1. Introduction Supply Chain Finance (SCF) Lecture # 10
Jan H Jansen

2. Lectures period 2 or 4 Lecture Topic Preparation 8
Introduction to value
Cool connection round 1
Assignment 6 9
CAPM & EVA
Cool connection round 2
Assignment 7 10
SCF instruments
Cool connection round 3
Assignment 8
EBA SCF 11
Blockchain in SCM & SCF
Cool connection round 4
Case Philips 12
Cool connection round 5
Case Unilever 13
Cool connection round 6
Case Heineken 14
Cool connection round 7
Test exam
Exam case

3. Round # 4 The Cool Connection

4. Recap Lecture 9

5. Value concept in business
𝐄𝐕𝐀 𝐓𝐌 =
NOPAT – WACC * Capital

6. EVATM (Stern & Stewart)
NOPAT
Operating Profit
Sales
- Costs
* (1- tax rate)
Costs of Capital
Capital Employed
* WACC
Re * ε
Re = Rrf +β *(Rm –Rrf)
+ Rd * λ *(1-t)

7. Economic Value Added
𝐄𝐕𝐀=𝐍𝐎𝐏𝐀𝐓 −𝐖𝐀𝐂𝐂 ∗𝐂𝐚𝐩𝐢𝐭𝐚𝐥 𝐞𝐦𝐩𝐥𝐲𝐞𝐝 𝐖𝐀𝐂𝐂= 𝐑 𝐄 ∗ 𝛆+𝛌 ∗ 𝐑 𝐃 ∗ 𝟏−𝐭 𝑹 𝑬 = 𝑹 𝑹𝑭 + β * (𝑹 𝑴 - 𝑹 𝑹𝑭 )

8. Lecture 10
SCF instruments

9. EVA™
Working
Capital

10. Levels of SCF instruments
Strategic
Take over
Joint venture
Minority interest
Tactical
Equipment financing
Pay on production
Supply risk sharing
Currency risk sharing
Operational
Working Capital Management
Reverse factoring
Dynamic discounting
Inventory financing
Purchase order financing
Source: SCF, its practical relevance and strategic value, Boer de, R. et al, SCF Community, 2015 Adapted by the author)

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

12. 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’

13. Dynamic Discounting

15. 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

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

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

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

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

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

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

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

23. Collaboration in the chain
No collaboration
Bilateral collaboration
Collective collaboration

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

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

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

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

28. 1a Reversed factoring (Confirming / Approved payables financing)

30. Source: SCF European Market Guide, EBA, 2014

31. Source: http://www. newburyconsulting. co

32. 1b Dynamic discounting
Source: SCF European Market Guide, EBA, 2014

33. 2a Pre-shipment

35. 2b Purchased Order-based finance

36. 3a Receivables purchase

37. 3b Invoice discounting

38. 3c Factoring

40. 3d Forfaiting
Source: SCF European Market Guide, EBA, 2014

42. 4a Documentary trade finance
Source: SCF European Market Guide, EBA, 2014

43. 4b Bank payment obligation (BPO)
Source: SCF European Market Guide, EBA, 2014

45. 4c Asset-based lending

46. 4d Risks: Payments & Foreign exchange

47. Conceptual model SCF for WCM in SMEs