Insight & Analysis

ERP-driven supply chain finance: a treasury game-changer?

Published: Mar 2019

ERP systems have been a boon for companies looking to optimise performance and now they are promising to even leverage blockchain-driven solutions for supply chain finance.

Enterprise Resource Planning (ERP) systems on premise or in the cloud are commonly used by companies of any size in any industry to support their internal business processes and overall business performance. They can, for instance, help reduce labour costs, IT expenses and improve interactions between staff and companies.

Rather less appreciated is the critical role ERP applications play in global supply chains, according to Oliver Belin, Chief Marketing Officer at TradeIX, a company that provides working capital and trade finance solutions leveraging blockchain. He points out that in a manufacturing environment, for example, ERP systems ensure that all required materials to produce a final product are available in the right place at the right time. ERP systems also deliver real value when linked to the sales forecasting system. When sales are booked for a product, the corresponding raw materials can be automatically ordered without the need for any human intervention. On the procurement side, suppliers, payables information and the invoice approval processes are also all managed with the ERP system.

“ERP systems store company-wide and trade-related data, critical for the ongoing operation of any business. As such, data captured and stored in the ERP system can be considered as the source of truth,” says Belin, who has previously held supply chain finance positions at PrimeRevenue, GSCF and Sumitomo Mitsui Banking Corp.

In recent years, ERP solutions have migrated to cloud as this offers firms lower operational costs and the potential for leveraging other cloud-based enterprise solutions, such as seamless electronic invoicing, within an ERP environment. Belin, however, says that supply chain data transfer and exchange processes are still costly, lengthy and not scalable: “Getting data integrated across buyer and multiple supplier ERP systems is still very time-consuming. In addition, most ERP systems are disconnected from tech systems managed by financial institutions, ones that corporations rely on heavily for financing trade and working capital. Those kinds of processing bottlenecks and integration hurdles are from our analogue past and are still widely used, but are holding back financial institutions and their clients, from thriving in a digital age.”

But with digital transformation gathering pace, Belin believes there is “a fantastic opportunity for companies and institutions to leverage emerging technologies to revolutionise trade finance, making it smarter, more transparent and better connected”.

Simplify your processes

One promising, emerging solution is the Marco Polo ERP App, an application that can be fully embedded into a company’s ERP system such as Oracle NetSuite and is focused on trade and working capital finance. The solution is delivered by the Marco Polo Network, a fast-growing trade and working capital finance network that leverages the Corda blockchain technology. The consortium comprises technology firms such as TradeIX and R3, as well as over a dozen banks including ING, Commerzbank, BNP Paribas, LBBW, NatWest, Natixis and SMBC.

Belin says that with the Marco Polo ERP App, accessing liquidity and improving working capital is simplified by a factor of one hundred with an unparalleled user experience: “With a simple invitation from a corporate, a trading partner can start the registration process and join the trade finance programme. The whole registration process is performed automatically and is integrated within the ERP system. The trading partner no longer needs to perform any system integration or lengthy onboarding processes. The ERP-embedded App also increases security as KYC information only needs to be submitted once and can be shared securely with other permissioned parties for future requirements.”

Other key features of the Marco Polo ERP App include:

  • Secure and seamless collaboration

    With the integrated purchase order and invoice data exchange, everything is transacted within the company’s ERP system, thereby reducing errors and time. All trade-related data is shared securely, privately and instantly between buyer and supplier via the Marco Polo Network and funded by one of the member banks.

    Customised conditions and matching rules, all set within the Marco Polo ERP App and Corporate Platform, are automatically checking and approving each invoice on the Corda blockchain. By matching invoices and purchase orders companies can approve invoices much faster, which in return increases financing opportunities for funders.

  • Manage all supplier funding requests on one platform

    Companies no longer need to log into multiple external e-invoicing and supply chain finance platforms. Everything is executed within their ERP system, thereby reducing errors and time and increasing security. Requests to financing working capital can also be executed automatically by treasury and be accepted automatically by the bank, based on established rules and programme configurations, reducing costs and time.

  • Multi funder and distribution made easy


    By providing simple access to multiple funding sources such as banks and non-bank funders on invoice level using just one integration, all financial institutions have access to the same underlying data via the Corda blockchain. Funding requests can be automatically routed to specific financier based on rules and conditions, managed all on the Marco Polo Platform.

  • Payment at maturity – automating key processes

    Suppliers share only authorised information. By leveraging blockchain technology, all transactions have a verifiable and immutable audit trail. The automating of key processes, within the Marco Polo Network reduces friction, risk, errors, time and costs for all parties.

Belin warns that as the digital transformation of everything gathers pace, firms and institutions that refuse or are unable to leverage new technology will face existential challenges. “The most dangerous position to adopt is one which says: “We’ve always done it this way and we see no reason to change it”.

“Blockchain-driven initiatives like the Marco Polo Network are showing that the transformation of trade finance is no longer just an idealistic vision. The future is now, and the challenges from our analogue past have paved the way for a new era of opportunity that is enabling early adopters to gain a competitive edge by doing more with less.”

Other blockchain-driven initiatives in trade that have been developed include the Maersk global cross border supply chain solution; the Yijian Blockchain Technology Application System in collaboration with IBM; Chained Finance launched by China-based electronic firm Dianrong and online marketplace lender FnConn (a Foxconn subsidiary); and the Mahindra common platform with IBM.

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