Supply chain challenges, such as demand forecasting, inventory management and logistics, have become top priorities for CFOs worldwide. David Rudd and Ian Armstrong, joint heads of origination at Benteler Trading International (BTI), explore the complexities faced by the electronics industry and present case studies highlighting BTI’s inventory trading solution.


In a recent global survey, supply chain integrity was cited by CFOs as one of their biggest priorities. Some of the supply chain challenges facing senior management today include:

  • Demand forecasting and planning: Accurately predicting customer demand is crucial for effective supply chain management. Fluctuations in demand, seasonality and market dynamics can make it challenging to forecast demand accurately. A lack of accurate forecasting can lead to overstocking or stockouts, affecting production schedules and overall operational efficiency.
  • Inventory management: Balancing inventory levels is a critical challenge. On one hand, carrying excess inventory ties up working capital and increases storage costs. On the other hand, insufficient inventory levels can lead to production disruptions and missed customer orders. Optimising inventory levels to meet demand while minimising costs requires effective inventory management practices.
  • Supplier management: Manufacturers rely on a network of suppliers for raw materials, components and parts. Managing relationships with multiple suppliers, ensuring quality, negotiating contracts and addressing potential disruptions like supplier bankruptcies or delays can be complex. Maintaining strong supplier relationships, diversifying the supplier base and implementing contingency plans are essential.
  • Logistics and transportation: Efficient transportation and logistics play a vital role in manufacturing supply chains. Challenges include optimising transportation routes, reducing transit times, managing freight costs and co-ordinating complex global shipments. Factors such as customs regulations, infrastructure limitations and geopolitical events can further complicate logistics operations.
  • Risk management: Manufacturing supply chains are susceptible to various risks, such as natural disasters, geopolitical disruptions, trade disputes and labour strikes. These events can cause supply chain disruptions, affecting production schedules, delivery timelines and overall business continuity. Implementing risk management strategies and establishing backup plans are crucial to mitigate these risks.
  • Technology integration: The integration of technology, such as enterprise resource planning systems, warehouse management systems and advanced analytics, is vital for streamlining supply chain operations. However, implementing and integrating these technologies can be challenging, requiring significant investment, training and change management efforts.
  • Sustainability and compliance: Increasingly, manufacturers are facing pressure to adopt sustainable practices and comply with environmental regulations. Ensuring supply chain transparency, tracking the origin of raw materials, reducing carbon emissions and managing waste disposal can be complex. Meeting sustainability goals while maintaining cost-effectiveness is a significant challenge.


The experience of the Covid years highlighted many cases where these challenges were not successfully managed whilst demonstrating the fallibility of just-in-time, just-in-sequence supply chains when many industries couldn’t meet some or all their supply chain challenges. For example, a shortage of chips and logistical constraints caused massive disruption across many industries from technology to auto.


Developments in the tech sector

Supply chains in the electronics manufacturing industry with their high-volume, high-value inventory are complex, exacerbated by the fact that they are global in nature, notwithstanding recent geopolitical tensions between the US and China, which are driving protectionism and a move to nearshoring.

Covid led to a severe demand-supply imbalance in chips, leading to delays in end products reaching the markets.

Big techs’ response to avoid these bottlenecks and to become more resilient in the future was to order more product and increase inventory levels in what was being dubbed as just-in-case.

The cycle has now fully turned as forecasts made back in 2021 and 2022 turned out to be too optimistic as the global economy slowed, inflation subsequently increased and the accompanying higher interest rates globally began to bite. Currently, there are many instances of excess inventory ordered by original equipment manufacturers (OEMs) in good faith, who are now bound by contracts to take delivery of large amounts of product from suppliers that they simply don’t currently need. Taking ‘early’ ownership of this excess product consumes scarce and valuable capital somewhere within the supply chain, whether that be for suppliers, contract managers, systems integrators or the OEMs, and all parties are seeking solutions to mitigate this cost.


Inventory trading

Benteler Trading International’s (BTI) solution to this conundrum is to perform the role of an inventory trader, stepping seamlessly into existing supply chains. Since BTI is buying and taking title to the goods, while assuming risk and control, inventory recognition for the client is significantly reduced, always deferred and revenue is often accelerated in what are off-balance sheet solutions.

BTI takes a physical flow and transforms it into a financial flow that is fundable by our global funding partners. BTI mitigates the various risks through our experience in providing innovative and proprietary structures, ultimately isolating the credit risk for the banks.


Electronics industry case study 1: The contract manufacturer

Our client, a large North American contract manufacturer (CM) approached us with an opportunity with one of their core clients (the OEM). The CM was running an existing supply chain in which they bought goods from suppliers in China and flew them over to Europe and the Americas for value add prior to delivery to the OEM. Having identified a potential multi-million dollar saving through changing the method of transport from air to sea freight, both the client and the OEM were looking for a party to help alleviate the working capital requirement for the extended holding period. An additional requirement of the CM was that they wanted to implement a solution where the party entering the supply chain to hold the working capital was blind to the suppliers and the OEM contractually.

The client sent out an RFP to the three or four companies globally active in inventory management and carefully selected BTI to provide the service, due to our advanced structuring experience and proven ability to meet all the CM’s requirements. The next challenge was delivery, with the head of the global business unit stipulating a June 1 hard deadline to all parties, set to meet assurances given to the OEM. BTI deployed a rapid execution strategy and with tight project management the documentation was executed, control systems delivered, and BTI’s TradeCo took the first delivery of product for shipping within six weeks of mandate.

Given the tight time frame, all parties worked incredibly hard to deliver a phased IT roll-out that will lead to a fully automated solution for future trades. Additionally, the hold phase for BTI’s TradeCo will be extended from goods on high seas, to encompass an extension to landed goods and warehouse ownership.

BTI will buy approximately US$300mn of product per annum and the trade is funded by MUFG. The CM will now offer this proven structure to other existing clients, to reduce costs across the supply chain, increase their competitiveness and provide continuous ESG improvements.


Electronics industry case study 2: The systems integrator

Our client, a leading systems integrator (SI) approached BTI to address some of the overcapacity issues currently experienced in the tech space. The initial request concerned the volume of product they were holding for a large OEM client, which had increased dramatically. The current supply chain challenges meant they were holding a three-fold increase from historical levels in their North American warehouse, which had a value into the billions of dollars.

Working collaboratively with the OEM, BTI was invited to offer advice and suggested an established structure that enabled the funder to price against the strongest credit in the supply chain through an off-take agreement with the OEM, a very credit-worthy counterparty. This solution substituted the client’s existing working capital with a much-improved margin and access to new liquidity. Freeing up their working capital also removed the constraints in the supply chain that were potentially limiting further growth in business between the two parties.

To conclude, the two cases sit amongst a multitude of issues experienced across supply chains in all sectors and hopefully demonstrate that there are proven solutions that can be rapidly deployed to alleviate some supply chain stress. These two cases have solved specific client problems using existing, available structures and strong funding partners.


Please feel free to contact us and we will be delighted to discuss the topic in more detail:

David Rudd, CFA


+44 7502 666 487

Ian Armstrong


+44 7738 332 561