Supply Chain Finance and IT
In the last decade the financial flow and electronic information flow (electronic data interchange, the Internet, IT platforms, etc.) are more and more of interest in traditional physical flows of goods and services in supply
This integrated approach is summarised in the conceptual model of supply chain finance by Jan Jansen (see the image above).
In the conceptual model the business activities such as Sales, Production and Purchase are represented in the left part; internal processes (using ERP) are in the middle; the outcome for the company is on the right-hand side:
1) Improved liquidity
o Dynamic liquidity: Cash-to-Cash cycle
o Static liquidity: Current Ratio
2) Optimal Net Operating Working Capital position
3) Value creation:
o Financial value
o Social / Relational value
o Ecological value
4) Risk mitigation
In the supply chain this will mean that this not only applicable for one company, but for all the companies in the supply chain. In order to organise this, an IT solution is needed, so companies can connect their business activities such as order-to-cash (O2C) & purchase-to-pay (P2P) processes, sharing forecast, etc., with the goal to improve their performance in the whole supply chain.
IT solutions like EDI, IT platforms, and Blockchain might be the answer for supply chains to become more efficient not only in terms of creating financial value, but also in terms of creating ecological value (e.g., reducing impact on nature) and relational capital (e.g. improving relationships with business partners, suppliers and customers).