Asian Financial Supply Chains Get a Boost

Standard Chartered Bank, based in Singapore, announced last month an alliance with SAP Ariba to expand the bank’s supply chain reach across Asia. We chatted with both to get some perspective about the joint venture.

Intersection of Strong Emerging Market Presence & Improved Supply Chain Visibility

Standard Chartered has a strong presence in emerging markets, where many buyers source their goods, said Sean Thompson, SVP and general manager of business network and ecosystems at SAP Ariba. 

The partnership will help reduce the $5.2-trillion financing gap for small- and medium-sized businesses, as estimated by the International Finance Corporation and SME Finance Forum. Because the SAP Arib network is bigger than the bank’s, this gives the bank and its clients access to an expanded market.

“Millions of buyers and suppliers around the world are already using SAP Ariba to manage their physical supply chain. Through this collaboration with Standard Chartered, we’re enabling those companies to also manage their financial supply chain through the same network and have the choice of Standard Chartered for their financing needs.”

This will give the bank’s clients better visibility over their supply chains, which will allow companies to adapt more quickly to changes and be less vulnerable to geopolitical risks such as the trade war, Thompson added.

Digitalization of the Supply Chain

Lisa Robins, global head of transaction banking at Standard Chartered, said the bank will use the SAP Ariba network to support clients throughout their procure-to-pay lifecycles by accelerating the digitization of the supply chain.

“As we embrace open banking, we connect communities across our footprint and provide access to integrated solutions that enable our clients to grow their businesses sustainably,” she said.

Thompson added, “Supply chains across Asia are getting a real workout in today’s volatile political environment. New tariffs cause businesses to rethink the way products are engineered, how suppliers in various countries are managed, and possible modes of transportation between countries to reduce tariffs.”

Wanted: More Suppliers, Less Risk

Companies in Asia have to respond to U.S. tariffs on China and rising wages. Some large shippers have already started moving production out of China, Thompson said.

“Companies need to build strong relationships with their suppliers today to ensure they meet the needs of tomorrow,” he added. “They also need to have systems in place to locate similar suppliers who can meet their needs in new locations, but more importantly, ensure the suppliers they choose do not pose risk.”

SAP Ariba offers a supplier risk module that can identify risks before a new supplier is signed.

“Despite time urgency, compliance controls should not be compromised, as cutting back on this critical aspect is what can push us into being more reactive than proactive, which inevitably results in higher costs,” Thompson said.