Five Phases of Optimization
Belin identifies five phases to supply chain optimization. Logistics, quality, innovation, and sustainability are all familiar phases, but Belin adds finance as the new cherry on top. Right now, the search to reduce working capital costs is a top priority. Belin talks about why this is significant:
From a financial perspective, working capital finance is the oil that makes trade in supply chains possible. The flow of goods and services is reflected in the accounts payables (AP) and accounts receivables (AR) from buyers and suppliers. In it a lot of liquidity is trapped. In a world of suppressed liquidity, companies have been eating into their own cash reserves and take a close look at their working capital needs. Buyers want to pay later, while (international) suppliers want to collect earlier putting supply chains under pressure.
Better finance has the power to alleviate tensions by way of using “the collateral of outstanding debt from large buyer organizations to offer cash flow advantages to suppliers in that company’s supply chain.” Belin then goes on to make a list of ways that supply chain finance can truly be a win-win situation for buyers and sellers. Continue on to his full article for a complete breakdown: http://www.ebnonline.com/author.asp?section_id=3533&doc_id=272236