CREDIT: GETTY buyers are increasingly extending terms, prepaying or directly financing supplier capacity – a model closer to sponsorship than procurement.
Asked to explain the mechanics, Charlie draws on an example from outside the data centre space entirely.
“ In the automotive space, GM created a US $ 4.5bn credit facility that would allow them to essentially pre-purchase critical components for vehicles without taking the full cash impact upfront,” he explains.
“ I think you’ re seeing more of these creative types of relationships. So, rather than a company saying,‘ We’ re going to buy X amount from you for this data centre,’ it’ s more,‘ What can we do to create a relationship where there’ s no conflict of interest?’ The supplier will get the component parts they need, when they need them, because they’ ve created a funding mechanism that’ s more compelling than simply buying from them on standard terms.”
Once a buyer has financed a supplier’ s expansion or prepaid for future capacity, that buyer’ s exposure to the supplier’ s financial health increases substantially, a dynamic that standard vendor management processes were not designed to capture.
Private credit’ s double edge Much of the capital funding this expansion is coming not from public markets but from private credit,
procurementmag. com 73