Photo of James Hayward and Ng Poh Yee, UOB, collects the award on behalf of Samsung High-Tech Electro-Mechanics (Tianjin) Co Ltd.

The banking partner in this solution proposed to interface the banks’ systems with the company’s ERP (SAP) via SWIFTNet connectivity which provided a global cash management platform with a standardised data environment and a high level of security.

SWIFTNet solution integrated with company’s ERP

The challenge

As one of the largest suppliers of electronic parts in China, TJEM procures raw materials both domestically and from overseas. Often, the company needs to make large volumes of payments to its domestic and overseas suppliers through several banks in China. These payments are typically initiated via the banks’ electronic banking channels. This process proved to be cumbersome, as TJEM has to hold various tokens and login IDs from each bank. Moreover, as each bank utilises their own proprietary system, TJEM spent large amounts of time logging into and navigating these different systems. After transacting, TJEM had to send status reports on the payments to SEM for reconciliation at a HQ level. For a large multi-national corporation such as Samsung, this mode of transacting was highly time-consuming and inefficient.

Kang Hong, Manager of the Financial Group explains, “With the objective of streamlining our processes, we sought to look for a more efficient solution to cater for our operational needs.”

The solution

TJEM engaged United Overseas Bank (China) (UOB (China)) to provide a solution that could meet its needs. After gaining a clear understanding of the client’s needs, UOB (China) proposed to interface the banks’ systems with the company’s SAP enterprise resource planning (ERP) solution via SWIFTNet connectivity.

As a first step, TJEM and UOB (China) set up the SWIFTNet connection for FIN/MT101, which allows TJEM to transfer single payment instructions via MT101 SWIFT message. Subsequently, UOB (China) developed a special payment file format in XML, which can be generated directly from TJEM’s ERP and can also be mapped to and processed by the bank’s back-end system for batch payments in both domestic and foreign currency. The entire development process took about four months, with the solution going live in the third quarter of 2017.

Source: Samsung High-Tech Electro-Mechanics (Tianjin) Co Ltd

With this solution, TJEM is able to submit payment instructions via its own ERP to SEM. SEM, as a SWIFT member, will then send the payment instructions on behalf of TJEM directly to the banks via SWIFT. As a result, SEM has not only been able to centralise and to handle its subsidiaries’ payments, it has also gained the ability to monitor all the transactions.

This solution has enabled TJEM to process payments directly from its ERP system to multiple banks’ back-end systems in a more efficient way.

Operationally, it is also less risky for TJEM as there is no longer a need to keep numerous e-banking tokens, eliminating the risk of abuse and misuse. TJEM is now only required to remember one user ID and password. As a value-added proposition, UOB (China) also provides MT940 report service to facilitate TJEM’s account reconciliation at the HQ level.

Best practice and innovation

The SWIFTNet solution integrates SEM’s ERP with the banks’ systems to deliver efficient multi-bank applications.

As a large multinational corporate, centralised cash management is very important to SEM. SWIFTNet provides a global cash management channel with a standardised data environment at a high level of security. TJEM can also manage and approve its daily transactions via its own ERP system. There is also greater transparency to SEM with SWIFTNet. SEM can easily retrieve the financial information from its own ERP system instead of downloading the account statements from the banks e-banking platforms.