How Finance Is Getting Physical

As companies transact more business outside their home
country's borders, linking their financial and physical supply
chains has become a priority, says Greg Johnsen, executive
vice president with GT Nexus, a global trade and logistics
portal. "Just as your supply chain changes when you
go offshore, there's also an impact on payment and how you
handle cash." Any number of events, such as shipping
a product, can trigger payment authorization. However, determining
when a specific event has happened can be difficult when
suppliers and shipping partners are scattered across the
globe. Moreover, as supply chains become global, more parties
usually are involved in moving goods from the supplier to
the buyer, increasing the complexity.

UnderArmour, Inc., the producer of higher-end athletic
apparel, has grown over the past several years like an athlete
prepping for a championship game. Sales jumped nearly tenfold
between 2002 and 2006, from $50 to $431 million. At the same
time, the company expanded the number of countries from which
it sourced materials, from about eight to 16, says Brad Dickerson,
vice president of accounting and finance. "The sourcing
base was changing significantly."

These twin shifts created several challenges. First, there
was no central tool through which Dickerson and his colleagues
could communicate with suppliers. So, if an invoice was held
up due to a discrepancy between its total and the numbers
on the packing slip, the employees in the supply chain functions
might know about this, but not accounting.

In addition, because UnderArmour was transacting business
with partners spread across multiple countries and time zones,
and speaking different languages, it was difficult to get
purchase orders to suppliers and pay the invoices on a timely
basis. "It was a dysfunctional process," combining
email, faxes, and phone calls, Dickerson says.

So, Dickerson and his colleagues in UnderArmour's sourcing
group began working to better align their business processes
with their suppliers, recognizing that their suppliers' financial
stability benefited UnderArmour as well. The key, says Dickerson,
was sharing information and gaining visibility into the supply
chain.