Visa Syncada CEO preaches supply chain visibility
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Not surprisingly, it’s getting harder and harder for supply chain companies to recoup the capital listed on their outgoing invoices. What is surprising are the overall inefficiencies of the system between shippers and carriers.
“There’s a lot of time spent and energy invested when the phones start ringing and the carrier wonders when they’re going to get paid,” Visa Syncada CEO Kurt Schneiber said. “If the supply chain for the next shipment isn’t paid, and a carrier is already behind for two months of payments, and he might just say ‘You know what? I’m going to wait.’”
KURT SCHNEIBER ON THE FINANCIAL SUPPLY CHAIN
According to Schneiber, that disconnect is happening at a much faster rate thanks to a market flooded with smaller carriers.
“Because the carrier market is so fragmented, their access to funds is restricted,” Schneiber said. “The ability to finance those invoices is quite valuable. Carriers without access to cash can be strapped, and might not be as predictably available to the shippers.”
So, what can carriers do? According to Schneiber, adding visibility into their own supply chain is a good place to start.
“Many of these carriers sit at a distance, and they have a clouded vision of the process to get their services approved and paid at the offices of their buyers,” Schneiber explains. “They don’t have actual visibility into their own costs, and shippers struggle to manage the true freight spend.”
Automating the invoice presentment process can help matters, while making invoices crisp and clear in their language can also make for faster payments. It’s there that Visa’s financial supply chain mastery can step in.
“Part of the Syncada solution is an embedded trade finance mechanism that allows for immediate financing for an invoice as soon as it’s approved by the system,” Schneiber said. “This makes it so that buyer and supplier, shipper and carrier, know exactly when something is approved.”
CITI AND SYNCADA FORM VISA PARTNERSHIP
The battle between shipper and carrier continues to wage throughout the global financial supply chain thanks to rising logistics costs, and Schneiber thinks that companies would be wise to improve their supply chain visibility, because he sees this problem as a long-term issue.
“I think these costs will level out when the economy reaches greater stability, but it might be difficult to identify that point in time,” Schneiber said.
EU and US agree end to Airbus-Boeing supply chain tariffs
The EU and US have agreed to resolve a 17-year dispute over aircraft subsidies, suspending tariffs on billions of dollars' worth of goods that have plagued procurement leaders on both sides of the Atlantic.
Under an agreement reached by European Commission Executive Vice-President Valdis Dombrovskis and US Trade Representative Katherine Tai on Tuesday, the tariffs will be halted for a period of at least five years.
It will bring an end to punitive and disruptive levies on supply chains that have little to do with the argument, which became embroiled in the trade battle. Businesses on both sides of the dispute have been hit with more than $3.3bn in duties since they were first imposed by the US in October 2019, according the EC.
The US imposed charges on goods upto $7.5bn in response to a World Trade Organisation ruling that judged the EU’s support of Airbus, its biggest aircraft manufacturer, unlawful. A year later in November 2020, the EU hit back. The WTO found the US had violated trade rules in its favourable treatment of Boeing, and was hit with EU duties worth $4bn.
In all the tariffs affected $11.5bn worth of goods, including French cheese, Scotch whisky, aircraft and machinery in Europe, and sugarcane products, handbags and tobacco in America. Procurement leaders on both sides of the fence were forced to wrestle with tariffs of 15% on aircraft and components, and 25% on non-aircraft related products.
Boeing-Airbus dispute by the numbers
- The dispute began in 2004
- Tariffs suspended for 5 years
- $11.5bn worth of goods affected by tariffs
- $3.3bn in duties paid by businesses to date
- 15% levy on aircraft and 25% on non-aircraft goods suspended
Both sides welcome end to tariffs
European Commission President Ursula von der Leyen branded the truce a “major step” in ending what is the longest running dispute in WTO history. It began in 2004.
“I am happy to see that after intensive work between the European Commission and the US administration, our transatlantic partnership is on its way to reaching cruising speed. This shows the new spirit of cooperation between the EU and the US and that we can solve the other issues to our mutual benefit,” she added.
Both aircraft manufacturers have welcomed the news. Airbus said in a statement that it will hopefully bring to an end the “lose-lose tariffs” that are affecting industries already facing “many challenges”. Boeing added that it will “fully support the U.S. Government’s efforts to ensure that the principles in this understanding are respected”.
The US aerospace firm added: "The understanding reached today commits the EU to addressing launch aid, and leaves in place the necessary rules to ensure that the EU and United States live up to that commitment, without requiring further WTO action."
This week’s decision expands upon a short-term tariff truce announced in March this year. The EC says it will work closely with the US to try and further resolve the dispute, establishing a Working Group on Large Civil Aircraft led by each side’s trade minister.
Airbus last month signalled to suppliers that post-pandemic recovery was on the horizon, telling them to scale up to meet a return to pre-COVID manufacturing levels. “The aviation sector is beginning to recover from the COVID-19 crisis,” said Airbus chief executive Guillaume Faury, adding that suppliers should prepare for a period of intensive production “when market conditions call for it.”