Manufacturing Executive - September 2008 - (Page 29)

chip producer, Intel wants to sell nology to move messages about the state of the processing power that would goods in production or transit, and to electronienable this virtual, possibly bankcally transmit invoices in a standard system that free money machine. automatically triggers payments rather than re“If the banks don’t wake up and quiring human intervention. start paying attention to what the For instance, using RFID chips and sensors, a client needs, the risk is someone container carrying waxed jackets and sitting on a else will get in the game,” says ship in Singapore could transmit information via a Enrico Camerinelli, a Milan-based WiMax network to the Internet. A retailer in Lonsenior analyst with research and don that has ordered the goods would receive inadvisory group Celent. He likens formation assuring it that the jackets aren’t melting. supply chain finance’s future to On the basis of that confidence, the retailer might the emergence of PayPal on the forward payment to the jacket maker once it reconsumer Internet, where PayPal ceives an electronic invoice from the jacket maker. has taken over many aspects of No bank, but lots of technology. the payment processing role This is controversial stuff, and cutting banks while relegating banks to the very last step of simply The emergence of technology that hastens sending money. the information flow between buyers and That “someone else” stepping in for banks could be a sellers is pressuring banks to deploy new big company with a financ- financing services in the supply chain. ing arm and close links to IT and logistics, such as IBM or out of the chain altogether seems to some people UPS, Camerinelli says. Or it could about as likely as eliminating Microsoft from PCs. be a transaction processing firm “It’s not going to happen,” says John Burton, or business-to-business facilitator, marketing director for London-based consulting such as GT Nexus or GXS. and technology company Petra Financial. But, Ashley Dowson, director of the he adds, the emergence of technology that hasSEPA Consultancy in London, tens the information flow between buyers and says it could also be a company sellers is pressuring banks to deploy new financsuch as Travelex, known for proing services in the supply chain. “Banks are feelviding currency exchange but outing the squeeze. I heard one bank say, ‘We used to fitted with technology it could use be able to charge $20 for a letter of credit; now to manage electronic invoicing. we’re struggling to get anything.’ Their revenue is And Sarah Jones, CEO of Londondrying up, so they’re saying, ‘How else can we based SCF Capital, a technology and consulthelp you on payments?’ It’s pressuring them to try ing firm, says that big companies at the end of to get to know their customers more.” the supply chain, like a BAE, might be willing to GETTING TO KNOW YOU provide faster, but discounted payments to global suppliers. That means banks are under pressure to tie into Another possibility: A nascent European paythe information networks that reveal the state of ment system called TWIST could begin to regoods in a supply chain and potentially lessen place the SWIFT payment co-operative owned by the risk of the unknown. Without that informabanks and often criticized for inefficiencies and tion, banks can claim they’re taking a big risk proprietary systems that favor banks. and charge more for financing as a sort of FUD What these alternative ideas have in common (fear, uncertainty, and doubt) tactic. But with is the notion that banks are not well-tuned into intechnology-driven information becoming information about goods as they move around the creasingly available to them and their emergsupply chain. Likewise, traditional banking mething competitors, they’ll have little choice but to ods for financing the supply chain, such as letters use it. That means they will instead have to offer of credit, are relatively inefficient and costly. On slicker and faster payment services. Those servtop of that, many banks have famously run into ices will include “factoring,” in which they buy their own financial hardship, making them unpayables and then provide immediate, but diswilling or unable to front money to suppliers on counted payment, rather than making a small affordable terms. supplier wait, say, 90 days for full payment. The alternative is to make better use of techSome banks are indeed responding to the IT September 2008 29

Table of Contents Feed for the Digital Edition of Manufacturing Executive - September 2008

Manufacturing Executive - September 2008 Contents Editor's Letter Opinion By David Humphrey Starters Road Trip Part 1: Innovation or Efficiency? Part 2: The Innovation Gap Opinion By Lisa Bodell Special Report: Great Aspirations Supply Chain: The New Money Machine Product Design: Fruehauf Gets into High Gear with 3D CAD Business Intelligence: Food Distributor Turns Up the Heat on Manufacturers Software: Manufacturers Face SaaS Hurdles Dialogue Opinion By Pierfrancesco Manenti

Manufacturing Executive - September 2008

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