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Will firms adopt ICC’s new supply chain finance definitions?

The ICC has released a set of definitions for supply chain finance (SCF) and its techniques. The challenge now, says the ICC, is to convince supply chain financiers, many of whom have been operating their own set of SCF definitions for years, to accept these new official definitions.

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Comments (7)

  • William Laraque
    William Laraque, US-International Trade Services 10 March 2016

    The Adjustment to E-Commerce in Global Trade Posted in LinkedIn Pulse. This post is dedicated to Donald Smith for excellence in fostering a respectful and vigorous discourse in the all-important areas of global trade and global trade finance. It is also dedicated to the advancement of excellence in global trade education which is so necessary to ensure U.S. economic growth and job creation in the future. E-commerce is precipitating adjustments at practically every level of global trade: •At the retail level, the optimal mix of brick-and-mortar and on-line selling has to be determined. This adjustment necessarily includes inventory stoking levels and deciding whether to "borrow from Peter to pay Paul." •In logistics, very large players such as Amazon will decide whether to have their own dedicated aircraft and ships in order to meet higher standards of delivery. New forms of delivery will be utilized, such as the abricolis system used in France. •In marketing and advertising, alternatives will be considered such as Unilever's use of Alibaba's T-Mall to market its wares in China. •In finance, appropriate methodologies will be employed as open account alternatives to traditional LCs. The employment of SWIFT may change from strictly being a secure funds transfer methodology to being a secure trade settlement methodology with SWIFT TSU (Trade Services Utility and BPO (Bank Payment Obligation). •The realization that e-commerce can easily be used for bilateral and two-way trade may grow. •E-Commerce may be seen as a means to bypass bureaucracy and impediments to selling in certain markets. This may result in the "democratization" of markets, so that small business entree is facilitated. •The evolution of e-commerce will see the marketing and sales of capital goods. Capital goods' sale will impose unique compliance requirements for all entities involved in the supply chain. A serious level of knowledge, deep knowledge will be required to facilitate the global sale of capital goods.

  • William Laraque
    William Laraque, US-International Trade Services 10 March 2016

    The Ugly American got uglier. Thank you for your dedicated readership Donald Smith. I am dedicating my next post in Linked in to you. Pour Le Merite! It is what is on the Iron Cross. This time it will not be a medal for exceptional courage and valor. It will be for exceptional achievement in understanding and fostering a climate of excellence in global trade and global trade finance.

  • William Laraque
    William Laraque, US-International Trade Services 10 March 2016

    I appreciate your thoughtful comment Don and your very appropriate reference to books. I was wondering whether anyone reads anything but blogs anymore. I wrote a series entitled Downton Abbey and Donald Trump: U.S. Economic Growth and Future Economics, in the LinkedIn Pulse. You can access it by looking up my name in Linkedin and clicking on recent updates. Please don't be intimidated by the more than 1,015 articles I have written in LinkedIn. I deliberately planted a question in Part II of the series to test for readership, to see if anyone was reading it. Since no one responded, I decided to break up Part IV into short bursts. We'll see how that goes. I write mostly in the Global Money, Markets and Strategy Forum of LinkedIn. I have found it to be encouraging because of the mostly respectful and appreciative dialogue. Unfortunately, many consider LinkedIn a place to look for jobs. I'm trying to change this perception. I refer in another LinkedIn blog to a Yale professor's comment that today, there is no need to read or publish in elite professional journals because with the Internet, information gets disseminated much more rapidly. I'm counting on it.

  • Don Smith
    Don Smith 10 March 2016

    Our current and recent political contests are an embarrassment. For many years in my global travels I have had to apologize for the conduct of my preceding countrymen who were rude, loud, inebriated, and with apologies to authors Burdick and Lederer, left a lasting memory of The Ugly American. Our current political climate would benefit by a mandatory reading of the novel by all elected officials and those running for office and only those with a passing grade on integrity and civility would be able to stand for office. In which of the Pulse channel will I find your 5 part series?

  • William Laraque
    William Laraque, US-International Trade Services 10 March 2016

    TXF provides the context for what is essentially missing from the crucial discussion on global trade and its impact on our world, its economies and jobs in the future. It provides the venue for respectful and vigorous debate on global trade. The narrative of this discussion had devolved into all that is crass, base and inconsiderate. Compare the elevated and elevating dialogue of the dowager countess of Grantham in Downton Abbey with that of Donald Trump on the political hustings of my dearly beloved country. Compare the current political dialogue in the U.S. with the verses of the Emancipation Proclamation, with those of Dr. Martin Luther King's Nobel Prize acceptance speech. We have greatness in the U.S. DNA. It is trumped at the moment by vulgarity. "Vulgarity is never a substitute for wit," the countess tells us. Just as artillery gives dignity to what would otherwise be just another vulgar brawl, ideas would give merit to what has become a particularly vulgar U.S. political brouhaha.

  • Don Smith
    Don Smith 10 March 2016

    Good article and excellent comment.

  • William Laraque
    William Laraque, US-International Trade Services 10 March 2016

    I applaud the effort to provide standard definitions for the amorphous and ever-evolving field of SCF. Unfortunately SCF is increasingly obsolete. I have been engaged in international trade for 40 years and passionately feel that trade has gotten away from banks and the "ideological orthodoxy" of ICC and SWIFT and the joint banking and insurance industries. Recently I saw posted on one of the LinkedIn Forums, the absurdity that LCs cover political risk. This went unchallenged! Platform and e-commerce companies like Infor, Alibaba and Amazon have now nearly succeeded in removing international trade from the clutches of global banks which are everywhere reeling from these developments and the effects of innovation. The techno-optimists have had the effrontery of taking trade from banking and insurance. What remains is for platform companies and e-commerce, in combination with ECAs and what I coin full service e-commerce to take the finance of capital goods from banks and minimize their role so that they are disintermediated fully from trade and all that for banks to do is to safely transfer funds through SWIFT. Compliance with export controls and cybercrime ensure the relevance and permanence of SWIFT and the use of banks. These prevailing threats provide the raison d'etre for banks in trade. Otherwise banks, ICC and SWIFT, unless they adapt, will become superfluous like the worlds of Tara, Downton Abbey and what America and democracy once were and once represented. I wrote about it in a five part series in LinkedIn Pulse, a series which was considered too "bloggie" for the elite and rarified altitude of TXF. If this lack of relevance persists, all of these institutions face the danger of cultural asphyxiation. It was John Kenneth Galbraith who wrote that the main function of economic prediction is to make astrology respectable. The same can be said of this implication of what SCF represents for the future of international trade.

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