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Supply Chain Finance: Building the Treasury Business Case

  • By Andrew Deichler
  • Published: 2/10/2016

Euro1LONDON -- James Marshall, head of treasury for Virgin Media, provided attendees of the ACT Cash Management Conference tips on how treasury can engage stakeholders and the board of directors in a supply chain finance (SCF) program.

Marshall began by noting that the supply chain for Virgin Media is “of critical importance” because in many cases, Virgin’s suppliers are their only customer facing contacts. “The only person you would ever meet, face-to-face from half of Virgin Media, could well work for a third-party company,” he said. As a result, it’s very important to Virgin that these individuals represent the company well.

Marshall noted that when Virgin set up its SCF program, it concentrated on trusted suppliers that it had some very strong relationships with. Additionally, it put together a small and targeted project team to work on the program, comprised of people from treasury, procurement and legal. “We were all learning from our peers; they were helping us initiate this program. They gave us some clear guidance for setting this program up. It helped us perceive bottlenecks which we could address and settle,” Marshall said.

Engaging stakeholders and the board

Marshall gave attendees a glimpse into Virgin’s process for building the business case for a SCF program for stakeholders and the board. Doing so has allowed Virgin’s suppliers to work with the company at a very senior level. “For example, if the contractors that work with us have a problem, they don’t phone me or the junior person in procurement. They have a direct line to the chief operating officer, or even the CEO,” he said.

Marshall provided some tips for engaging stakeholders and the board:

  • Set hard targets need for various functions.
  • Establish a project team early in the process.
  • Choose the right partner that can support the business case and provide a tailor-made solution.
  • Prepare a detailed business case showing short-term and long-term benefits to the company.
  • Eliminate the misconception that a SCF solution can only work when suppliers have a weaker credit profile than the buyer’s. Marshall noted that all suppliers are aiming to optimize liquidity/cash, prioritize credit management and want to optimize their balance sheet.

“Hopefully, you can see from our complicated model and our complicated supplier base that the next phase of us is one of us using supply chain finance to do some pretty complicated projects that will hopefully generate some returns in the future,” Marshall concluded.

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