Supplier Financing at Bosch und Siemens Hausgeräte (BSH)
by Kai Schrickel, Head of Corporate Finance Department and Group Treasurer, BSH
2007 marked the 40th anniversary of Bosch und Siemens Hausgeräte GmbH (BSH), a joint venture of Robert Bosch GmbH and Siemens AG, which operates in the white goods industry. Since its incorporation in 1967, the company has grown from three factories in Germany with 14,000 employees and EUR0.5bn revenues to a multinational corporation comprising 70 companies, 45 factories located worldwide, 38,000 employees and revenues over EUR8.3bn. Our factories produce a wide range of domestic appliances and consumer products distributed through a global sales and support network. BSH’s brand names are amongst the most well-respected in the industry, including Bosch, Siemens, Gaggenau, Neff, Constructa and Thermador.
We identified supplier financing as a potential risk for BSH so we undertook a project to help mitigate this risk.
The market in which BSH operates is highly competitive. Consequently, we need to drive efficiencies at every stage of the supply chain. Initially, we identified supplier financing as a potential risk for BSH, therefore we undertook a project to help mitigate this risk. As part of this, we wanted to help address liquidity problems experienced by some of our suppliers. Many of these are unrated small-to-medium-sized companies located in all parts of the world. These companies do not necessarily have the financial strength or access to the market which is available to BSH. Where external financing is available at all, it is generally expensive which then has a knock-on effect on BSH through increased costs. Furthermore, financial risks of suppliers can ultimately impact BSH. If their ability to deliver to BSH is hindered, our production capability can also be affected.