Supply Chain Finance SCF Lecture 6 Jan H

Supply Chain Finance (SCF) Lecture 6 Jan H Jansen E-mail: jansen@han. nl

Lectures period 1 or 3 Lecture 1 Topic 2 Introduction SCF & Elements of SCF: SCM, Purchase, APS, ERP and ICT Financial ratios 3 Du. Pont Analysis & Value 4 Working Capital 5 Working Capital Management Dynamic Discounting 6 SCF instruments Introduction The Cool Connection Cool connection round 1 Risk management in SCF Cool connection round 1 (evaluation) 7 Preparation Assignment 1 Annual reports 2016 & 2017 Unilever, Philips & Heineken The Power of SCF Annual reports 2016 & 2017 Unilever, Philips & Heineken Assignment 2 Case study KPN Assignment 3 Case study SCF EU Assignment 4 Case study ACCA Standard definitions for Techniques of SCF EBA SCF Assignment 5 Standard definitions for Techniques of SCF EBA SCF

Recap Lecture 5

Supply Chain Finance: How it all fits together (developed by JH Jansen)

Any questions? Source: http: //www. accaglobal. com/ab 111

Conceptual model SCF for WCM in SMEs

Supply Chain Finance Instruments (‘Umbrella’) Source: Standard definitions for techniques of Supply Chain finance, 2015

EVA™ Working Capital

Dynamic Discounting (Source: Standard definitions for techniques of supply chain finance, June 2015, Global supply chain forum) ‘A number of methods through which early payment discounts on invoices awaiting payment are offered to suppliers. The service is dynamic in the sense that the earlier the payment the higher the discount’

Dynamic Discounting Discount 3, 5% 3, 0% Discount % 2, 5% 2, 0% Discount 1, 5% Linear(Discount) 1, 0% 0, 5% 0, 0% 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Number of days crediit

Dynamic discounting (Source: http: //primerevenue. com

Source: http: //primerevenue. com

Assignment 5

Lecture 6 SCF instruments

Lecture 6 Case Standard definitions for Techniques of SCF

Aim of the report Clear set of definitions, so there is no more: uncertainty, ambiguity and lack of clarity when SCF terminology is used Authors / Members: • ICC • BAFT • EBA • FCI • IFG • ITFA

SCF definition (1) Source: Standard definitions for techniques of Supply Chain finance, ICC Global SCF forum. , 2014

SCF definition (2) Source: Standard definitions for techniques of Supply Chain finance, ICC Global SCF forum. , 2014

SCF definition (3) Source: Standard definitions for techniques of Supply Chain finance, ICC Global SCF forum. , 2014

SCF definition (4) Source: Standard definitions for techniques of Supply Chain finance, ICC Global SCF forum. , 2014

SCF definition (5) Source: Standard definitions for techniques of Supply Chain finance, ICC Global SCF forum. , 2014

Definition SCF (Source: SCF – European Banking Guide, EBA, 2014)

Physical Supply Chain (PSC) & Financial Supply Chain (FSC) Figure 16 Supply Network management as defined by Slack, A. et al. (Slack, 2011)

Collaboration in the chain • No collaboration • Bilateral collaboration • Collective collaboration

New pattern in trade flows Source: Standard definitions for techniques of Supply Chain finance, ICC Global SCF forum. , 2014

Source: Standard definitions for techniques of Supply Chain finance, ICC Global SCF forum. , 2014

Supply Chain Finance Instruments (‘Umbrella’) Source: Standard definitions for techniques of Supply Chain finance, ICC Global SCF forum. , 2014

Supply Chain Finance Instruments (‘Umbrella’) 1. Accounts payable / Buyer centric a. b. 2. 3. 4. Reversed factoring (Confirming / Approved payables financing) Dynamic discounting Inventory centric a. b. Pre-shipment Purchased Order-based finance Accounts receivable / Supplier centric a. b. c. d. Receivables purchase Invoice discounting Factoring Forfaiting Related a. b. c. d. Documentary trade finance Bank payment obligation (BPO) Asset-based lending Payments & Foreign exchange

1 a Reversed factoring (Confirming / Approved payables financing)

Source: SCF European Market Guide, EBA, 2014

Source: http: //www. newburyconsulting. co. uk/wp-content/uploads/2013/12/supplierfiancemodel. JPG. bmp

1 b Dynamic discounting 3, 5% Discount 3, 0% Discount % 2, 5% 2, 0% 1, 5% Discount Linear(Discount) 1, 0% 0, 5% 0, 0% Source: SCF European Market Guide, EBA, 2014 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 Number of days crediit

2 a Pre-shipment

2 b Purchased Order-based finance

3 a Receivables purchase

3 b Invoice discounting

3 c Factoring

3 d Forfaiting Source: SCF European Market Guide, EBA, 2014

4 a Documentary trade finance Source: SCF European Market Guide, EBA, 2014

4 b Bank payment obligation (BPO) Source: SCF European Market Guide, EBA, 2014

4 c Asset-based lending

4 d Risks: Payments & Foreign exchange