Euromoney, is part of the Delinian Group, Delinian Limited, 8 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2023
Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Innovative Financing for Strategic Procurement

Sponsored by


Sourcing and supply strategies have become increasingly sophisticated in recent years, with companies across industries taking a more strategic approach to procurement in view of shifting ecosystems.




Ashutosh Kumar 
Global head – commercial banking, global transaction banking

Corporate procurement functions aim to improve the resilience, transparency and responsiveness of their supply chains. This is to ensure quality products are supplied on a timely basis, but also to allow dynamism in the face of industry changes.  

To achieve this, corporations need to establish long-term, trusted relationships with key suppliers. This is where a partnership between procurement and treasury functions can reap rewards. In particular, treasury can support strategic procurement efforts through innovative supplier financing mechanisms – both pre- and post-shipment – to strengthen relationships, reduce supply chain friction and ensure a company can meet the needs of its customers.

Flexible ecosystems

Various factors have coalesced in recent times, prompting a focus on strategic procurement. Globalization is cited most, bringing new customer and supplier opportunities, but also driving pricing pressures via greater competition. 

Digitization is also disrupting large buyers and their suppliers, increasing the need for flexibility and investment along supply chains. Some industries are beyond the disruption phase and already under transformation, which is dramatically altering procurement strategies and supplier relationships.

In the automotive industry, for example, we are seeing a rapid shift towards autonomous vehicles, electrification, connectivity via the internet of things (IoT), and shared mobility. As a result, automotive manufacturers are now working with suppliers to encourage innovation and to secure supplies of new components and services including telematics, sensors and semi-conductors, and energy storage technologies. 

The development of reconfigured ecosystems is not restricted to the automotive industry: manufacturing, retail, healthcare, media, transport and many others are experiencing transformations. Consequently, it is becoming more challenging to maintain the quality and sustainability of supply in complex, large-scale supply chains – and these need to be flexible in order to adapt to changing customer needs, competition and cost pressures. 

Building stronger networks

Ensuring suppliers have appropriate access to financing will be key to achieving this flexibility – not simply for tier-one suppliers (i.e. those that have a direct relationship with the buying organization), but throughout the supply chain. This will include a variety of small and medium-sized enterprises (SMEs), which typically find it more difficult to access financing. According to Asian Development Bank (ADB) figures, 74% of SME trade finance requests are rejected, compared with 7% among multinational corporations. ADB has calculated that a trade finance gap of USD1.5 trillion exists among SMEs globally, constraining growth and job creation.  

Most banks traditionally offer post-shipment financing to tier-one suppliers. This brings working capital benefits for the buyer and supplier, but does not support financing needs across the wider ecosystem. This finances invoices on goods and services that have typically already been produced and shipped, but does not provide liquidity support to suppliers to enable production of those goods and services. 

One alternative is pre-shipment financing. This involves financing suppliers to enable them to source raw materials, manufacture goods and maintain inventory before goods are shipped to buyers. Pre-shipment financing can be challenging for banks, as assessing performance risk using traditional methods is not easy, particularly in countries where credit data agencies are absent, or where data is incomplete. 

Standard Chartered has developed a unique pre-shipment financing proposition for the suppliers of large corporates. The bank’s relationships range from the largest corporations through to SMEs, and it has a deep knowledge of, and long-standing presence in, many of the world’s key sourcing markets. The bank’s detailed understanding of industry, country and supplier risk profiles in these markets has further enabled it to bring pre-shipment financing solutions to the table. 

Pre-shipment finance enables buyers to achieve their strategic procurement objectives whilst also bringing value to suppliers across their ecosystems. Pre-shipment finance based on a buyer’s ecosystem also strengthens key relationships, further enhancing sustainability and reliability of supply, particularly in the event of competing buyer demands.

Digital disruptions

One of the challenges of financing complete ecosystems is a lack of visibility over the diverse and numerous participants within it. For example, a clothing retailer buys shirts from a manufacturer, but that supplier will need to buy textiles, thread, buttons, cutting and sewing equipment etc. from other suppliers. These suppliers too will have multiple inputs in terms of raw materials and equipment to produce their goods. Consequently, when the retailer presents an invoice to the bank for post-shipment financing to a supplier, that invoice effectively reflects multiple invoices that have been paid, or are due to be paid, throughout the supply chain. 

Given that suppliers choose when to make payment based on their liquidity position and bargaining power with their own suppliers, providing post-shipment financing to tier-one suppliers alone will not support a buyer’s objective of ensuring stability and liquidity across a supply chain. Increasingly, corporations are leveraging solutions such as blockchain-based smart contracts to enhance visibility over the suppliers that comprise their supply chains. Banks too have a growing opportunity to leverage these technologies and enhanced visibility to offer solutions that provide access to liquidity through the multiple tiers of a buyer’s procurement chain. 

Drawing on strategic partnerships

The most successful procurement operations over the next few years will be those that are able to make transformational changes in the way that they structure and support their supply chains, including how they harness new technologies, invest in digital ecosystems and leverage data. The focus will not simply be on reducing cost, but increasing value and flexibility within supply chains to improve the quality, competitiveness and nimbleness of supply. Treasury and partner banks have a vital role in supporting strategic procurement in this regard, by providing finance at the right time and to the right counterparts, as a catalyst for innovation, digitization and industry change.



This material has been prepared by Standard Chartered Bank (SCB), a firm authorised by the United Kingdom’s Prudential Regulation Authority and regulated by the United Kingdom’s Financial Conduct Authority and Prudential Regulation Authority. It is not independent research material. This material has been produced for information and discussion purposes only and does not constitute advice or an invitation or recommendation to enter into any transaction.

Some of the information appearing herein may have been obtained from public sources and while SCB believes such information to be reliable, it has not been independently verified by SCB. Information contained herein is subject to change without notice. Any opinions or views of third parties expressed in this material are those of the third parties identified, and not of SCB or its affiliates.

SCB does not provide accounting, legal, regulatory or tax advice. This material does not provide any investment advice. While all reasonable care has been taken in preparing this material, SCB and its affiliates make no representation or warranty as to its accuracy or completeness, and no responsibility or liability is accepted for any errors of fact, omission or for any opinion expressed herein. You are advised to exercise your own independent judgment (with the advice of your professional advisers as necessary) with respect to the risks and consequences of any matter contained herein. SCB and its affiliates expressly disclaim any liability and responsibility for any damage or losses you may suffer from your use of or reliance on this material.

SCB or its affiliates may not have the necessary licenses to provide services or offer products in all countries or such provision of services or offering of products may be subject to the regulatory requirements of each jurisdiction. This material is not for distribution to any person to which, or any jurisdiction in which, its distribution would be prohibited.

You may wish to refer to the incorporation details of Standard Chartered PLC, Standard Chartered Bank and their subsidiaries at

© Copyright 2018 Standard Chartered Bank. All rights reserved. All copyrights subsisting and arising out of these materials belong to Standard Chartered Bank and may not be reproduced, distributed, amended, modified, adapted, transmitted in any form, or translated in any way without the prior written consent of Standard Chartered Bank