Sporting goods company Puma and BNP Paribas have announced a new supply chain finance solution that offers financial incentives to Puma’s suppliers based on their working practices.
The programme creates a financing structure with tiered pricing, offering lower costs for those suppliers that improve their environmental, health and safety, and social standards. It is supported by GT Nexus IT infrastructure and International Finance Corporation (IFC), part of the World Bank Group.
With many of Puma’s 300-plus suppliers being based in Asia, the first phase of the programme will be rolled out to suppliers in Bangladesh, Cambodia, China, Indonesia, Pakistan and Vietnam. The programme uses ratings based on Puma’s own standards and will be monitored through an auditing process.
Rick van der Kamp, the Jakarta-based senior operations officer for IFC, told the 2015 Supply Chain Finance Community Forum how suppliers’ sustainability rating is tied to the interest rate charged for the global trade supplier finance made available to them: the better the sustainability compliance the lower the interest charge.
“This financing programme enables our suppliers to leverage their relationship with us and benefit from Puma’s strong reputation and financial position,” said Lars Soerensen, Puma’s chief operating officer. “This is the first programme in our company that rewards a supplier’s rating within Puma’s environmental and sustainability programme through related fees.”
One of the first suppliers to be onboarded is Ball Planet Industrial, a Chinese manufacturer of balls. General manager Ken Hong said, “We are keen to start using this financing facility, since access to affordable financing is always a challenge. This innovative program will not only help us improve our cash flow, but will also provide us with a financial incentive to improve our environmental, health and safety and social standards, which will ultimately reduce our operating costs and enhance our performance.”