Financial Supply Chain

Case Study: Top European Retailer One of the biggest and best-managed retailers in Europe thought early about supply chain finance as a smart way to reduce the overall working capital costs within its production and distribution chain.

Case Study: Top European Retailer

UniCredit Bank AG

One of the biggest and best-managed retailers in Europe thought early about supply chain finance as a smart way to reduce the overall working capital costs within its production and distribution chain.

The central treasury experts were determined to leverage the company’s superior credit rating to reduce the overall financing costs of their suppliers worldwide, by facilitating the early financing of their invoices after they have been approved by the accounts payables department.

UniCredit emerged as the natural first choice for the deal. The collaboration between UniCredit and this leading retailer group is a success story. After going live in August 2010, the international roll-out of the supply chain finance programme proceeded smoothly, maintaining a high degree of client satisfaction. Three factors were especially important in making the deal successful:

Seamless integration into the client’s procurement process

Over time the retailer developed a functionality-rich ‘supplier portal’ for the management of information flows with its sourcing partner: through a web platform, the suppliers can monitor the status of their orders, invoices and payments. UniCredit plugged its supplier finance solution into this portal in a fully automated way thus increasing the efficiency of the accounts payable systems of the client. On the supplier side, the option of triggering UniCredit’s discounted payments for approved invoices appears as a value-added feature in a consistent client’s sourcing portal.

Global structure, local execution

One of the biggest challenges posed by the client’s plans was the geographical scope of the supply chain finance programme, which spanned the whole of Europe. UniCredit proposed a multi-domestic approach: the bank set up a global centre of competence, acting as a single point of contact for the client and drafting the framework agreements with the client’s headquarters in Switzerland. At the same time UniCredit’s local legal entities were requested to provide on-the-ground support in the respective markets.

International onboarding effectiveness

From day one, UniCredit and the client agreed on a principle: the effectiveness of the supplier onboarding is the most important factor in determining the success of a supply chain finance programme.

In every country where supply chain finance is being deployed, UniCredit set up a dedicated unit that has been specifically trained to approach the suppliers in the local language and follow through until they are ready to trigger discount payments online.

The communication strategy was defined in close agreement with the client’s procurement.

Thirty suppliers joined the programme after only a few weeks from its first go-live, and many more are joining at a steady rate.

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