HSBC Report Shows Global Supply Chains Remain Vulnerable to Unanticipated External Shocks

Rhea-AI Summary

HSBC has published a report titled “Building Resilient Supply Chains Amid an Uncertain Geopolitical Landscape,” in collaboration with Procurement Leaders. The report emphasizes the importance of supply chain finance in mitigating risks related to global trade disruptions.

Marissa Adams, HSBC Americas Head of Global Trade Solutions, highlights that modern supply chains' complexity makes them vulnerable to unexpected shocks. Companies are advised to make supply chains more transparent, resilient, and less dependent on single suppliers. Supply chain finance can help by injecting liquidity and improving supplier resilience.

The report suggests a four-stage risk assessment process: focus on high-risk areas, analyze potential disruption consequences, explore alternative suppliers, and continuously reassess emerging risks. This follows the launch of HSBC Global Trade Solutions, aimed at supporting businesses in navigating global trade challenges using HSBC's extensive network and expertise.

Positive

• HSBC's report emphasizes risk mitigation through supply chain finance.
• Supply chain finance helps companies maintain inventory in a cost-neutral manner.
• It adds resilience and safety buffers by injecting liquidity into trading relationships.
• The four-stage risk assessment process offers a structured approach to managing supply chain risks.
• HSBC's new identity, Global Trade Solutions, aims to support businesses in global trade with a focus on future challenges.
• Leveraging HSBC’s extensive network and expertise provides added value to businesses.

Negative

• Global supply chains remain highly vulnerable to unanticipated shocks.
• Complexity and dependence on multiple components make disruptions more damaging.
• Geopolitical uncertainty continues to impact global trade flows.
• Identifying and securing alternative suppliers can be challenging and resource-intensive.

Resiliency through supply chain finance can provide important safeguards against unexpected disruptions

NEW YORK--(BUSINESS WIRE)-- With global supply chains becoming more complex and geopolitical uncertainty increasingly impacting global trade, thus changing the nature of trade flows, supply chain finance can be an important tool to help eliminate those risks, according to “Building Resilient Supply Chains Amid an Uncertain Geopolitical Landscape,” a new HSBC report published in collaboration with Procurement Leaders, a World50 Group Community.

HSBC Americas Head of Global Trade Solutions Marissa Adams (Photo: Business Wire)

While supply chain disruptions are nothing new, complex modern products have become dependent on many different components sourced around the world, thereby making an unexpected event impacting supply chains more harmful. As such, trade experts advise that companies rethink their approach to sourcing, focusing on building supply chains that are transparent and where possible simpler, resilient to geopolitical risks, sourced from markets closer to home, and not reliant on one sole supplier of goods and materials.

Supply chain finance is another important tool that companies can leverage to decouple their financial supply chain from their physical supply chain, according to Americas Head of Global Trade Solutions Marissa Adams. She said supply chain finance allows organizations to hold more inventory on a cost-neutral, balance-sheet friendly basis. Injecting liquidity into a trading relationship can add resilience and safety buffers.

“An intelligently designed supply chain finance program can do a lot of heavy lifting in terms of de-risking trading relationships, improving supplier resilience, and providing suppliers with the finance to invest in and develop their businesses,” said Adams, who suggested that companies follow a four-stage risk assessment and remediation process to plan for uncertainty:

• Take a risk-based approach to sourcing analysis
  
  Rather than reviewing threats by tier, stock-keeping unit or category, focus on those areas in which the organizations is most at risk, or where the biggest dangers lie. Often, these areas will be associated with specific regions or countries.

• Analyze the consequences of supply disruption
  
  Estimating the likelihood of disruption is difficult, but exploring the likely consequences of any disruption is not. Which products or product groups would be impacted? How quickly? For how long? Are any substitutes available? What might the financial consequences be?

• Review the options available to help avoid disruption
  
  What other suppliers exist? Where are they located? Do they offer the same product, i.e. like-for-like? How viable are they in terms of scale, technology maturity, time-to-market and quality? Do you need to locate one, two, or even more alternative suppliers?

• Repeat this process as necessary to avoid new and emerging risks
  
  If recent history has taught us anything, it is that the world doesn’t stand still: geopolitical uncertainties arise over time. Your product offerings and supply base evolve. Repeat the exercise as new threats and vulnerabilities emerge.

This latest trade report follows the launch of HSBC Global Trade Solutions, a new identity for the bank’s long-standing Global Trade and Receivables Finance (GTRF) business. Global Trade Solutions builds upon HSBC’s foundations as a trade bank, while creating new ways to connect the world through trade. The new direction focuses on supporting businesses for the future, helping them navigate the constantly evolving landscape of global trade by harnessing HSBC’s long-standing network, expertise and solutions.

Click here to learn more about Global Trade Solutions.

About HSBC

HSBC Holdings plc
HSBC Holdings plc, the parent company of HSBC, is headquartered in London. HSBC serves customers worldwide from offices in 62 countries and territories. With assets of US$3,0001bn at 31 March 2024, HSBC is one of the world’s largest banking and financial services organisations.

HSBC Bank USA, National Association (HSBC Bank USA, N.A.) serves customers through Wealth and Personal Banking, Commercial Banking, Private Banking, Global Banking, and Markets and Securities Services. Deposit products are offered by HSBC Bank USA, N.A., Member FDIC. It operates Wealth Centers in: California; Washington, D.C.; Florida; New Jersey; New York; Virginia; and Washington. HSBC Bank USA, N.A. is the principal subsidiary of HSBC USA Inc., a wholly-owned subsidiary of HSBC North America Holdings Inc.

These materials are intended solely for your information and HSBC Bank USA, N.A., assumes no obligation to update or otherwise revise these materials. The information, analysis and opinions contained herein constitute our present judgment which is subject to change at any time without notice. Nothing contained herein should be construed as tax, investment, accounting or legal advice. In all cases, you should conduct your own investigation and analysis of each potential transaction, and you should consider the advice of your legal, accounting, tax and other business advisors and such other factors that you consider appropriate. This is not a recommendation, offer, endorsement or solicitation to purchase or sell any security, commodity, currency or other instrument or a commitment to provide any financing that may be described in these materials.

For more information, visit: HSBC in the USA

About Procurement Leaders

Procurement Leaders, a World 50 Group Community, is the world’s largest and most valued community for chief procurement officers and their leadership teams.

Powered by a syndicated member and partner ecosystem of 775+ leading global companies, Procurement Leaders inspires 35,000+ senior leaders to make faster, better-informed decisions and follow proven paths to success. Through insights, expert guidance, facilitated networking and strategy-focused communities, Procurement Leaders accelerates the transformation journey to greater value creation and procurement excellence.

Discover more: procurementleaders.com

View source version on businesswire.com: https://www.businesswire.com/news/home/20240610463954/en/

Media enquiries

Matt Kozar

HSBC Vice President of External Communications, US

matt.kozar@us.hsbc.com

Source: HSBC Bank USA, N.A.

FAQ

What is the focus of the latest HSBC report?

The report, titled 'Building Resilient Supply Chains Amid an Uncertain Geopolitical Landscape,' focuses on the importance of supply chain finance to mitigate risks associated with global trade disruptions.

Why are modern supply chains more vulnerable to disruptions according to HSBC?

Modern supply chains are more vulnerable due to their complexity and dependence on various components sourced globally, making them susceptible to unexpected external shocks.

What does HSBC suggest to improve supply chain resilience?

HSBC suggests making supply chains more transparent, resilient, and less dependent on single suppliers. Supply chain finance is recommended as a tool to improve liquidity and supplier resilience.

What is the four-stage risk assessment process proposed by HSBC?

The four-stage process includes: focusing on high-risk areas, analyzing disruption consequences, exploring alternative suppliers, and continuously reassessing emerging risks.

What is HSBC Global Trade Solutions?

HSBC Global Trade Solutions is the new identity for HSBC’s Global Trade and Receivables Finance business, aimed at helping businesses navigate global trade challenges using HSBC's network and expertise.