Supply Chain Finance Spotlight: Exclusive Interview with Markus Schiffers, Orbian
Markus Schiffers, Managing Director of Orbian, offers his insights on the changes in the supply chain finance industry.
Could you share with our readers, in a few words, your professional background before joining Orbian?
My career started at Germany´s central bank before I joined Siemens Financial Services in 2000. As Head of Operations and later as Head of back-office, I was overseeing teams that were processing factoring and forfeiting transactions. From 2005 to 2008 I was delegated to the US to run a factoring and asset-based-lending business for Siemens Financial Services. During that time we were re-financing multiple SCF programmes of corporates in the US. This is when we recommended the Siemens CFO in the US to build a SCF programme for Siemens US.
We assessed the market and, as a result, we decided to build our programme with Orbian, which was initially focused on the US and Canada. After that, I was working for Siemens Treasury in Munich from 2008 to 2011 with the mandate to building a SCF programme for Europe and Asia using the successful US programme as a blueprint. More recently, I worked in different management roles in the US and Switzerland before I joined Orbian in January 2018, 3 years after leaving Siemens.
What were your main reasons for joining Orbian and has your perspective on the industry changed since then?
After working with Orbian on implementing and operating the Siemens programmes, joining the company felt like a very natural move for me. A little bit like coming home. In the end, I am deeply convinced of supply chain finance that the Orbian financing structure and its capabilities to onboard suppliers are still unique in the industry. Orbian with its SAP-based proprietary system has a strong technology footprint, but it is a financing company and not (only) a technology provider. This is why Orbian is able to be the contractual and technological interface to buyers, their suppliers and banks. All of those relationships are contractually separate and isolated from each other, providing many advantages for all participating entities in the SCF programmes.
My perspective on the industry has not changed. There are failed programmes out there, but this is not to be confused with supply chain finance being a failed product. Overall, it seems the market is growing a healthy 30% a year, which gives us plenty of opportunities.
You have developed the first bank-agnostic supply chain finance programme on the European market and you have managed to implement it with multiple Siemens’ procurement organizations across Europe. Could you briefly tell us how these bank agnostic programmes/solutions have developed over time?
Both Siemens programmes, i.e. the US programme and the European programme, include multiple procurement organisations, multiple IT systems, multiple buyer and supplier countries, and multiple currencies. Looking at a history of almost 10 years and more than 8 years respectively, both programmes developed tremendously well. In total, more than 3.500 suppliers have been onboarded to the programmes and every single invoice that suppliers offered for discount was discounted, even in times of financial crisis when others programmes had to suspend discounting. Many banks, especially the ones without their own SCF programmes, understood that Orbian provides them access to attractive financing opportunities. Overall, the willingness of banks to fund on the Orbian platform has grown ever since.
What are (still) the biggest challenges for corporates trying to roll out a global supply chain financing programme?
I believe the challenges of rolling out a programme have not changed. Supply chain finance is a collaborative effort to improve working capital for both the buyer and its suppliers. As such, we share our experience in rolling out programmes with procurement and treasury departments and we work closely with them for the benefit of the suppliers. In the end, the stakeholders need to work together to make it a joint success. If a corporate wants to have a successful supply chain finance programme, it needs to get the buy-in of its procurement organisation first. To me, a lack of commitment of a key stake holder is still the biggest challenge to any programme.
What is your take on bringing long-tail suppliers into supply chain finance programmes?
From my perspective, long-tail suppliers should be brought in and I am happy that our enrolment process is very efficient, allowing us to welcome this supplier group to our programmes. In my experience, the procurement departments would rather have a solution for all suppliers than for a specific group only.
What is your opinion on the initiatives targeted at smaller suppliers (invoice marketplaces)? Do you think we will see more or less of this in the upcoming years?
Whilst there have been a number of initiatives to allow smaller suppliers to offer invoices for sale, these have generally, and for a variety of reasons, met with rather modest success. There is little doubt that extending an SCF programme across the long-tail of smaller suppliers will, in almost all circumstances, provide such suppliers with more assured forms of liquidity at lower costs.
The original article can be found here.