Integrating financial and physical supply chains: The role of banks in enabling supply chain integration

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Journal Article

Authors:
Silvestro, Rhian
Lustrato, Paolo
Publication year:
2014

Purpose: The financial supply chain, running parallel to the flow of goods and information, is common to all economic supply networks, and its integration with the physical supply chain is therefore a critical and ubiquitous aspect of supply chain integration (SCI) largely ignored in the literature. This paper aims to develop a model of physical and financial SCI, which is based on a process view from both buyers’ and suppliers’ perspectives, and explores the role of banks in enabling SCI. Design/methodology/approach: The paper reports an exploratory study of the role of banks in improving SCI, by presenting a case study analysis of two international banks. Findings: The findings show that banks can support buyers and suppliers by contributing to the enablers of SCI, namely coordination, collaboration, information sharing and information visibility. Research limitations/implications: The research is limited in that it is explorative; further studies are required in order to quantify the impact of banks’ interventions on SCI. Practical implications: Improved SCI requires an understanding of the flow of physical and financial resources across supply networks. Banks can help buyers and suppliers develop a more holistic understanding of the supply chain, thus improving integration and optimising working capital. Originality/value: The paper presents a process model of physical/financial SCI which uniquely recognises the role of banks in enabling buyers and suppliers to improve SCI, synchronisation and performance. © Emerald Group Publishing Limited.

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