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UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENTWORLD TRADE ORGANIZATION
WORLD CUSTOMS ORGANIZATIONINTERNATIONAL CHAMBER OF COMMERCE
AND THE OTHER UNITED NATIONS REGIONAL COMMISSIONS
INTERNATIONAL FORUMFOR TRADE FACILITATION
SIMPLER PROCEDURES FORWORLD TRADE GROWTH
29-30 MAY 2002United Nations Office at Geneva, Switzerland
HTTP://WWW.UNECE.ORG/FORUMS
UNECEUNITED NATIONS ECONOMIC COMMISSION FOR
EUROPE
UNECE International Forum on Trade Facilitation
Session III: Implementation: The Role of the Business Community
Supply Chains and the facilitation of payments
John Hammond
Head, Supply Chain Services Standard Chartered Bank, Hong Kong
Wednesday 29 May 2002
UNECE International Forum on Trade Facilitation… Session III
Implementation: The Role of the Business Community
Supply Chains and the facilitation of paymentsJohn Hammond
Head, Supply Chain Services Standard Chartered Bank, Hong [email protected]
Wednesday 29 May 2002
The Facts of International Trade - a US$7 Trillion Business With Huge Inefficiencies UN estimates that up to US$420 billion is wasted on inefficient
processing, arising from:- Vast number of trading parties and service providers communicating
with paper-based processes- Incompatible business processes and systems- Very little process integration- The high error rates from re-keying of data
Companies involved in international trade require solutions that can streamline ‘end-to-end’ processing by use of e-commerce.
Business To Business Complexity
Buyer Supplier
Freight Forwarder Freight Forwarder
Terminal at OriginTerminal at Destination
Air Carrier
Ocean Carrier
Bank Bank
Air ExpressTerminal atDestination
Terminalat Origin
1. Request for Quote
2. Quotation
3. Purchase Order
4. P. O. Confirmation
5. Shipper Order/Instr.+ Invoice+ Packing List
6. Ship Order/ Instr.
11. Pre-alert / Arrival Notice
7b. Shipping Order Cycle (S/O, BoL)
7a. Ship Instr. Cycle
8. Gate-out/gate-in
10. Bay Plan
13. Payment Order
14. Remittance
15. Import documents
16. Proof ofDelivery
9. Bay Plan
Capture gate movement
(gate-out/in)
Capture gate movement
12. Export documents
12. Gate-in/ gate-out
5. Shipper Order / Instr.+ Invoice
7a. Manifest
7a. Manifest 7a. Manifest
The Fragmented Process Translates into Inefficiency
Data re-entry, errors Inability for right people to access right information at
right time Can’t track entire transactions; analysis and
reconciliation are difficult No cross sector process integration
The prize for fixing the problem is substantial
Paperwork accounts for 5-10% of the cost of int’l trade a material impact on net margins
Automation can reduce the cost by over half Other forms of collaboration can also yield significant
benefit product design, inventory planning, etc
But Customer needs in international trade are unique
Operating efficiency for existing trading groups Direct sourcing Accommodate all types of trading partners
The SME in Asia to the MNC in the OECD End-to-end solution that is open Global access
Solutions that address these inefficiencies include… A collaborative channel for the products and services that make
businesses more efficient. A paperless E- commerce environment where trade processes can be
conducted electronically. B2B products and services that are web-based :
- Trade banking services, LC, Open account, Payments, Collections etc- Trade document management- Customer Purchase order management services- Catalog services, public and private- Logistics, Shipping, Airfreight, Multi-modal, Inspection, Track and trace- Market intelligence - Management information reports- Third party service access
“EDI or Die” was the cry of the ’70s.It was Expensive
Complicated& Difficult to maintain
and is in it’s death throes today!
B2B e-commerce is the Solution
E-Commerce Providers
Freight Forwarders
Air Couriers Carriers
Terminals
Banks
Insurance
Government ~ Customs
Buyer
Supplier
ANY TO ANY MESSAGINGEDIFACT,X.12
SWIFT, SAP, Notes Proprietary…
EDIFACT, Flat file,Notes, Excel…
Any to Any
B2BeX
Communication, standards and media conversion.
Building such a solution is expensive
Conventional EDI has proved too difficult for many
Significant up-front investment and resources/skills required
Select B2B Exchanges will develop specialised supply chain /int’l trade solutions that are “rented” to customers
…the basic B2B Exchange Uses the Internet & “IP” - Internet protocol An open platform - any to any messaging Cost effective electronic business medium ebXML replaces traditional VAN EDI Provides for Personal computer browser access Creates a secure environment for trade Builds a supply chain management tool
Provides for back office integration Delivers an extensive range of on-line trade services
Recognises the e - future of international trade
B2B Exchanges Facilitate Efficiency in Trade….By Integrating Ancillary Services
Trade related services and content from multiple parties Integration of sourcing, procurement, finance and logistics
No re-keying or re-work MIS reporting across entire trade process Any-to-any messaging Communication in multiple formats
PC browser access and / or integration with customer systems Single sign on, secure and reliable
Low cost, user friendly and easy to implement for trading partners
And the Banks and Insurers?
The Regulatory environment for Banking and Insurance
Banks and Insurers are both Regulated Industries in most territories.Banks in particular are restricted in terms of the types of “non-
banking” services that they are permitted to offer.As major players in the trade process Banks and Insurers can
facilitate improved and therefore more efficient processes through deeper participation in the integration of services that are
ancillary to banking
The “non –banking” Ancillary Services? Deemed by some to include… Sourcing
ProcurementProvision of e – Catalog’s
Trade Document Creation and ManagementLogistics
InspectionInsurance
Customs and Regulatory Compliance ServicesBusiness Intelligence Services
The New Age Service Delivery Channel for …Bankers, Insurers, traders and trade service providers
The Internet offers an extraordinary means to market with significant advantages in terms of cost and efficiency and provides an opportunity
for global collaboration on a scale never before possible.The basic capability to gather and re-use data from multiple sources
across multiple processes without re-keying; securely and with certainty,
heralds a new age of trade facilitation.
But not so easy for a Bank!
Legal and Regulatory Compliance
The restraint Compliance with local regulatory requirements ...the “Banking Act”
Banks must build products and services to: Comply with the most stringent banking standards and multiple external
“local country” banking regulatory requirements. Comply with local “e-commerce” legislation Avoid “non banking” services. All third party services shall be strictly trade banking related. Responsibility and liability must be clearly defined Partners should be “blue chip” and chosen in accordance with bank
guidelines for reputational risk management, and “duty of care” policies. Know Your Customer principles must be applied
– Money laundering– Fraud and malpractice
"Our supervisory approach towards Internet banking will have to evolve as the technologies and business strategies in banking
themselves keep changing," said the Deputy Managing Director of the Monetary Authority of Singapore.
"We want to maintain prudent regulatory oversight so as to preserve public confidence in the
financial system, while encouraging financial institutions to take full advantage of new technologies to improve efficiency and
competitiveness."
The Singapore view of change…enlightened
Legal and Regulatory Compliance
The Competitive World today Banks as with all businesses compete at all levels
Price Quality Business process Technology Customer Service Logistics efficiency Speed of service, quality of service and flexibility Location
Greater visibility means that all of these factors are readily assessed
Greater Visibility?
The availability of trade data from Purchase Order to Delivery Order (“PO to DO”)
Access to that data, and re-use of that data enables a bank to have more control of risk and to offer improved trade products and services
The Product source data RFI Quote PO Invoice LC Application Inspection and Insurance and Logistics instructions to DO and the Customs declaration forex payment and settlement and collection…… and more
Improved credit terms faster payments
Re-use and link data
Standard Chartered Bank - Trade Services
Market Position Major International bank Rapidly growing business
in providing value added trade services for its large and small customers
Solution a B2B Exchange The Bank provides an
online service that facilitates trade transactions & payments between its customers, logistics partners, SCB and other banks
Trade Document Manager Facilitates standard and non-
standard document (RFQ, Q, PO, PO Confirmation, SO, SO Confirmation, Dispatch Advice and Commercial Invoice) exchange
Provides integration with the Bank’s internal system via XML
Integrated with PKI to enable secure transactions required by the Bank
Ensures Non repudiation Benefits
Economic Extended Market Data – Information -
Knowledge –Visibility Less risk
– B2BeX Home Page
Intelligence:• Market Information• Country Information• News Feeds• Stock data• Forex information• Market Alerts
Banking Services:• Trade Finance- LC Management• Cash Management• Treasury• Related reporting
Logistics:• Check Ship Schedules
• Book Space• Customs Clearance
• Generate Documents
• Alerts
• Track & Trace
Sourcing:
• Locate Suppliers/
• products
• Private Catalogs
• Quotes
• PO Management
• Inspections
Standard Chartered B2BeX is about getting the supply chain basics right
Ability to exchange “intelligent” trade documents and data, with anybody suppliers and buyers catalog services, logistics, banking,
insurance, etc.
all integrated with comprehensive messaging, and supported by solid infrastructure
with “industrial strength” infrastructure to support mission-critical processes
Highest security message authentication, confidentiality, integrity and non-
repudiation transaction and network security anti-virus, hacking, denial of service protection
End-to-end high availability and disaster recovery 24/7 multi-lingual, integrated + “human” support
Yielding significant efficiencies for importers and exporters
Reliable turn-key solution for local and int’l trade
Reduced trade administration Automated transactions with trading partners Comprehensive, integrated MIS Access to other marketplaces and
technologies
Summary The banking industry is committed to streamlining international trade
processing and to becoming a participant in the global E-Trading movement
That is a basic contribution to Trade Facilitation Automation, efficiency, straight through processing by involvement
in and promotion of improved supply chain processes lead to… Cost savings Time savings Faster payment
Improved return on investment– For banks and their customers
Thank youThank you
UNECE International Forum on Trade Facilitation… Session III
Implementation: The Role of the Business Community
Supply Chains and the facilitation of paymentsJohn Hammond
Head, Supply Chain Services Standard Chartered Bank, Hong [email protected]
Wednesday 29 May 2002
UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENTWORLD TRADE ORGANIZATION
WORLD CUSTOMS ORGANIZATIONINTERNATIONAL CHAMBER OF COMMERCE
AND THE OTHER UNITED NATIONS REGIONAL COMMISSIONS
INTERNATIONAL FORUMFOR TRADE FACILITATION
SIMPLER PROCEDURES FORWORLD TRADE GROWTH
29-30 MAY 2002United Nations Office at Geneva, Switzerland
HTTP://WWW.UNECE.ORG/FORUMS
UNECEUNITED NATIONS ECONOMIC COMMISSION FOR
EUROPE
