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Costs and benefits of SCF solutions
Companies that wish to implement Supply Chain Finance solutions often struggle to clearly identify their costs and benefits. What are the total costs of a solution, both explicit and hidden? And what are its potential benefits for the various parties involved? How can a company choose the most suited solution to its specific needs?
Third party logistics providers and financial value-added services: Good governance practices
In today’s highly integrated and connected world, trade occurs oftentimes cross-border, with goods being transferred from one country to another. With the physical flow of goods, also informational and financial flows are finding their way from sender to receiver and vice versa. However, often the physical, informational, and financial flows in the supply chain are not treated equally. Therefore, solutions such as the concept of supply chain finance (SCF) and financial value-added services (FVAS) are becoming more significant. The Knowledge Series at hand discusses good governance practices with regard to these services from a logistics service provider’s (LSP) perspective. After an outline of the supply chain structure with the different actors and their interests, the FVAS of customs clearance, freight payment services, and inventory financing are analysed in five different-sized LSP’s.
The case study approach identifies customs clearance, followed by inventory financing and freight payment services as the most prevalent FVAS. External partners are included in three out of five cases. The reasons for providing financial services autonomously include financial, risk, quality, and business model considerations. On the other hand, motives for collaboration are expertise and staff requirements, cost considerations and the impact on the balance sheet, complementary capabilities, risk management, and strategic rationales.