Increasing stability, resilience, and transparency in supply chain is becoming critical for organisation looking at multi-tier financing.
The fragility of the existing systems with increased inefficiencies of global supply chains reflected in recent times is making companies seek help to keep prices low and cost of operations under check. Other issues linked to business transactions, such as adverse impact on the environment, unequal distribution of economic benefits, and the presence of child labour and human trafficking in supply chains, have been brought into sharp focus by the growing attention to environmental, social, and governance (ESG) concerns and sustainability issues.
Channelling financing to deeper tiers in supply chain is the defining feature of DTSCF (Deep Tier Supply Chain Finance). It differs from traditional SCF (Supply Chain Finance)/payables finance model, which is limited to Tier 1 suppliers. The key differentiation in DTSCF lies in leveraging the anchor client’s credit profile and integrating a mechanism to distribute financing to the lower tiers of suppliers. For a successful DTSCF model to function, a platform-based approach, digitally connecting all participants is recommended.
This approach addresses and resolves several critical issues related to deep-tier financing:
Evolving landscape in connected supply chain order fulfilment process involving exportation of goods to overseas market.
Organisations are looking for a solution to bridge the financing gap by opening new channels for suppliers to address their problems with accessing traditional trade finance.
Deep-Tier Supply Chain Financing process involving multi-party especially with multiple geographies is becoming a critical business requirement.
Buyers and sellers make commercial decisions about how they contract, finance, deliver, and settle their transactions.
The lack of visibility and transparency leads to inefficient supply chain, with collaboration issues and inability to enforce effective risk-free contracts.
The Deep Tier Supply Chain Financing process is a complex process covering multiple organization with heavy documentations and multiple contracts.
Current supply chain financing process involving multi-tiers is a time-consuming manual tasks and delays can significantly impact the business revenue and profitability.
Our state-of-the-art blockchain-based platform, allows the anchor corporate’s (end buyer’s) credit profile to unlock financing for their multi-tier and strategically important supplier network digitally.
The accelerator enforces effective risk-free contracts with reduced cycle times and enhanced user efficiency eliminating time-consuming manual tasks. The accelerator also enhances greater real-time collaboration across multi-tier suppliers in a multi-party environment with tamper-proof record of transaction documents and data with auditability. It also helps to digitally fulfil KYC (Know Your Customer) Requirements. There is a substantial opportunity for all participants to contribute and track success in managing their sustainability and ESG commitments and responsibilities throughout the supply chain.
The modular framework offers excellent flexibility and can be easily integrated into all industry verticals, irrespective of the nature of the underlying sector.
The app also enhances greater real-time collaboration across stakeholders in a multi-party environment with tamper-proof record of transaction documents and data with auditability.
“dltledgers uses blockchain for digitalising cross border trade contracts, providing a digital repository of transaction documents in multi-tier, with auditability, track and trace, sustainability, and integrating with the flow of money.”
– Raof Latiff, Group Head of Digital, Institutional Banking, DBS