Supply Chain Finance Program for capital efficiency ... Speaker... · Supply Chain Finance Program...

© Siemens AG 2015. All rights reserved. siemens.com

Supply Chain Finance Program for capitalefficiency optimization at Siemens

Stefanie Silvia Weber, March 18th, 2015

March 18, 2015 Stefanie Silvia Weber


Siemens` Global presenceClose to customers all over the world

10.9115,000

69

Revenue (in billions of €)2

15% of total worldwide

Employees3

33 % of total worldwide

Key production facilities4


18.870,000

76



Employees3




14.462,000

74



Employees3




38.7211,000

139



Employees3




Americas

Germany

Europe, C.I.S.,1 Africa, Middle East(including Germany)

Asia,Australia

All figures refer to continuing operations.1 Commonwealth of Independent States. 2 By customer location. 3 As of September 30, 2014. 4 Fifteen employees or more.



Building TechnologiesWorld leader in building technologies headquartered in Zug

The division Building Technologies is the world’sleading provider of safe, secure, energy-efficientand eco-friendly buildings and infrastructures. As atechnology partner, consultant, service provider,systems integrator and product vendor, we haveofferings for fire safety, security, buildingautomation, heating, ventilation, airconditioning and energy management.

WWW.SIEMENS.COM/AR/BUILDING-TECHNOLOGIES

FY 2014 FY 2013

Orders in millions of € 5,587 5,769Revenue in millions of € 5,569 5,754Employees (as of September 30) in thousands 27 28



Collaborative Financial Supply Chain Management

Supplier Siemens Customer

LiabilitiesSupply Chain

Finance

ReceivablesSiemens Credit

Warehouse

InvestmentsSales

Financing

InvestmentsSupplier

InvestmentFinancing

Exemplary collboration in the supply chain

LiabilitiesSupply Chain

Finance



Siemens DPO in a competitors’ Benchmark

70434370Honeywell

61323463Emerson

70505171Schneider

59464558Philips

945259101ABB

33446958General Electric

99673668Siemens

70464568Median

1st2nd3rd4th1st2nd3rd4th1st2nd3rd4th1st2nd3rd4thBenchmarkComparison

Cash ConversionCycleDIO ComparisonDPO ComparisonDSO Comparison

Working Capital Benchmark : Study Results

70434370Honeywell

61323463Emerson

70505171Schneider

59464558Philips

945259101ABB


99673668Siemens

70464568Median



70434370Honeywell

61323463Emerson

70505171Schneider

59464558Philips

945259101ABB


99673668Siemens

70464568Median



:

Source: The Hackett Group 2010 REL working capital DSO = days sales outstandingDPO = days payables outstandingDIO = days inventory outstandingCash Conversion Cycle = DSO + DIO - DPO

-

4th 3rd 2nd 1st LeadingSource: The Hackett Group 2010 REL working capitalMedians are based on industry segment

4th 3rd 2nd 1stLagging Leading



Motivation to establish a SCF-Programme

LieferantenCustomer Supplier

„Longer pay termswithout change in

prices“

„That‘s notpossible“

„ok! We accept thelonger terms“

„That‘s notpossible“

„ok! We get theCash flow from our

Suppliers“„Only if we discuss

prices“Profitability

Profitability

Supplier

Profitability

Profitability



Supply Chain Finance Programm

Durch Siemens’ Finanzstärke profitieren

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Supply Chain Finance Programm

Durch Siemens’ Finanzstärke profitieren

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Siemens SCF Program makes use of a technology platform that links Siemens and itsSuppliers of goods or services with a 3rd party financier. This solution allows the suppliersto benefit from early payments at very low cost.

supplierBankBankBankBank supplier

Siemens Supply Chain Finance Program (SCF) is designed to give selected Siemens’suppliers access to cash at Siemens’ financing rates to

§ Increase suppliers’ cash§ Reduce suppliers’ cost of capital

Supply Chain Finance@Siemens



5. SCF Program purchases receivablesby paying after 2 business days

6. Payment of Invoices atmaturity date to Program

1. Supplier delivers goods/servicesand invoices Siemens€

Supply Chain Finance Program

Leveraging Siemens Financial Strength

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Supply Chain Finance Program

Leveraging Siemens Financial Strength

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Supply Chain Finance@Siemens at workSupply Chain Finance@Siemens at work

Supplier



Bank #1 Bank #2 Bank #3

Supply Chain Finance@Siemens at work



Standard Payment Term w/o Supply Chain Finance



Standard Payment Term with Supply Chain Finance

ü



Challenges of the Supply Chain Finance program

Procurement§ Payment terms not equally in focus§ Abstract promise to pay = loss of rights§ General reluctance to discuss finance topics§ Multidivisional - suppliers

Accounting§ Due Diligence to ensure that trade

payables will not be reclassified tofinancial debt

IT§ Modification of complex IT-environment§ Number of systems to be implemented§ Profit Center Accounting

Legal§ Payment to new owner of

receivables rather than to supplierTreasury§ Negative impact on buyer‘s credit line for the benefit of the

supplier§ On-balance financing preferable?!



Supply Chain Finance fosters a win win situation inthe supply chain

Improve Cash FlowGet paid fast, 2 business days following Siemens’approval of the invoice

Optimize Working CapitalNon-recourse cash drastically reduces Days SalesOutstanding (DSO)

Enhance Debt CapacityReduced reliance on debt can improve overall cost ofdebt

Increased Transparency & Reduced CostsReduce processing and collection costs by viewingall the approved invoices

Supplier

Improve Cash FlowExtend supplier pay terms (ex. New standard: 60 daysnet)

Reduce Supply Chain RiskInject cash into supply chain via low cost early payment

Strengthen Supplier RelationshipDifferentiate from competitors and build supplier loyalty

Streamline ProcessesReduce number of payment terms and methods

Siemens



Where are we at Siemens with theSupply Chain Program today?

Over 1500 supplierparticipating in theprogram

Continuously growingamount of transactionsand volume

Roll out statusEligible supplier countries and currencies

ü

ü


Thank you for your attentionZug / March 18th, 2015

Supply Chain Finance Program for capital efficiency ... Speaker... · Supply Chain Finance Program...

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