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Would collaborative corporate treasury work? Is it really practical?

Ernst & Young have just carried out a study for The Consumer Goods Forum: To deliver profitable growth in the world of the new consumer – must your old rivals become your best friends? which concludes that, “Consumer products companies need to collaborate with rivals to unlock new sources of profitable growth amid converging market challenges.”

The findings highlighted four key areas of impact on logistics operations:

  1. Urbanization
  2. E-commerce and omni-channel growth
  3. Environment and regulation
  4. Growing transportation inefficiencies and cost

The EY report describes, “Three key collaboration opportunities that exist for manufacturers:

  1. Manufacturer logistics hub: Multiple manufacturers or suppliers share warehouse and logistics. This optimizes overheads and inventory, and maximizes delivery frequency and vehicle utilization due to high product mix.
  2. City/market retail and logistics consolidation center: Multiple retailers share direct costs in collaboration with suppliers for effective order fulfillment. This optimizes overheads and inventory, and improves delivery frequency and vehicle utilization.
  3. Independent collection point: This allows flexibility for consumer and minimizes home deliveries; similar patterns were observed in locker or shared vehicle services-based delivery. This also maximizes vehicle utilization.”

Collaborative corporate treasury opportunities/nightmares?

The Consumer Goods Forum at the start of this study asked three ’simple’ questions:

  1. What is driving the changes in physical flows in our industry today?
  2. How are companies responding to these fresh trends?
  3. How could your company get the most out of the emerging new portfolio of collaborative solutions?

So what are the “emerging new portfolio of collaborative solutions” for corporate treasury? A few ideas that come to mind are:

  • Sharing TMS solutions: is it really necessary for every corporate treasury department to have their own system or services? Cannot you share one?
  • Raising finance: why cannot crowd funding come to corporate treasury big time?
  • Investing: direct investment in each others corporate bonds - maybe through the shared TMS?
  • Shared Service Centres: why do companies need their own? Why cannot they share? How could they share?
  • Every large MNC needs some form of payment factory and in-house bank: why do they all need their own?
  • Fraud prevention: all MNCs have a huge problem, where is the innovative collaborations to cut fraud?

CTMfile take: This piece is not a wholesale pitch for cash and treasury management outsourcing which often/mostly is done very poorly. BUT WE NEED TO ASK: Is corporate treasury that different between companies? Why cannot corporate treasury departments collaborate more? Everyone can see the problems, the nightmares, however, there are real opportunities out there. Where are they? What would work and what wouldn’t? Is collaborative corporate treasury really practical? Your CFO really wants to know…… 

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