Best Supply Chain Solution Winner: Autoliv China

Published: Jan 2024
Photo of Violet Yang, Lisa Xie, Autoliv China and Charley Zhang, J.P. Morgan.

Photo of Violet Yang, Lisa Xie, Autoliv China and Charley Zhang, J.P. Morgan.

Yang Liu

VP Finance
Autoliv logo

Founded in 1953, Swedish-headquartered Autoliv Inc. is the worldwide leader in automotive safety systems. Autoliv’s 69,000-plus employees operate in 27 countries and delivered US$8.8bn in net sales as of FY2022. Established via a joint venture in Nanjing in 1989, Autoliv now operates in China with over 8,000 employees.

in partnership with

J.P. Morgan logo

SCF programme includes centralised supplier onboarding

The challenge

With a dozen entities throughout China and a shared service centre (SSC) in Shanghai, Autoliv China has the challenge of simplifying payment flows for its 420+ overseas suppliers from more than 35 markets with invoices in more than nine different currencies. With high frequency of orders and delivery to meet production timings, this has resulted in more than 1,000 cross-border transactions per month, all handled manually.

Autoliv China’s factories have to prepare all the paperwork, such as contracts, invoices, custom declaration forms and tax declaration forms for cross-border payments, and then send the hard copies to Autoliv’s Shanghai SSC which consolidates the documents and mails them to the bank to process the payments.

Besides open account payments, a significant portion of these cross-border payments comprise supply chain finance (SCF) maturity payments, which were payments made by Autoliv to banks that had financed its suppliers ahead of the payments due date. Invoices and supporting documents were couriered to the banks, which is time-consuming, labour-intensive, and subject to a greater likelihood of human error.

The solution

As a first step to automate the payment flows process, host-to-host (H2H) connectivity was established between J.P. Morgan and Autoliv’s own in-house built Supply Chain Finance Management middleware, allowing the direct transmission of payments instructions via an industry-approved format and supporting documents such as invoices via secure file transfer protocol (SFTP).

This also enables Autoliv to tap into China’s single-window system for custom clearance using J.P. Morgan’s API technology. Be it cross-border payments under open account trades, or cross-border SCF maturity payments in different currencies to overseas J.P. Morgan branches, all Autoliv has to do is upload a simple spreadsheet with customs declaration numbers via the bank’s virtual branch module, and the system will retrieve all the relevant data and documents from the customs’ official database, automatically fulfilling the compliance checks and requirements.

It is a great honour to receive this award and a big recognition to us as well. The award inspires our company and team to continue this kind of innovation and transformation in more processes.

Yang Liu, VP Finance

Autoliv has centralised the onboarding of suppliers. By categorising suppliers by regions and currencies, J.P. Morgan helped centralise all European suppliers in Frankfurt, all North and Latin American suppliers in New York and all Asia-Pacific suppliers in Hong Kong. As such, Autoliv’s global suppliers, even if they sell to Autoliv entities in multiple markets, will only need to be onboarded once. With this solution, the volume of transactions was streamlined to twice a month to these three locations for SCF maturity payments, reducing the number to about 100 transactions in 2022 while ensuring the company’s suppliers are still being paid in a timely manner.

In addition, Autoliv has also utilised the bank’s payment tracker, a DIY service tool that leverages the bank’s network in clearing and participation in the Swift gpi initiative, to monitor the payment status of its suppliers in almost real-time, online.

Best practice and innovation

In China, Autoliv’s ability to offer a unified, streamlined open account payments and multi-currency supply chain finance maturity payments system, as well as an end-to-end process, is one of the first in the market.

By centralising the onboarding process, more suppliers, are now willing to join the global SCF programme.

Key benefits

  • Cost savings.

  • Number of banking partners/bank accounts reduced.

  • Process efficiencies.

  • Improved key performance indicator (KPI) metrics.

  • Increased automation.

  • Risk mitigated.

  • Improved visibility.

  • Errors reduced.

  • Manual intervention reduced.

  • Increased system connectivity.

Charley Zhang

Executive Director, APAC Trade Head, Corporate & Investment Bank Payments, J.P. Morgan

With this comprehensive payment solution that we developed for Autoliv China, we are able to help them automate their end-to-end payment processes in both open account payment and supply chain maturity payment, resulting in reducing the administrative burden of gathering supporting documents, minimising errors and expediting the payment process. The success of the solution was the result of the cooperation across multiple teams between Autoliv and J.P. Morgan, we are proud to be a part of this journey.

in partnership with

J.P. Morgan logo

The Adam Smith Awards Asia is the industry benchmark for best practice and innovation in corporate treasury. The 2023 awards attracted 450 nominations. To find out more please visit treasurytoday.com/adam-smith-awards-asia

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