The Impact of Supply Chain Finance on Corporate Performance : Improving Supply Chain Efficiency and Increasing Profitability

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Thesis

Authors:
Bærentsen, Dan Xu
Publication year:
2012

The thesis studies the application of supply chain finance (SCF) in supply chain management. The SCF is also called supplier finance, and mainly it is used to deal with the financial issues in supply-side value chain management. The impact of SCF on corporate performance reflects in the improved supply chain efficiency in terms of cost saving payable processes and payment term extension. The performance indicators derived from the financial supply chain management (FSCM) have influences on profitability. On the SCF program, decreased costs of goods sold (COGS) obviously can increase return on invested capital (ROIC) and return on equity (ROE) in short term. The cause-effect relationships between the FSCM performance indicators and profitability are established by the EVA model and tested in linear regression analysis. The popularity of using the SCF program is increasing after the financial crisis (2008) because of the imminent beneficial consequences. Small participants can take large participants’ credit ratings to finance their capital requirements on the SCF program. Together with early discount payment, the small participants are able to save financing costs as well as increase cash and speed up cash flows. Large participants can extend payment terms to attain positive cash flows and to increase economic value added. Additionally, the large participants can leverage the small participants’ cost savings to negotiate better price offers and in turn to reduce their own COGS. The supply chain finance is a financial solution that provides win-win outcomes for all the participants in the supply-side value chain. Particularly in the economic recession, the positive impact of SCF on corporate performance can increase corporate economic power in the marketplace and remain competitive

Comments: 3

  1. nanaadjei

    Comment awaiting approval

  1. scfacademy

    Hey Mohamad,

    thanks for reaching out. We simply host a link to the external website (now under maintenance, it seems!) but do not own the publication itself. I suggest you check out back the external website in a while.

  1. aznill

    Hai there,

    I am keen to get the copy of this article. May i know how can i get the copy of this article and if i need to pay for it, how much and how do i proceeds? Thank you for your reply.

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