Photo of Fabrice d’Agostino, Director, Business Control Supplier Management.
Fabrice d’Agostino
Director, Business Control Supplier Management
Tetra Pak is a world-leading food processing and packaging solutions company. Working closely with its customers and suppliers, it provides safe, innovative, and environmentally sound products that meet the needs of hundreds of millions of people in more than 160 countries.
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SCF programme compatible with Tetra Pak’s ERP globally leads to impressive roll-out
The challenge
Tetra Pak’s customers have, in recent years, sought to extend their payment terms. To remain competitive, Tetra Pak was eager to accommodate its customers’ expectations. However, longer payment terms for customers would have a significant impact on Tetra Pak’s own cash flow and working capital. It therefore sought to extend its supplier terms to a minimum of 60 days which was an additional 40 days for some of its suppliers. Tetra Pak recognised this would present cash flow challenges for many suppliers.
The solution
Tetra Pak has a global business model with multiple buying entities in various countries around the world; its finance organisation also has a global approach, including supplier management. It was therefore important to work with a bank that could implement a truly global SCF programme to achieve consistency, minimise the administrative burden associated with managing the programme (including the use of multiple file formats) and control costs. Tetra Pak also intended to implement the SCF solution using a global team with centralised direction of the rollout. It wanted to work with a bank that could align with this structure to ensure an orderly, carefully coordinated implementation.
One additional complication was that many of Tetra Pak’s suppliers work with multiple buying entities around the world. Tetra Pak wanted to minimise disruption and inconvenience for these suppliers and sought to onboard them with multiple buying entities in a single process. This is contrary to the onboarding process operated by most banks, which typically onboard multiple suppliers in a single country or region to a single buying entity.
Citi was the only bank able to meet Tetra Pak’s need for a global programme in the countries where it operates. Tetra Pak and the bank worked together to design an SCF solution to meet its needs, developing a file format compatible with Tetra Pak’s ERP globally and the bank’s SCF platform (which is available in 95% of the countries covered by Tetra Pak’s programme). The file format selected facilitates a fully automated solution where Tetra’s ERP pushes the payment files onto the bank’s platform, which subsequently processes the payment and sends a notification back to Tetra Pak’s ERP. The bank was able to adapt its onboarding processes to accommodate Tetra Pak’s desire to pursue a supplier-focused rollout, where suppliers would be onboarded with multiple Tetra Pak buying units around the world simultaneously.
Based on the successful implementation of one buying entity, Tetra Pak then drew up a list of target suppliers for the global expansion of the programme, which is being rolled out in a series of phases.
Best practice and innovation
Many global companies have implemented SCF solutions. However, few have attempted to implement a truly global SCF solution, choosing instead to implement multiple local or regional programmes. Tetra Pak wanted to ensure consistency and efficiency and align its SCF programme with the global approach taken by its finance function. Moreover, Tetra Pak’s business model means that suppliers have relationships with multiple global buying entities; to make the SCF programme as straightforward as possible for suppliers, a truly global implementation was required.
“We developed an IT solution that covers 95% of designated countries and achieves automation via full integration with our ERP and our bank’s platform,” says Fabrice d’Agostino, Director, Business Control Supplier Management.
Key benefits
- Extended supplier payment terms with positive impact on cash flow and working capital for suppliers and Tetra Pak.
- Plans for extending payments by at least 15 days until end of 2021.
- Relationships strengthened.
- Stable supply chain.
- Processes streamlined.
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Chakib Mentouri
EMEA Trade Client Manager, Treasury and Trade Solutions
Citi
Tetra Pak aimed to roll out the programme globally across multiple buying entities and global supplier relationships. They mandated Citi based on our global footprint which gives us the ability to implement the solution in multiple regions simultaneously using the same connectivity. We worked together to design and develop a file format compatible with Tetra’s ERP globally and Citi’s Supply Chain Finance platform, facilitating an automated approach from the processing of invoices through to payments to suppliers and reconciliation at maturity. We also worked on a global supplier onboarding strategy to meet Tetra’s expectations.
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