Kurt Cavano
Founder, Vice Chairman and Chief Strategy Officer GT Nexus
...'my supplier is an extension of my business'
Kurt Cavano discusses the importance of financial supply chains and the importance of cloud based platform with Mary Christine Joy.
Synopsis:
GT Nexus is a cloud based supply chain platform provider based in USA. The company was founded in 1998 by Kurt Cavano, and helps client companies in managing their logistics and trade processes. GT Nexus advocates the belief that in the future, we may not get to see competition amidst companies. But rather, the competition would be amidst supply chains. It strongly propagates the use of cloud technology in the supply chains. It works on a single idea - to put a cloud platform at the center of an industry, and let companies access a number of supply chain process for cheap and fast.
Mr. Kurt Cavano, in addition to being the Founder, Vice Chairman and Chief Strategy Officer of GT Nexus, is also a strong supporter of the latest applications of technology. He is an author and speaker on topics of international trade and global supply chain management, especially retail supply chain. In his career span of around 25 years, he has helped a number of companies achieve more productivity with the intelligent use of technology. He holds a BS in Bioscience from Penn State University and an MBA from New York University.
Excerpts:
Supply chain and finance are increasingly becoming dependent, especially because of globalization. What do you suppose in those lines? Please elaborate.
Often in the supply chain, the party in the weakest financial position carries the heaviest burden. In apparel, suppliers receive orders and are tasked with purchasing raw materials and booking capacity and labor to begin the job. This can be a challenge in multiple ways. Capital costs can be high in many regions. Banks have been reluctant to offer financing to small and mid-size businesses. And when customers extend payment terms on orders, it stretches the supplier even further, making it more difficult to begin the next order. The financial side of the supply chain has major ramifications on the overall supply chain. It impacts the supplier's ability to deliver goods. It impacts the brand or retailer's ability to bring goods to market on time. It impacts costs. It directly impacts the health of the apparel supplier.
What exactly does the term 'financial supply chain' encompass? Can you explain the emergence of this term and its popularity in the current scenario?
Financial supply chain refers to capital and liquidity across the supply chain. A growing number of companies are recognizing the supplier-related risks that stem from capital constraints. For a long time, suppliers were being beaten down on price AND on payment terms. This resulted in suppliers struggling to survive. The potential impacts of a supplier going out of business or of being late on an order have been well documented recently. Some companies have recognized the need to partner with suppliers - taking the approach that "my supplier is an extension of my business" - and taking steps to ensure their financial health. Several programs are available today, such as early payment programs that give suppliers access to payment within days. These programs not only remove time from the payment cycle, they also remove capital costs. When the buyer, supplier and finance provider are tied together on the same network, the finance provider can offer financing to the supplier based on the credit strength of the brand or retailer.
How can cloud based platform help in the financial supply chain?
Cloud changes the game in the financial supply chain by providing that network of connectivity upon which documents, data and payments flow with complete transparency to the buyer, seller and finance provider. Cloud removes the technology burden that often comes with global trade and supply chain solutions. A supplier can connect using just an internet browser. But that simple connection provides visibility into orders, access to financing and a clear view into payments to know exactly when payment will arrive. For suppliers, it means a healthier business that can plan for growth. For buyers, it means less risk and lower capital-related costs in the supply chain.
Can financial supply chain prove to be a practical approach in global sourcing of textiles and garments?
Financial supply chain has been proven to be a winning solution in the textile space. Buyers are relieved of risk and cost. Suppliers have access to capital they need to run their business.
Manual financial processes and inefficient use of working capital has resulted in tremendous capital been stuck in supply chains by companies. How can that capital be liberated?
I think we answered this in the above.
Published on: 10/10/2014
DISCLAIMER: All views and opinions expressed in this column are solely of the interviewee, and they do not reflect in any way the opinion of Fibre2Fashion.com.
