The involvement of procurement played a key role in supporting petrochemical producer Sabic’s hunt for the right supply chain finance programme provider, said Eric Woons, head of cash management at the Saudi Arabian firm.

“Procurement was really excited about this,” he told delegates at the SCF Forum in Amsterdam, saying the division had already been approached by some suppliers enquiring about the possibility of setting up SCF programmes.

Woons said ensuring other stakeholders such as IT and the legal department were convinced of the benefits of an SCF programme was vital before the company took their tender to market.

While one of the main aims of the SCF programme was to improve Sabic’s working capital by extending its DPO, Woons said it also would bring additional benefits to the procurement team. It was a “tool” they can use in negotiations with suppliers and a way of strengthening their supplier partnerships, he said.

He explained how before the tender was taken to market, he worked alongside procurement with a small group of suppliers to gather data and calculate theoretically what kind of working capital gain an SCF programme would bring. Sabic brought on two banks to look at the initial data. “In the end it was even better,” he said. “The numbers we were shown at the RFI [request for information] were better than the ones at the beginning.”

With the support of procurement, Sabic was also able to share detailed procurement data – under a non-disclosure agreement – with the last round of bidders during the tender process.

Woons told delegates it was important that the winning bidder in the tender process had a product that would win over their suppliers. “What was really important was how our suppliers perceive the product,” he said. “As soon as suppliers think it is too complex and too much work,” they might not want to join the programme, he explained.

Sabic also worked closely with supply chain advisory firm Capital Chains on formulating the RFI. Having a third-party advisor on-board helped Sabic navigate the ever-evolving fintech and SCF provider market. The tender process has now completed with a provider and platform selected. It is now pending board sign-off.

Read more case studies and insight from the SCF Forum Europe 2018