World Trade - September 2008 - (Page 20) The Future of Trade Integrating Cash, Trade and Logistics into Global Supply Chain Management -Bernie Hart, executive director Global Trade Services JPMorgan Chase & Co. o some, the idea of a bank participating in logistics and the physical supply chain may be puzzling. To others, however, it is a brilliant insight into the future of international trade. A tight association exists between the financial documents necessary to settle letter of credit or financing terms and the customs documents required to smoothly and swiftly move goods across borders. Realizing this, financial institutions are building trade management powerhouses to help corporations manage working capital and liquidity throughout their global operations. As a result, their global trade services teams have the ability to manage end-to-end physical and financial information flows. Integrating Physical and Financial Supply Chains When viewed in parallel, the financial supply chain represents the management of cash, inventory and capital, while the physical supply chain signifies the management of products and information. Actions within the physical and financial supply chains are interdependent; T therefore, an action in one realm causes a reaction within the other—and not always for the better. For example, a company’s procurement team switches sourcing from Mexico to China in order to cut manufacturing costs. While the pure product cost may have decreased, the transportation and logistics costs increased, as did the uncertainty related to the extended transportation network. Plus, the company loses potential savings available through the North American Free Trade Agreement (NAFTA), a free trade program arrangement between Canada, Mexico and the Unites States. Understanding the financial profile of supply chain activities is critical to evaluating alternatives that drive efficiencies in physical operations and lower the cost of capital embedded in the supply chain. JPMorgan’s Global Trade Services is the only financial institution group incorporating technology, consulting expertise and business process outsourcing to help businesses manage financial and physical supply chains while mitigating risk. ADVERTORIAL
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