Supply Chain Sustainability: Always in Demand

Philips partners with C2FO to deliver low-cost early payment to suppliers of all sizes

Philips, the multinational health technology company, has the same forward-thinking approach to ESG initiatives as it does to its technological innovation. With the roll-out of a solution to support its suppliers’ cash needs that offers fair and affordable access to liquidity on demand, Philips stands proud with the Highly Commended accolade in the TMI 2021 Treasury4Good Award for Best Sustainable SCF Solution.

Best Sustainable SCF Solution
Highly Commended

Philips

Dutch multinational health technology company Philips’ focus on its responsibility towards society drives its determination to embed sustainability in every aspect of its business. Its supplier sustainability programme has ambitious goals to see at least 50% of its suppliers committing to science-based targets for CO2 emissions reduction by 2025. This ambition is matched by an equally powerful sense of responsibility to consider the financial health of all of its suppliers.

Changing up

Philips was one of the first companies to implement a supply chain finance (SCF) programme back in 2009. However, it acknowledged the deficiencies of its existing SCF programme in current market conditions, and was looking for a new solution that optimally engaged suppliers of all sizes.

“Given the growth of dynamic discounting and the need to support all our suppliers, we felt we were lagging behind the industry in terms of innovation,” admits Alexander Visser, Philips’ Head of Indirect Procurement and Spend Management. “After an in-depth review of the market, we chose to implement the C2FO platform, which has evolved traditional ‘early payment’ to a stronger market-based model.”

It set a number of goals for its new solution:

Rapid delivery

For Visser, C2FO’s team was fully committed to the project and was keen to get early results on behalf of Philips. “We implemented within 10 weeks, achieving an ROI within the first 30 days, and have rolled the programme out to 133 different countries, in multiple currencies within the first few weeks,” he says.

With the Philips Early Payment Programme going live in July 2018, it has since improved the financial stability of thousands of Philips’ suppliers worldwide. In the first 60 days after launch, the programme delivered more than €15m of accelerated payments to suppliers across 60 countries.

In supporting government-backed initiatives that promote access to liquidity for SMEs – such as the Netherlands’ Betaalme.nu scheme, the European Union’s Late Payment Directive and the UK’s Prompt Payment Code – C2FO’s Early Payment platform is conspicuously helping Philips maintain the long-term sustainability of its supplier network.

Indeed, at the height of the pandemic, Philips created a special rate market for supply chains supporting the COVID-19 response. With help from C2FO, using the flexibility of the platform, within two days Philips set up an early payment platform for producers of medical equipment so they could be paid sooner, and at preferential rates, to meet the increase in demand for medical equipment.

Of course, the real test is how Philips’ suppliers respond. “At first I was sceptical about the platform because it sounded too good to be true. I decided to try it once, and I never stopped using it,” enthuses Zeljko Susljic, Owner, Little Shop of Translations. He adds that where many buyers often use their suppliers “as a free loan facility”, he feels Philips’ positive approach makes him “even more motivated to provide extra service and quality”. It’s a ringing endorsement that just adds to the validity of Philips’ Highly Commended accolade in the Treasury4Good Best Sustainable SCF Solution category.

Commenting on the success of the project, Andrew Burns, SVP EMEA, C2FO: says: “It is an honour and privilege to work with Philips and have them win this Award. It’s unique to find a partner who is so aligned with the goals and mission of bringing a more sustainable solution for their supply chain. What Philips has been able to accomplish in a short amount of time is remarkable. The programme is a global success, deployed across 133 countries and helps support more than 20,000 suppliers in their network who are receiving the cash they need to grow their business. We are also very proud to collaborate with Philips to create a specific solution during the Covid-19 crisis dedicated to the medical industry. This is truly a win everyone can celebrate.”