Financial Supply Chain - Daniel Cotti, ABN AMRO

The supply chain has become more complex as markets expand globally, encouraging open account trading, which has disintermediated banks.

However, according to ABN AMRO, leading banks are developing value-added services to integrate physical and financial supply chains, which demands much closer relationships with their clients.

Globalisation and ever-improving technology have made a huge impact on the way companies do business. However, while these developments create opportunity, they also bring with them greater complexity - especially in physical and financial supply chains.

Equally, established trading partners have moved, ever increasingly, into open account trading menu. Expansion into, and sourcing from, new markets need close evaluation of supply chains and optimisation of any potential efficiencies - be they in finance, process / logistics or a combination of both.

Long-time trade banks like ABN AMRO are very much part of this changing environment and clearly recognise the need to support customers in their constant drive to minimise cost and maximise efficiency, while raising service levels.

INDIVIDUAL ATTENTION

However, giving definition to a supply chain is not always an easy matter. Different industries, different geographies, different supply chain structures mean it is essential to identify client 'drivers' and what is important to the client.

Intercontinental supply chains are more complex than those that are domestic or within a regional block such as the European Union. The greater the global reach, the more a corporate will encounter diverse sets of regulations, systems and protocols that shape both logistics and finance processes.

Daniel Cotti, head of transaction banking, Europe and global products at ABN AMRO notes that 'each company reviews their supply chain with their own specific objectives in mind – whether it be cost efficiencies, operational efficiencies, the strengthening of buyer / supplier relationships, the putting in place of supply chain financing and so on. For a bank to effectively help them, we must understand their drivers.'

THE RIGHT EXPERTISE

ABN AMRO has a separate supply chain business unit which brings together both technology and financial specialists across their global network who are able to work with a client and their supply chain.

In this regard, it is important that clients share both their current processes, and where known, any planned changes to these. A 'supply chain' is a dynamic environment where the only constant is that of change.

The process of providing say, supply chain financing, is often a catalyst for change as the underlying information flows, required servicing and data management processes are taken into consideration. As such, the ethos is very much one of a working partnership given the high degree of customisation that is an integral part of any successful delivery.

WORKING WITH THE WHOLE CHAIN

Also, while the principal relationship may be between say, a buyer and their bank, working with the buyer also requires that the needs of the buyers' suppliers are taken into account – wherever they may be.

A bank's supply chain offering should allow for both letters of credit and open account trading. Letters of credit will continue to have a role while support for open account trading should extend beyond just 'settlement' handling to include purchase order management and receivable management systems with attendant document preparation capabilities where required.

CUSTOMERS IN CONTROL

Much has been written and said on the supply chain and the roles that banks can play. As ever, this role will ultimately be dictated by the corporate world. In the same way as developing a supply chain proposition cuts across several disciplines in a banking environment, the same is the case in a corporate environment. Thus it is crucial for a bank to always ensure it understands not only what is required but also the key driver behind those requirements.

As Dani Cotti emphasises, 'discussion may be generic but execution is customised. Value should be described by those who need it, rather than those who need to sell it.'