© 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 WeberPage 2
© Siemens AG 2015. All rights reserved. siemens.com
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
24 % of total worldwide
18.870,000
76
Revenue (in billions of €)2
26% of total worldwide
Employees3
20 % of total worldwide
Key production facilities4
26 % of total worldwide
14.462,000
74
Revenue (in billions of €)2
20% of total worldwide
Employees3
18 % of total worldwide
Key production facilities4
26 % of total worldwide
38.7211,000
139
Revenue (in billions of €)2
54% of total worldwide
Employees3
62 % of total worldwide
Key production facilities4
48 % of total worldwide
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.
March 18, 2015 Stefanie Silvia WeberPage 3
© Siemens AG 2015. All rights reserved. siemens.com
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
March 18, 2015 Stefanie Silvia WeberPage 4
© Siemens AG 2015. All rights reserved. siemens.com
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
March 18, 2015 Stefanie Silvia WeberPage 5
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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
33446958General Electric
99673668Siemens
70464568Median
1st2nd3rd4th1st2nd3rd4th1st2nd3rd4th1st2nd3rd4thBenchmarkComparison
Cash ConversionCycleDIO ComparisonDPO ComparisonDSO Comparison
70434370Honeywell
61323463Emerson
70505171Schneider
59464558Philips
945259101ABB
33446958General Electric
99673668Siemens
70464568Median
1st2nd3rd4th1st2nd3rd4th1st2nd3rd4th1st2nd3rd4thBenchmarkComparison
Cash ConversionCycleDIO ComparisonDPO ComparisonDSO Comparison
:
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
March 18, 2015 Stefanie Silvia WeberPage 6
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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
March 18, 2015 Stefanie Silvia WeberPage 7
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Supply Chain Finance Programm
Durch Siemens’ Finanzstärke profitieren
-Powered by Orbian-
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
March 18, 2015 Stefanie Silvia WeberPage 8
© Siemens AG 2015. All rights reserved. siemens.com
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
-Powered by Orbian- €€
Supply Chain Finance@Siemens at workSupply Chain Finance@Siemens at work
Supplier
March 18, 2015 Stefanie Silvia WeberPage 9
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Bank #1 Bank #2 Bank #3
Supply Chain Finance@Siemens at work
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Standard Payment Term w/o Supply Chain Finance
March 18, 2015 Stefanie Silvia WeberPage 11
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Standard Payment Term with Supply Chain Finance
ü
March 18, 2015 Stefanie Silvia WeberPage 12
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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?!
March 18, 2015 Stefanie Silvia WeberPage 13
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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
March 18, 2015 Stefanie Silvia WeberPage 14
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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
© Siemens AG 2015. All rights reserved. siemens.com
Thank you for your attentionZug / March 18th, 2015
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