Nghiên cứu về sản phẩm tài trợ chuỗi cung ứng tại ngân hàng standard chartered

ĐẠI HỌC QUỐC GIA HÀ NỘI KHOA QUẢN TRỊ VÀ KINH DOANH - NGUYỄN THU MINH RESEARCH ON SUPPLY CHAIN FINANCE PRODUCTS AT STANDARD CHARTERED BANK NGHIÊN CỨU VỀ SẢN PHẨM TÀI TRỢ CHUỖI CUNG ỨNG TẠI NGÂN HÀNG STANDARD CHARTERED LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH HÀ NỘI - 2019 ĐẠI HỌC QUỐC GIA HÀ NỘI KHOA QUẢN TRỊ VÀ KINH DOANH - NGUYỄN THU MINH RESEARCH ON SUPPLY CHAIN FINANCE PRODUCTS AT STANDARD CHARTERED BANK NGHIÊN CỨU VỀ SẢN PHẨM TÀI TRỢ CHUỖI CUNG ỨNG TẠI NGÂN HÀNG STANDARD CHARTERED Chuyên ngành: Quản trị kinh doanh Mã số: 60 34 01 02 LUẬN VĂN THẠC SĨ QUẢN TRỊ KINH DOANH NGƯỜI HƯỚNG DẪN KHOA HỌC: PGS.TS NGUYỄN NGỌC THẮNG HÀ NỘI - 2019 DECLARATION The author confirms that the research outcome in the thesis is the result of author‟s independent work during study and research period and it is not yet published in other‟s research and article The other‟s research result and documentation (extraction, table, figure, formula, and other document) used in the thesis are cited properly and the permission (if required) is given The author is responsible in front of the Thesis Assessment Committee, Hanoi School of Business and Management, and the laws for above-mentioned declaration Date………………………… i ACKNOWLEDGEMENTS I would like to express my deepest gratitude to all of the following people for helping me complete my thesis Firstly, I would like to express my special thanks to my company for giving favorable conditions for my study and my master thesis completion at Hanoi school of business and management (HSB) Secondly, I am extremely grateful to all of the lecturers from the Department of Business Administration - HSB for providing me with research methods and professional knowledge during the course, especially the active and creative research skills My appreciation also goes to the teachers in the thesis review committee for giving me valuable ideas during my thesis completion process My profound gratitude is also conveyed to my instructor for his helpful assistance and guidance This thesis could have never been completed without his enthusiastic counsel and support Despite the efforts during the research period, there are still many limitations in the thesis I would hope to receive valuable comments from the teachers and coworkers to make this essay more completed Thank you very much./ Ha Noi, ii 2019 TABLE OF CONTENTS DECLARATION i ACKNOWLEDGEMENTS ii TABLE OF CONTENTS iii ABBREVIATION .v CHAPTER 1: INTRODUCTION .1 1.1 Rationale of the study 1.2 Research objectives and research questions .3 1.3 Scope of the study 1.4 Significance of the study 1.5 Structure of the study CHAPTER LITERATURE REVIEW .5 2.1 Supply chain management and financial aspects 2.1.1 Supply chain management .5 2.1.2 Financial impacts 2.2 Supply chain finance 2.2.1 Definition of supply chain finance 2.2.2 Framework of supply chain finance 2.2.3 Types of supply chain finance .11 2.3 Supply chain finance benefits and risks 20 2.3.1 Benefits 20 2.3.2 Risks 20 2.4 Factors affecting supply chain finance 21 2.5 The ecosystem for supply chain finance .25 CHAPTER METHODOLOGY .27 3.1 Research philosophy 27 3.2 Research approach .28 3.3 Research design 29 3.4 Research strategy .30 iii 3.5 Research method 30 3.6 Data collection 31 3.6.1 Secondary data .31 3.6.2 Primary data 32 3.7 Questionnaire setup 32 3.8 Data analysis technique 35 CHAPTER ANALYSIS AND RESULTS .36 4.1 Introduction of Standard Chartered Bank‟s trade finance 36 4.1.1 Overview of Standard Chartered Bank (SC Bank) 36 4.1.2 Trade finance at SC Bank 38 4.1.3 The ecosystem for supply chain at Standard Chartered .46 4.2 Analyzing on factors effected to supply chain finance in SC Bank 47 4.2.1 Description of the sample 47 4.2.2 Operational models 48 4.2.3 Products and services 50 4.2.4 Sales channels 52 4.2.5 Human resources 54 4.2.6 Credit risk management .55 4.2.7 Management decision 59 CHAPTER CONCLUSION AND RECOMMENDATION 61 5.1 Conclusion 61 5.2 Recommendation 62 5.3 Limitations and recommendations for future researches 65 REFERENCE 67 APPENDIX QUESTIONNAIRE 72 iv ABBREVIATION SC Supply Chain SCM Supply Chain Management SCF Supply Chain Finance CSF Critical Success Factor WC Working Capital Cash Conversation Circle =DIO+DSO+DPO CCC DIO: Days Inventory Outstanding DSO: Days Sales Outstanding SC BANK DPO: Days PayableBank Outstanding Standard Chartered v LIST OF TABLES Table 2.1: Summary of SCF definitions .8 Table 2.2: The evaluation checklist of SCF program .23 Table 3.1: The evaluation checklist of SCF program in SC Bank 33 Table 3.2: Minimum sample size based on nature of qualitative study 35 Table 4.1: Standard Chartered Strategic Priority 37 Table 4.1: Trade Finance products – Import and Export Services 39 Table 4.2: Summary Description of the sample 47 Table 4.3: Evaluation of operational model of SCF program in SC Bank .48 Table 4.4: Evaluation of products and services of SCF program in SC Bank 50 Table 4.5: Evaluation of sales channels of SCF program in SC Bank .53 Table 4.6: Evaluation of human resources of SCF program in SC Bank 55 Table 4.7: Evaluation of credit risk management of SCF program in SC Bank .55 Table 4.8: Evaluation of credit risk management of SCF program in SC Bank .59 vi LIST OF CHARTS AND FIGURES Figure 2.1: Supply chain flows Figure 2.2: The simplification of SCF framework Figure 2.2: SCF Lending Framework .11 Figure 2.3: The complete SCF portfolios 12 Figure 2.4: Distribution of SCF Instruments 13 Figure 2.5: Reverse Factoring work flow 14 Figure 2.6: Dynamic Discounting Process Flow 16 Figure 2.7: Receivable Purchase Process 17 Figure 2.7: Invoice Discounting 18 Figure 2.8: Trigger points for the provision of financial supply chain services .19 Figure 2.10: Competency framework of a successful SCF program 23 Figure 2.11: The ecosystem of supply chain finance 26 Figure 3.1: The research onion model .27 Figure 4.2: SC Bank Supply Chain Finance Model 45 Figure 4.3: Network Driver – Ecosystem .46 Figure 4.3: SC Bank Products and Services .51 Figure 4.4: Performance highlights of Business Segment Corporate & Institutional Banking .52 Figure 4.5: Volume New-to-bank client on Commercial Banking Segment 54 Figure 4.6: Supplier finance solutions benefits over traditional bilateral funding in multiple ways 56 Figure 4.7: Supplier finances process in SC Bank 57 Figure 4.8: Risk Management Approach 59 vii CHAPTER 1: INTRODUCTION The first chapter explores current development of Supply Chain Finance (SCF) The importance of SCF is briefly presented in this chapter The researcher also provides rationales of choosing the studied topic Research objectives and research questions are proposed This chapter highlights the scope of work and what the contribution of the thesis 1.1 Rationale of the study The role of supply chain management has been increasing over the time given to the fact that the competition in business world becomes more intense To compete well in the market, the organizations must pay attention to their supply chain (SC) and to identify the way of effectively and efficiently managing their SC (Marak and Pillai, 2018) Regarding to the importance of SC and supply chain management (SCM), there are tremendous efforts from previous researchers to reveal how to improve physical and information flows between the focal companies and their suppliers and customers but there are less number of empirical evidences to be developed to address financial aspects of SC and SCM (Bailey and Francis, 2008; Lamoureux and Evans, 2011; Caniato et al., 2016) Recently, supply chain finance (SCF) is more and more critical products and services to the organizations, especially after the global financial crisis which was happened in late of 2008 (Marak and Pillai, 2018) Global financial crisis raised the concerns to the banks and the investors regarding to high default rate from their loans In this context, SCF market has been changing in the way of trade credit extension but it leads to unexpected result as weak suppliers are subjected to higher payment period or get delaying in their repayment (Fabbri and Klapper, 2016) The behavior of weak suppliers result to the higher risk in SCF process (Raddatz, 2010; Boissay and Gropp, 2007) Therefore, the need of revising current SCF management model and identify the ways to improve SCF process are urgent need targeted as source of cross-sell income in the bank and developed with the banking ecosystem On the banks‟ management statement 2018, it is clearly address the management team‟s point of view about the bank businesses which are supported by SC‟s global functions working together to ensure the Group‟s operations run smoothly and consistently with legal and regulatory obligations, purpose and risk appetite 60 CHAPTER CONCLUSION AND RECOMMENDATION The last chapter summarizes key findings from previous chapters It is also designed to provide the recommendations to the banks’ managers to manage their SCF process and to develop the SCF programs effectively by offering the most suitable products to bring benefits for their customers and to be able to position their reputation on the competitive financial market 5.1 Conclusion The study is developed with three main objectives of defining a framework and a checklist in which key successful factors to SCF programs to be developed and measured, determining the desirable outcome of SCF programs, and examining how key successful factors to be maintained in the case study of SC Bank These research objectives are fulfilled by the establishment of three research questions In this section, the researcher would like to summary the answer for each research question which is proposed in the first chapter The first research question is what the key successful factors to SCF programs are To answer this research question, the researcher examines the concept of SCF program, collect the understandings of SCF ecosystem, and determine SCF framework It is denoted that SCF refers to the collaboration of two or more organizations in which they together create value in SC by managing financial resources through different financial means (Hofmann, 2005) and it brings the value to both parties involved into the process (Pfohl and Gomm, 2009) The researcher also explores a secondary data which is provided by International Finance Corporation (2017) and capture six key successful factors to SCF programs, including operational model, products and services, sales channel, human resources, credit risk management, and management supports The second research question refers to what the desirable outcomes of SCF programs are This research question is answered during the second chapter Operational models is important in SCF ecosystem and it helps the banks to design innovate SCF programs with the features to be suitable with the customers‟ 61 demands and to ensure that SCF programs to be successful after launching Products and services is second CSF factor and it allows the banks to develop clear organizational structure with responsibilities and processes, to define which SCF programs for specific market, and to target, engage, and serve the customers in supply chain Sales channels aim to manage new clients, to optimize operating cost, and to wisely choose the clients that are suitable with SCF programs Human resources must be developed in order to align the activities of sales team to overall business objectives as well as to effectively sell and serve the customers in supply chain When the banks design SCF programs, they must integrate credit risk management into the SCF flows and strong credit risk management allows the banks to better classify the clients participated into SCF programs, to enhance the designation of risk and pricing profiles, to minimize the loss after default, and to minimize the change of client default and expected loss Finally, management dedication or management support is last CSF factor and the maintenance of this factor helps the banks to align the interest of each shareholder The third research questions aims to explore how key successful factors to SCF program to be maintained in SC Bank In general, the respondents agree and strongly agree with all statements of CSF factors, except one item of products and services with respondents disagree with the statement of SC Bank always provides quantitative assessment of business opportunities before developing SCF‟ programs and services High average score for each item indicates that SC Bank is maintaining well CSF factors related to SCF programs 5.2 Recommendation There are some recommendations to be proposed in order to help financial institution effectively manage the SCF The first recommendation refers to operational models Market size is characterized by sales turnovers groups, including less than US$5 million, US$5-25 million, US$25-75 million, US$75-150 million, and more than US$150 million The bank should more focus on the market less than US$150 million because of any sales turnovers more than US$150 million is categorized into large corporate The 62 banks also need to provide frequent evaluation towards legal and financial infrastructure of each market For example, the banks should study about what the current legal framework in Vietnam in comparison with other countries in Asia as well as capturing how financial openness and financial literacy in each market Key markets for SCF programs in Asia are China, India, and Singapore but the banks may want to invest on smaller markets such as Vietnam and Thailand since there are potential market with stable economic growth in these countries recently are fueling the need of SCF The second recommendation refers to the importance of products and services Based on standard process, the bank should encourage local product team to customize each trade products to adapt with specifics and requirement of each operating market with clear products descriptions so that the sale staffs can map the customers‟ demand towards specific SCF programs and offer the suitable solution for clients on other segments For Vietnam market, Commercial Banking segment should be more focus of clients as SMEs as their requirement for financing is huge in their effort to achieve domestic share as well as expand to international markets The third recommendation is given to sales channel The banks should develop two major sales channels, including branch and digitalization Branch is determined as traditional sales channel and it involves the transaction offices in different areas as well as the employment of hub and spoke operational model for remote areas to ensure highest customer coverage rate and to increase the market share The banks should integrate the Internet to leverage digitalization in SCF programs In the study of SC Bank, the bank establishes a transaction portal for the customers to upload correct invoices and share the information to others A transaction portal is helpful because of it connects various partners into SCF process, including the buyers and the sellers and it also helps to reduce waiting time for both parties since the invoices are uploaded in real time and there is no waiting time to send the documents The banks may want to invest into the electronic platform to reduce the customer onboarding time SC Bank is currently using digital channel and it helps to reduce the 63 customer on-boarding impressively Sales team also should focus on new client on boarded via network of supplier and buyer The fourth recommendation refers to human resources development The banks should develop quality human resources for SCF programs To that, the banks must define quantitative and qualitative criteria for recruitment and selection The best candidates in the labor market must be scanned and selected with appropriate salary and bonus In addition, the bank should determine the career development for talent employees through job enlargement and job enrichment scheme The incentive policy must be given to the employees in order to promote them in effective selling of SCF programs The incentive should be linked with the risk issue to ensure the quality of SCF portfolio The training is important context in SCF programs of the banks The banks should design different training content for the employees to educate them about new SCF trends in the market as well as the compliance of SCF products‟ policies The training should be given to both newly recruited employees and existing employees In case of newly recruited employees, the trainings are required to ensure that they are able to performance assigned tasks as well as the banking systems In case of existing employees, the trainings should be continuous in order to emphasize the importance of the program and also improve staff working performance to serve client with best in class service Specific trainings and discussions must be transferred to the employees with the participation of the experts in SCF areas The fifth recommendation is given to credit risk management Credit risk management system requires the banks to collect intensive historical data to performance two credit scoring models, namely application scoring and behavioral scoring It is proved that application scorecard is developed with the input as demographic and business characteristics of the companies while behavioral scorecard is developed upon on transaction data of the customers The development of application and behavior scoring models allows the risk management team to evaluate credit worthiness of the customers and to provide timely actions to bad customers or high risk transactions Another recommendation refers to the 64 development of collection center in the banks followed with Credit Monitoring and Control Policy and this center takes the responsibilities of managing the collection of money from the customers The organization structure of collection center is based on the cycle of credit, including early stage, mid-stage, and late stage These stages are formulated upon on overdue days of the customers in comparison with the agreed payment date In each stage, the banks should provide different actions and different intensities to ensure that the money to be collected as soon as possible The last recommendation requires the management of the banks to participate into SCF development As mentioned in previous chapter, SC Bank‟s top management recognizes the benefits of implementing SCF programs and their recognitions are clearly stated in the bank‟s investment report In this context, it is recommended that other banks‟ top management team should highlight the role of SCF program and the highlights must be stated in the documents Moreover, top managers in the bank should be participated into SCF product committee to evaluate the effectiveness of each SCF product and the proposal of new ones 5.3 Limitations and recommendations for future researches There are some limitations related to this study At first, this study focuses only SCF programs and process in an international financial institution as SC Bank and there are no investigation of how SCF programs are maintained and developed in other global banks such as Citi Bank; HSBC or ANZ which are operating in Vietnam Therefore, key findings may not be relevant to other banks The second limitation is sourced from the fact that there are not so many respondents to be participated into semi-structured interview process Low number of respondents concerns the result biases Finally, SC Bank is a global financial institution which has businesses in many areas and therefore the study cannot go in details how SCF programs in particular market Given to the limitations of the study, there are some recommendations for future studies Firstly, future researchers should explore how SCF programs in other banks They may want to involve both global financial institutions and domestic banks to understand the differences between SCF programs in two organizations 65 Secondly, future researchers should expand their studies with the involvement of more respondents On the other hand, future researchers should conduct in-depth interviews with the experts in SCF area to understand the underlying risks and issues when the banks implement SCF ecosystem The research should be expanded to the suppliers, the manufacturers, and the retailers to capture their awareness and their evaluation towards SCF programs 66 REFERENCE Standard Chartered Annual Report 2018 Online Retrieved from https://av.sc.com/corp-en/content/docs/SCB_ARA_2018_FINAL.pdf Standard Chartered, the Banking Ecosystem (2016) Standard Chartered FY2018, Result and Investor Update (2019) Standard Chartered Website https://www.sc.com/en/ Assey, M J-J (2012) A new introduction to supply chains and supply chain management: Definitions and theories perspective International Business Research Atkinson, W (2008) Supply chain finance: The next big opportunity .Supply Chain Management 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This questionnaire is part of a research thesis to evaluate the implementation of Supply Chain Finance Program in a commercial bank as Standard Chartered Bank Your responses are important in enabling me to obtain as full an understanding as possible of this topical issue The questionnaire should take you about ten minutes to complete If you wish to add further comments, please feel free to so The findings from your questionnaire and others will be used as the primary data for purpose of my graduation thesis for MBA course at Hanoi School of Business Management, Vietnam National University I hope you will find completing the questionnaire enjoyable and receive your detailed and honest answer All relevant information will only be available for research purpose and will be treated fully confidential Thank you very much for help Sincerely Thu Minh Premier Client Service Manager Client Service Group, CIC Operation Standard Chartered (Vietnam) Limited Question 1: Do your current position and job relate to Supply Chain Finance program (or the Banking Ecosystem) in Standard Chartered Bank? Please select of the answers below: Yes  Question No  Stop Question 2: Please evaluate the implementation of Supply Chain Finance at Standard Chartered Bank (SC Bank) with a Likert scale (from to 5), in which: 1: Strong disagree 2: Disagree 3: Neutral 4: Agree 5: Strong agree 72 Item OM OM1 OM2 Factors Operational models Scale 5 5 SC Bank has proper understand market size and market competition SC Bank provides clear evaluation towards legal and financial infrastructure landscape SC Bank provides clear description of product design and OM3 credit policies and implementation plan, regarding to SCF programs PS Products and services SC Bank always provides quantitative assessment of PS1 business opportunities before developing SCF‟ programs and services PS2 PS3 SC SC1 SC2 SC3 SCF‟ programs and services are developed upon on clear understandings of operating and legal environment SC Bank clearly develops and choose segmentation methodologies and commercial model in SCF programs Sales channels SC Bank conducts a cost-benefit analysis for each client in SCF programs A suitable sales outfit is developed within SCF programs SCF programs are tailored services offering based on the client‟s business size SC4 SC Bank creates an on-boarding mechanism HR Human resources SC Bank develops and to implement incentive programs HR in SCF programs SC Bank provides technical and operational technical HR CR trainings to the employees in SCF programs Credit risk management 73 Appropriate credit policies for SCF program are CR developed SC Bank collects industry benchmarks regarding to SCF CR2 programs SC Bank develops collection system in SCF programs to CR3 prevent the bank from high defaults SC Bank develops application and behavioral scoring CR4 models MD Management dedication SC Bank‟s managers develop adequate understandings of the benefits of SCF programs and to widespread the MD1 communication to various stakeholders Question 3: Please provide some personal information (if possible): Name: …………………………………………………………………… Current position: ……………………… Mobile: Sincerely thanks and Best wishes! 74 ... MINH RESEARCH ON SUPPLY CHAIN FINANCE PRODUCTS AT STANDARD CHARTERED BANK NGHIÊN CỨU VỀ SẢN PHẨM TÀI TRỢ CHUỖI CUNG ỨNG TẠI NGÂN HÀNG STANDARD CHARTERED Chuyên ngành: Quản trị kinh doanh Mã số:... operation of SCF programs 4.1 Introduction of Standard Chartered Bank’s trade finance 4.1.1 Overview of Standard Chartered Bank (SC Bank) About Standard Chartered Group (SC) As a leading international... of Standard Chartered Bank‟s trade finance 36 4.1.1 Overview of Standard Chartered Bank (SC Bank) 36 4.1.2 Trade finance at SC Bank 38 4.1.3 The ecosystem for supply chain at Standard