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A Checkered Flag for Supply Chain Finance in the Automotive Industry “Everyone has shortages. The supply chain is one of our biggest threats1.�

Carlo Bailo, Head Research & Development, Nissan Americas


AUTOMOTIVE INDUSTRY AND CURRENT ISSUES Working capital efficiency and cash flow availability are critical for any industry but none more so than in a capital intensive sector in a growth cycle such as the automotive industry.

Management strategies such as “just-intime” are now the norm, with automotive manufacturers relying on a handful of suppliers in order to ensure the smooth continuation of production lines.

The automotive industry is a term that covers a wide range of companies and organizations involved in the design, development, manufacture, marketing, and selling of motor vehicles, towed vehicles, trucks, motorcycles and mopeds. In terms of industry it is one of the world's most important economic sectors for many countries in the world.

The industry is capital intensive with financing either expensive or restricted to both large and small suppliers. Further, supplier relationships have historically been strained among the large manufactures and their suppliers.

While larger manufacturers have reported increased profits which allows them better financing rates, suppliers are often at the mercy of banks’ restrictive lending policies. Lack of access to timely and affordable financing can sound the deathknoll for suppliers that cannot accurately predict their cash flow when being asked by their customers to extend payment terms. Supply Chain Finance continues to be attractive to companies, especially those with sensitivity to efficient physical supply chains. Particularly the automotive sector often relies on tight networks between the buyer and the suppliers and where small disruptions can result in serious consequences further along the value chain. Supply Chain

What better way to help the stability of the supply chain and help suppliers manage costs than by providing cash flow visibility and on-demand working capital financing through Supply Chain Finance.

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Source: OESA, Deloitte 2013

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A checkered flag for supply chain finance in the automotive industry