the most digitally advanced World Expos ever,” he added. “The implementation of SAP Ariba solutions has transformed our end-to-end procure-to-pay cycle and helped set new standards of procurement automation for projects of this scale.”
To date, more than AED 1bn has already been transacted by Expo 2020 suppliers through SAP Ariba. The platform promotes collaborative partnerships and allows registered users to participate in sourcing events, negotiate and initiate contracts, and centralise their invoicing and payments in real time.
Claudio Muruzabal, President of EMEA South, SAP, said: “Expo 2020 Dubai is demonstrating global best practices in digitising its procurement process with SAP Ariba solutions to help gain visibility into its spend, tighten collaboration with its suppliers, and achieve process automation, including completely paperless invoicing.”
About Expo 2020 Dubai
Expo 2020 will take place in Dubai and is the first of the long-running World Expos to be hosted in the Middle East, Africa and South Asia territory. The original World Expo, called the Great Exhibiton, was hosted in 1851 at the Crystal Palace in London, designed as a showcase for the innovations of the Industrial Revolution.
Expo 2020 was originally due to run 20 October 2020 to 10 April 2021, but was last year postponed in light of COVID-19 restrictions - though some business has already taken place virtually. The event will place greater emphasis on innovation in sustainable solutions through the Sustainability District, blending technology and culture. It is expected that around 70 per cent of the 25 million attendees will be international visitors.