Stay up-to-date withflow newsbites>
Choose your preferred banking topics and we will send you updated emails based on your selection
Leveraging such capability, Deutsche Bank has done fairly well on supplier onboarding, where the bank has made quite a lot of investment. “As a leading supply chain finance bank globally, we need to keep investing in this space to support our clients,” Ip points out. “We didn’t step up our technology investment because of the pandemic – it is something that we have been doing ever since.”
Deutsche Bank has a supplier onboarding portal, which allows for a more efficient onboarding process. “You don’t want to take three to four months to onboard a supplier as they maybe running out of cash,” says Ip. “It might then potentially impact our anchor’s production or sales, and a bank cannot have a successful supply chain finance programme if it does not have an efficient supplier onboarding process.”
“Deutsche Bank is in a state of not just innovating – we do listen to the market as well,” adds Tan. “We do see what the requirements are and we respond accordingly. We’ve created a self-help scheme where suppliers will be able to onboard themselves into the programme and ultimately do away with the need for hard copy documents.”
What Deutsche Bank has done is understand the suppliers’ pain points and then create a portal to ease the onboarding process. “The turnaround time has been shortened by a fair bit and even the servicing comes out more efficiently,” says Tan.
The Bank also has something like a dashboard, which gives its clients the look and feel of analysing how their suppliers are performing under the programme. It is currently working to improve the dashboard’s capability from the user’s perspective. Deutsche Bank likewise has a bank-agnostic trade information network, which clients can connect via an API (application programming interface).
One of the things that has emerged against the current market backdrop is the growing involvement of the procurement team in the decision of suppliers to join a supply chain finance programme. Says Ip: “Previously, the procurement team might not care whether suppliers join in the bank’s supply chain finance programme or not. As long as the suppliers agree to the payment terms without the use of additional financing, it was fine with the team as they achieved their objective anyway. Joining the programme or not is not an issue.”
Nowadays, the situation is changing. “Even if the suppliers agree to extend the payment terms, the procurement team still want the suppliers to be in the supply chain finance programme,” says Ip. “They strongly recommend that the suppliers join the programme because they do not want to see any sudden bankruptcy and the business shutting down. They have to ensure the suppliers have the liquidity during the difficult situation.”
For Ip, this is, indeed, a common trend. “Previously, we see the struggle between the treasury team and the procurement team when they want to launch a supply chain finance programme. Now they are actually working closely together – they have common KPIs (key performance indicators) on the working capital improvement. Cost definitely is important. Efficiency comes next and risk assessment will also be a key KPI for the procurement team.”
Adds Tan: “Apart from efficiency, every corporate is now looking at the so-called risk mitigator. It is no longer about how fast can I move, but what are the risks that I will face if I move this fast.”
In addition, while saving is still taken into consideration, corporates are now stocking up on their inventory to minimise the impact of possible disruptions in the supply chain. They want to ensure a robust sourcing of raw materials, and it does not matter whether their potential suppliers are located onshore or offshore. “If there will be a disruption in the supply chain, it is important for corporates to have alternative sources to be able to continue production,” says Tan.
Another key observation is how suppliers themselves are diversifying their production base to other countries. “In this regard, it is necessary for Deutsche Bank to match the footprint of our clients,” says Ip. “We need to have the network to engage our clients in different locations to be able to provide a sustainable supply chain finance programme.”
This article first appeared in the September 2020 edition of The Asset magazine