Category: Manufacturing & industrial
Winner: Metso Corporation
Summing up: Metso offered multiple solutions to ensure that suppliers’ needs were met. A combination of a standard supply chain finance programme and dynamic discounting allows Metso to capture the whole spend curve – not just a part of it.
What the judges said: “The combined solution of dynamic discounting and SCF allows the company to flexibly optimise its working capital or cash investments. Offering multiple solutions to suppliers is truly best practice – and rarely seen.”
- Combined Citi for supply chain financing and C2FO for dynamic discounting
- Thereby covered the full spectrum of suppliers, large and small
- Achieved Metso’s balance sheet and P&L objectives
In implementing its supplier finance programme, Metso’s overriding objective was to provide win/win early payment solutions across its entire supply chain. To be truly helpful to suppliers, it was essential that early payment was never forced on them but that it remain an opt-in scheme.
Metso selected Citi as a SCF provider, while selecting the cutting-edge technology of the C2FO Dynamic Discounting marketplace. Suppliers are able to obtain low cost financing by leveraging Metso’s good credit standing while new tools help procurement optimise supplier performance, enhancing supplier relationships.
Metso itself set specific financial objectives including improved ROCE. Citi’s SCF programme provides balance sheet improvements while the C2FO marketplace provides a higher yield on cash, directly increasing EBITDA.
Metso works in more than 50 countries and so it was important that the selected partners had a global reach that matched Metso’s as closely as possible.
The C2FO dynamic discounting programme generates significant risk-free returns on cash in northern Europe and the rate of supplier uptake was around 20% of eligible suppliers within just a month of ‘go live’. The numbers continue to grow rapidly with very positive feedback about the flexibility and ease of use of the platform. The platform takes an innovative market-based approach by which suppliers can offer the rate at which they are happy to discount their invoices for early payment. C2FO then optimises these offers based on a set of parameters controlled by Metso, such as cash availability and yield. The solution is therefore truly dynamic, maximising benefits for both suppliers and for Metso.
The Citi supply chain financing arrangement has made it possible to significantly increase DPO through payment terms extensions. Around 40% of qualifying suppliers have been successfully onboarded so far. The programme covers seven Metso entities in six countries, and is likely to be expanded to other countries.
Metso recognised that there is no ‘one size fits all’ solution, so adopted an approach that was a combination of solutions that could successfully work together to help thousands of large, medium and small suppliers.