Managing vendors, customers, manufacturers, warehouses, storage and other third party service providers so that goods are produced and distributed in the correct quantities, to the correct locations, and at the correct time, can be an arduous procedure. Transactions require repetitive data entry. Paperwork and administration alone can account for up to 10% of the total costs of an international trade deal. And when a company places hundreds of orders with dozens of different suppliers a day, the potential for human error - and costly mistakes - is huge.
But the problem of accurate information flow is what a web-based supply management solution can solve. "The Internet is considered to be a very cost effective global solution for accurate information transferral," says Ken Stratton, global sales head for trade, supply-chain and B2BeX at Standard Chartered. "An effective web-based supply chain management system drastically cuts down on repetitive data input and related paperwork, significantly reducing the potential for errors."
While many banks have continued to focus on the traditional aspects of trade finance, Standard Chartered has taken the lead with its development of B2BeX. This fully integrated end-to-end supply chain solution was developed in close consultation with clients, supported by a rigorous validation exercise that ensured the platform met their needs.
"We have been providing trade finance and services for over 150 years. It makes absolute sense for us to apply technology to our trade expertise and understanding of clients' needs, to build solutions that deliver real supply chain efficiencies for both the client and their trading partners. This has been a key focus for us over the past few years," says Stratton.
Standard Chartered's B2BeX web-based supply chain solution consolidates each activity between a buyer and supplier, from the origination of a purchase order right through to final settlement, on a single platform. Buyers, suppliers through to authorised third party service providers are able to view the transaction data and documents and add their input. All they need is a personal computer and an Internet connection. Because the original data is "threaded" through each document throughout the entire transaction, the risk of misstating information and errors is significantly reduced. What's more, the transaction can be fully tracked at every step.
The system offers huge benefits. Companies using the platform say they have enjoyed efficiency gains of between 25% and 50% in paperwork and administration. And because orders are less likely to be mislaid, delayed, or misunderstood, and problems come to light much faster, companies can predict shipment and payment times more accurately.
B2BeX has converted many. More than 500 companies in 10 countries around the globe have implemented it since its launch in 2002.
What Price Efficiency?
Dispelling the popular notion that all technology-based solutions cost a fortune to implement, Stratton says that Standard Chartered's B2BeX offers big cost and implementation advantages over other solutions in the market. "You do not need to make a big investment in hardware or software to use B2BeX."
Many existing supply chain software systems require a software platform overhaul - a time-consuming and expensive endeavour. Not so for B2BeX.
"B2BeX complements our clients' existing systems - it is non-intrusive, and does not compete with or replace existing systems," he says. "And, since B2BeX also acts like an application software provider and updates itself over the Internet, you do not need to purchase or install system upgrades."
Secure trading
While take-up is accelerating, fears of theft and technological breakdown still give some corporates pause.
Stratton says there's little cause for concern. B2BeX for instance, operates to the highest security and safety standards. "We have to demonstrate that B2BeX can meet the stringent Internet security needs of central banks in Asia such as the Monetary Authority of Singapore and Hong Kong Monetary Authority," says Stratton. "The data on B2BeX is heavily encrypted so there is no unauthorised access, and we regularly run security checks. All information is also backed up, so it cannot be irretrievably lost. Compare this to using the fax to send letters of credit for example - its far more secure."
Supply Chain Management Gains Momentum
Beyond solution technology, Standard Chartered is also delivering supply chain efficiencies by addressing the financing needs of companies and their trading partners. By leveraging the strategic relationships between their clients and its suppliers and buyers, the Bank offers alternative financing solutions that help finance the flow of goods along the entire supply chain.
"Supply chain financing enables our clients and their trading partners to manage their working capital needs much more effectively," explains Stratton. "With the shift towards trading on open account terms, working capital management is high on the agenda for many corporates."
All said, Supply Chain Management is not a new concept. It is however, gaining currency as a make or break factor.
Companies are realising that top notch supply chain management practices, and the right financial partner with the technology to match, can give them that critical edge in an increasingly competitive and globalised economy.
Ken Stratton is global sales head for trade, supply-chain and B2BeX, Standard Chartered
