November 14, 2023 | Stamford, CT — Changes European companies are implementing in their supply chains could be setting the foundation for a new era of digitized logistics and trade finance, and more sustainable business practices. 

Large European companies are revamping their supply chains in the face of lingering disruptions, geopolitical upheavals and macroeconomic volatility. 

“The transformation of supply chains began in 2020 with a series of frantic adjustments made to keep businesses running during the global pandemic,” says Tobias Miarka, Head of Corporate Banking at Coalition Greenwich and co-author of The New European Corporate Supply Chain: More Resilient, Digital and Sustainable. “It continues today, as companies work to make supply chains more diverse and resilient.” 

China+ and Near-shoring
More than 80% of the large European companies taking part in the Coalition Greenwich Voice of Client – 2023 European Large Corporate Trade Finance Study have adopted strategies to make supply chains more resilient. By far the most common change these corporates are making is to diversify their supply chains. They are doing so by extending supply chains to new countries and suppliers in Asia through so-called China+ strategies. European companies are also moving supply chains closer to home.

European companies believe shifting supply chains closer to their major production centers will enhance their control, lower logistics costs, reduce shipping times, and address ongoing quality issues with Asian suppliers and materials, while simultaneously alleviating payment terms challenges and FX hedging complexities. 

“European companies also believe near-shoring will help reduce their carbon footprint and provide better transparency into supply chains, providing opportunities to minimize ESG risks,” says Melanie Casalis, Research Director at Coalition Greenwich and report co-author.

Supply Chain Finance and Sustainability
Large European corporates are facing a pressing challenge that is complicating efforts to overhaul supply chains: higher funding costs and lower access to capital for suppliers. One possible response to this problem is to implement supply chain finance (SCF)—a technology-driven solution by which banks help large companies optimize working capital and reduce risk across their supply chains. According to study participants, approximately 37% of large European corporates have implemented SCF and Coalition Greenwich believes SCF will become increasingly popular with European corporates for another important reason as well. 

“Digital applications that make up the SCF platform make it an ideal foundation for efforts to make supply chains more sustainable,” says Ana Voicila, Research Manager at Coalition Greenwich and report co-author. “These emerging solutions can help companies get transparency into the practices and ESG performance of their suppliers and reduce the risk of falling prey to supplier greenwashing.”