Supply Chain Finance

Risk Management, Resilience and Supplier Management

Wendy Tate, Lydia Bals, Lisa Ellram

• Publisher: Kogan Page
• Year: 2018
• Print ISBN: 9780749482404
• eBook ISBN: 9780749482411
• Edition: 1
• Topic: Business
• Subtopic: Corporate Finance
• Index: Business

Supply Chain Finance is a contributed book looking at the two major perspectives of managing finance across the supply chain.

The first is more short-term, focused on accounts payables and receivables. The second is a more overarching perspective, focused on working capital optimization in terms of inventory and asset management. It includes chapters from a variety of research perspectives, as well as from business and policymakers. The authors look at the benefits of the supply chain finance approach including reduction of working capital, access to more funding at lower costs, risk reduction, as well as an increase of trust, commitment, and profitability through the chain.

Supply Chain Finance includes theory as well as practical case studies addressing advances in the area of supply chain finance. The editors and contributors look at how to design and implement supply chain finance in supply chains and examine what the future holds for this important area. Online supporting resources include self-test multiple-choice and essay questions for each chapter.

PART ONE

SCF history and perspectives

02

Supply chain finance: history and future directions

LISA M ELLRAM

Lisa M Ellram, PhD, CPM, CMA, Scor-S, is the Rees Distinguished Professor of Supply Chain Management in the Department of Management at the Farmer School of Business, Miami University in Oxford, Ohio, where she teaches logistics and supply chain management at the undergraduate and graduate level. Her primary areas of research interest include sustainable purchasing, transportation and supply chain management; services purchasing and supply chain management; offshoring and outsourcing; and supply chain cost management. She has published in numerous top journals spanning a variety of disciplines, including Journal of Supply Chain Management, Academy of Management Journal, Journal of Operations Management, California Management Review, MIT Sloan Management Review, and other managerial and academic outlets. She has co-authored seven textbooks, the most recent being Logistics Management: Enhancing competitiveness and customer value, an online text published by myeducator.com. She has a BSB in accounting and worked as a cost accountant, financial analyst and a new product financial manager at Pillsbury Corporation before receiving her PhD from the Ohio State University. She has been teaching, studying and writing about cost management in the supply chain for over 25 years.

WENDY L TATE

Wendy L Tate, PhD (Arizona State University, 2006) is the William J Taylor Professor of Business and Cheryl Massingale Faculty Research Fellow in the Department of Supply Chain Management at the University of Tennessee. She teaches undergraduate, MBA and PhD and Executive Education students Strategic Sourcing and has an interest in the financial impacts of business decisions across the supply chain. She enjoys research and takes a special interest in translating academic work into classroom learning activities and disseminating her work globally. Her research can be broadly classified under the umbrella of purchasing but focuses primarily on two different types of business problems. The first is in the area of services purchasing including outsourcing and offshoring. This area of research has expanded into ‘reshoring’, or bringing manufacturing back to the home country. The second area is on sustainable business practices and trying to understand how these initiatives can be diffused across a supply chain and a supply network. She presents at many different venues including both academic and practitioner-oriented conferences. She has published research in top journals, spanning a variety of disciplines including the Journal of Operations Management, Journal of Supply Chain Management, California Management Review, MIT Sloan Management Review, and other managerial and academic outlets. She serves as co-editor in chief for the Journal of Purchasing and Supply Management, as Associate Editor for two other supply chain journals and is on the editorial review board and performs ad hoc reviews for multiple other journals. She recently co-authored a textbook entitled Purchasing & Supply Management: Enhancing Competitiveness and Customer Value.

RYAN FERNANDES

Ryan Fernandes is a Product Management and Strategy professional with over 12 years’ experience in Financial Services. In recent years at Australia & New Zealand Banking Corp, he was responsible for developing supply chain finance (SCF) capabilities and deploying this across 30+ countries within the ANZ network. Ryan worked with corporate clients at C-Level to structure and implement domestic and cross-border SCF programmes valued at over $2 billion of funding in Australia, Asia, UK and North America. Over the course of his career, he has seen both large corporates and SMEs grapple with optimizing working capital, mitigating supply chain risk, and driving operational efficiency. He has been able to deliver SCF solutions that provided immense value to address these challenges. More recently, Ryan has worked at a fintech start-up building an online marketplace for SCF underpinned by innovative technology and a unique funding model. Ryan frequently speaks at conferences and has published articles around supply chain finance, fintech and product development.

Abstract

This chapter begins with a definition and brief history of the rise of supply chain finance. This is followed by a deeper dive into the supply chain perspective of SCF, showing the options available to firms to increase cash flow and improve the cash-to-cash cycle and working capital. We use financial statements of global firms to demonstrate the impact on individual company costs and total supply chain costs when SCF is viewed from the firm versus the supply chain perspective. We then delve into the numerous problems associated with focusing only on the organization’s cash, rather than supply chain cash impacts. It can be to the organization’s advantage to look at supply chain cash implications more broadly from a risk management, supplier goodwill and loyalty, and total cost perspective. The chapter closes with suggestions for improving cash management in the whole supply chain through improved information and asset sharing, as well as SCF solutions.

Introduction: the emerging concept of SCF

The opening editorial provided an overview of the chapters in the book as well as some perspective on the emergence of supply chain finance. This chapter is designed to provide a foundation for the book in terms of some basic definitions and schools of thought. The premise is that SCF perspectives are not sterile finance tools and approaches that are separate from larger supply chain relationships. The focus is specifically on buyer–supplier relationships, and the role of SCF in supporting those relationships. Because of this, the supply management function should play an important role in the organization’s SCF approach – including the development and application of various financing tools.

In this chapter, the accounts payable focus of SCF is first presented. This is then contrasted with a description of end-to-end SCF options. This is followed by a brief history of how extended payment terms and SCF recently came into the spotlight. The impacts on individual company costs and total supply chain costs are demonstrated when SCF is viewed from the firm perspective rather than from the supply chain perspective.

We also provide a primer with examples of how organizations may increase cash and working capital, as well as the difference between cash and working capital, and appendices (A and B) with definitions of key terms. Throughout the chapter, financial statements of global firms are used to demonstrate the points and bring the ideas to life for the reader.

The section following will identify risks associated with focusing only on the organization’s cash and working capital positions, rather th...

Table of contents

• Cover
• Title Page
• Copyright
• Contents
• List of Figures
• List of Table
• Foreword by Michiel Steeman
• 01 Supply chain finance: solutions for financial sustainability, risk management and resilience in the supply chain
• PART ONE SCF history and perspectives
• PART TWO SCF in action
• PART THREE SCF in practice – case studies
• PART FOUR SCF in research – trends and future research areas
• Appendices
• Index
• Backcover