PROJECT REPORT

ON

SUPPLY CHAIN FINANCE MANAGEMENT OF ALLCARGO LOGISTICS

Dissertation Submitted to the

BUNTS SANGHA’S UKS INSTITUTE OF MANAGEMENT STUDIES AND

RESEARCH

in partial fulfilment of the requirements for the award of the Degree of

POST GRADUATE DIPLOMA IN MANAGEMENT

Submitted by:

PRANAYA SHETTY

(Roll No: 1510)

Research Guide:

PROF.NIKHIL UBALE, Asst. Professor

Bunts Sangha’s UKS Institute of Management Studies & Research

ShashiManmohanShetty Higher Education Complex, BuntaraBhavanMarg, Kurla

East, April 2016
 DECLARATION

I hereby declare that the dissertation “Supply Chain Finance Management of Allcargo
Logistics” submitted for the PGDM Degree at Bunts Sangha’s UKS Institute of Management
Studies & Research is my original work and the dissertation has not formed the basis for the
award of any degree, associate ship, fellowship or any other similar titles.

Place: Mumbai

Date:

(PRANAYA SHETTY)
 CERTIFICATE

This is to certify that the dissertation entitled “To study the perception of customer toward the
branded and non-branded jeans” is the bona fide research work carried out by Mr. Mansoori
Sohail student of Bunts Sangha’s UKS Institute of Management Studies & Research during
the year 2014-2016 in partial fulfillment of the requirements for the award of the Degree of
Post Graduate Diploma in Management and that the dissertation has not formed the basis for
the award previously of any degree, diploma, associate ship, fellowship or any other similar
title.

……………………………..

PROF. NIKHIL UBALE

Asst, Professor

……………………………….

DR. KRISHNA SHETTY

DIRECTOR

Bunts Sangha’s

UKS Institute of Management Studies & Research

Place: Mumbai

Date:
 ACKNOWLEDGEMENT

In the first place, I thank the Bunts Sangha’s UKS Institute of Management Studies &
Research Mumbai for giving me an opportunity to work on this project. I would like to thank
Dr. Krishna Shetty, Director of UKS Institute of Management and also I would like to thank
Prof. Mangesh G Pati l, Asst Professor Mumbai for having given me their valuable guidance
for the project. Without their help it would not have been possible for me to complete the
project.

I would also like to thank, all the respondents of the questionnaire who have provided me
with a lot of information and guidance without which this project could not have been
completed.

I would be failing in my duty if I do not acknowledge with a deep sense of gratitude the
sacrifices made by my parents and thus have helped me in completing the course
successfully.

Place: Mumbai

Date:
 TABLE OF CONTENT

Sr. No. Title

1. Introduction

2. Review of Literature

3. Article

4. Research Methodology

5. Data Analysis

6. Recommendation and Suggestion

7. Annexure

8. Bibliography
INTRODUCTION
 INTRODUCTION

WHAT IS SUPPLY CHAIN FINANCE MANAGEMENT?

Financial Supply Chain Management is not an entirely new concept, interest

in the discipline has increased dramatically over the past year with the focus shifting from
theoretical discussion to the practical implementation of programmes with tangible benefits.
Interest has been driven by banks seeking to adapt their transaction banking product offerings
to new market conditions, as well as buying corporates looking to squeeze added value from
their existing procurement arrangements.

The physical supply chain can be defined as the activities involved in planning and executing
the movement of goods and their documentation, while the financial supply chain describes
the activities involved in planning and executing payments between trading partners - what
could be described as the order-to-cash and the purchase-to-pay cycles for suppliers and
buyers respectively. For every physical movement of goods between supplier and buyer,
there exists a financial flow travelling in the opposite direction. Financial supply chain
management involves taking a holistic approach to these processes in order to achieve a range
of benefits that include improved efficiency and visibility across the supply chain and a more
favourable working capital position.

A distinction should also be drawn between what can be defined as 'supply chain services'
and 'supply chain finance'. The former refers to the realm of providing services in order to
increase supply chain efficiency - services that are not necessarily finance related such as the
dematerialisation of paper invoices or an increase in straight-through processing (STP).
Supply chain finance (SCF), on the other hand, relates more specifically to providing the
appropriate financing facilities at the relevant points in the physical supply chain.

From the buyer's perspective, offering financing in this way represents an opportunity to
more effectively manage relationships with suppliers and increase payment terms without
damaging goodwill between trading parties. And from the perspective of the supplier, the
main benefits relate to improved cash flow as reduced days sales outstanding (DSO)
mitigates the need for working capital during the production process.

A Holistic Approach:

While traditional trade finance offerings tend to be focused around individual transactions
and the strength of participants' balance sheets, SCF takes a more holistic approach. Rather
than looking at transactions in isolation, SCF considers the entirety of a trading relationship
and is altogether more encompassing. This approach has been determined in no small part by
the changing nature of global trade flows - in particular the growth of trading on open
account.

With many emerging market economies fully recovered from the financial crises of the
1990s, trade between the developed and developing world is currently growing at around
13% a year according to SWIFT. However, documentary supported trade has only been
growing by around 3% a year, meaning that the bulk of the increase is taking place on an
open account basis. In addition to this, the trend towards production taking place in countries
that are traditionally considered less credit worthy has added a new level of risk and
complexity to procurement arrangements. These developments have established a need for
new approaches to mitigating risk and financing suppliers. SCF seeks to address this by
taking an approach that looks beyond the strength of an individual supplier's balance sheet
and any associated country risk, and instead considers the strength and depth of the
relationship between buyer and supplier, and buyer and bank.

In common with traditional factoring or invoice discounting arrangements, the supplier

receives a percentage of the due payment up front. However, with a supplier finance
approach, the process is initiated by the buyer through its own bank and, thanks to the buyer's
stronger credit rating, the terms are likely to be more favourable than the terms on offer to the
supplier through a local bank. Indeed, in this respect, SCF schemes represent a form of credit
arbitrage that capitalizes on the gap between the price at which a buyer can finance a product
between production and payment, and the price at which a supplier could finance itself for the
same period.

Financing suppliers in this way is heavily dependent upon the relationship between the
trading parties. In order to accurately price products, banks need to be supplied with data
from their clients detailing the history of the relationship with the supplier, and will also need
to be notified at the first sign of any problems with a supplier meeting its obligations. In this
respect, a track record of problem free production will be the ideal scenario.

Banks should also see some regulatory benefits to financing trade in this way. By transferring
the credit risk to large, well-rated buyers, banks are also able to lower their capital reserve
requirements with respect to the Basel II accords. Indeed, Deutsche Bank research shows that
trade related finance carries a lower risk of default than equivalent non-trade related
instruments - even if those instruments were used to finance trading. And this data should
allow for the more accurate pricing of risk on SCF products.

New Mantra, New Focus:

Making the FSC the focus of a cross-functional business improvement programme

increasingly makes sound commercial sense. As the reliance on low-cost sourcing countries
for sourcing and contract manufacturing becomes more intense, and as more key SCM-
related processes are outsourced or off-shored to third parties, the complexities, risks and
costs associated with long distance SCM have increased. Managers have recognised that the
best way to manage this complexity is to take an end-to-end process management approach.
The approach advocated under FSCM is to focus on the efficiencies of physical and financial
flows across the chain and the root causes of late delivery, negative cash positions and poor
working capital management.

The current business ethos encourages collaboration not just across traditionally siloed
functions, such as sales, finance and procurement, but across external supply chain partners.
The new mantra is less focused on redistributing cost and risk down the chain and more
concerned with taking cost out of the entire chain and improving the efficiency of the 'supply
chain eco-system' for all parties.

Flexible Offerings:

Recent discussions on financial supply chain management have often focused on

developments in information and communications technology that have made initiatives in
this area more practical. And though operating a successful electronic trade finance platform
is a necessity for any bank wishing to offer SCF to its client, the importance of IT and
electronic processing should not be overstated. Many corporates - in both the developed and
developing world - will still be operating paper-based systems for commercial documents
such as purchase orders and invoices, and will be unable or unwilling to switch to electronic
systems in the short term. By only offering SCF packages on an electronic basis, banks will
be excluding large numbers of small to medium sized exporters that would benefit from
financing opportunities.

In order to offer the best possible service to their importing clients, trade finance banks need
to be flexible when it comes to dealing with exporters. An example of this is the Asia
Centralized Processing Centre (ACPC), which was established by Deutsche Bank in Mumbai.
The ACPC was established in 2003 in order to process trade transactions originating in Asian
countries and allows for the manual imputing of paper documents. It thus provides a bridge
between those corporates that use electronic systems and those that use paper based systems,
allowing SCF packages to be offered to more suppliers.

Risk management:
Risk management is a critical part of SCM as low-cost sourcing; contract manufacturing, off-
shoring, managed services and outsourcing have all increased the complexities involved
along the chain. The risk of bottlenecks and disruption and incurring unforeseen cost are
greater in cross continent and global supply chains. The growing incidence of natural
disasters resulting from climate change, terrorist acts, embargoes, fraud, money laundering
and economic volatility all adds to the risk profile of a global supply chain.

Co-ordinating the different facets of risk management within an over-arching FSC

programme is seen as a key priority within a number of organisations. Compliance
requirements are getting tougher for both importers and exporters alike. OFAC, Green-lane
status in the US, Sarbanes-Oxley, Basel II for banks are all examples of compliance related
initiatives that need to be taken seriously and require investment. An investment that will
yield greater returns if it is integrated into a broader programme of dematerialisation, i.e. the
migration to electronic document and data exchange. Compliance and the compliance team
should be an integral part of the FSCM programme.

Tax:

A number of large multinationals with sourcing and production activities across the globe
want to better manage tax liability by re-engineering SCM processes and responsibilities to
optimise customs duty, corporate and value added tax liabilities. Tax efficient supply chain
management (TESCM) is an important offering for a number of accounting and management
consultancies and may be considered part of a broader FSCM programme.

Drivers for Supply Chain Finance:

Corporates are increasingly purchasing their supplies from overseas markets, in order to
benefit from lowest cost country sourcing, ie purchasing goods and services at the lowest
possible cost. With the globalization of supply chains, large corporates are realizing that they
need to be more collaborative and supportive in managing these extended trade relationships.
In place of the traditional arm-wrestling relationship between buyer and supplier, where the
buyer simply squeezes the most advantageous terms out of his suppliers, collaborative supply
chain management is becoming widely accepted as best practice.

Even with the growth in long distance global trade, the traditional trade finance tool, the
documentary letter of credit, is on the decline in terms of market share. Notwithstanding the
tremendous security and financial flexibility of this trade finance instrument, letters of credit
can involve high administrative costs and manual processes. This has been a driver for
initiatives at industry level and within individual businesses to simplify trade processing and
reduce costs. According to the World Trade Organisation, more than 80% of global trade is
now in the form of open account, whereby a supplier simply invoices his customer who then
settles the invoice after a period of trade credit. So despite the enormous value of letters of
credit in specific circumstances (such as the beginning of a trade relationship with a new
supplier or buyer in relatively unknown overseas markets), it seems that the trend towards
increased open account trade is set to continue.

In this expanding open account environment, creative banks are finding a useful role for
themselves in delivering supply chain finance and other value-added services to help their
customers improve their working capital management. These initiatives respond to the
challenges being laid down by national and super-regional governments to drive commerce
and economic growth. Many EU countries have introduced laws to help promote a culture of
prompt payment in order to alleviate the problems of small and medium enterprises (SMEs)
suffering from late payment of their invoices. Similarly, banks are responding to
encouragement from the European Commission and national governments to develop e-
invoicing solutions in order to reduce processing costs and improve the flow of working
capital along supply chains, with benefits for buyers and suppliers.

Basic Supply Chain Finance Structuring:

 The basic process for efficient supplier payments and supply chain finance can be
summarized as follows:

 The buyer sends to the bank a Confirmed Payables file specifying the dates on which
invoice payments are to be made.
  Suppliers are advised by the bank of the amounts and dates on which payments are to
be settled on behalf of the buyer.

 This communication can be by email, fax, post, or preferably on the bank's web-based
portal.

 In addition to informing the supplier of future payment dates, the bank offers the
supplier early settlement of these payments. This financing is negotiated with the
suppliers separately from the supplier payments which the bank undertakes to make
on behalf of the buyer.

 If the supplier decides to accept the early payment and completes the short form
documentation, funds will be received by the supplier at an account with the financing
bank or any bank of his choice.

 At maturity of each invoice the bank either makes settlement to the supplier on behalf
of the buyer (if early settlement has not been taken by the supplier) or is reimbursed
for the discounted payment using the buyer's funds in those cases where supplier
finance has been drawn down.

 This structure works equally well for both domestic and international trade.

Migrating from Paper to Electronic in Supply Chain Finance:

As can be seen in the simple structure described above, this valuable supply chain finance can
be, and indeed in Spain was for many years, successfully structured in a paper-bound world,
whereby the bank sends by mail to suppliers forward dated payment advices and finance
offers. Suppliers then sign the receivables sale contract and return this to the bank. Upon
receipt of this documentation, a bank would send the discounted payment to the supplier,
either electronically or even as a banker's draft. However, this supply chain finance process
can be greatly streamlined using web-based technologies. Accordingly, leading Spanish
banks have already migrated their customers onto secure and robust web-based portals, where
suppliers can access the latest invoice status and financing offers and have the opportunity to
accept early settlement of selected invoices or indeed all invoices.
Supply Chain Finance:

Benefits for Suppliers:

 Opportunity to obtain early settlement of invoices from the bank, improving the
cash flow of the supplier.

 The value of funds obtained is the full face value of the invoices settled minus a
discount charge for the period until maturity.

 Thus the supplier receives a higher percentage of invoice face value than under a
factoring or invoice discounting arrangement, where typically only a pre-agreed
percentage (eg 70-80%) of the invoice face value will be advanced.

 The funds raised through supply chain finance will usually be non-recourse for the
supplier since the discounted payment is structured as a receivables assignment.
  Being non-recourse early settlement, this funding is off balance sheet for the supplier
and therefore does not eat into their existing credit limits. This structure may enable
the supplier to access more funding than would be possible on a standalone basis.

 The simple documentation signed between the bank and the supplier is usually a short
form contract by way of a sale/purchase of receivables, whereby the bank becomes
the holder of the trade debt.

 Where the supplier is a small or medium enterprise (SME) and the buyer is a large
credit-worthy corporate, the discount cost will often be lower than the SME might
achieve through conventional borrowing.

Benefits for the Buyer:

 Creates a more collaborative, stable and financially robust supply chain which
functions more efficiently for the benefit of the buyer and his suppliers.

 The bank works with the buyer to inform the suppliers of the new supplier payment
arrangement, outlining the operational and financial benefits.

 Cuts the cost of processing supplier payments and gives the buyer improved visibility
of its outbound cash flow, by outsourcing the supplier payments process to a bank.

 Reduces 'chaser' queries from suppliers regarding the current status of invoices, ie
have invoices been received, processed and approved? Suppliers can obtain the status
of invoices and discounted early settlement offers on the bank's supplier portal.

 Importantly, where properly structured and documented, arms-length finance for

suppliers can be delivered in such a way that trade payables on the buyer's balance
sheet continue to be classified as commercial outstanding due to trade creditors,
instead of being converted into bank debt which would otherwise impact negatively
on the buyer's debt gearing ratios.

 As a separate arrangement, the buyer may be able to negotiate improved terms (eg
cost of goods or longer trade credit terms) with his supplier base, in the light of the
 improved working capital management the suppliers enjoy under the bank's supplier
payment programme.

Value-added Supply Chain Finance Services:

Beyond the supply chain finance structure described above, there are a number of variations
on this basic model. In some cases a different percentage of the contract value can be
advanced on completion of the various stages of the trade cycle, so that part of the funds are
advanced at each step when the purchase order is issued, once raw materials have been
manufactured, when goods are actually in transit and finally on receipt and approval of
invoice. This financial structuring allows the supplier to fund the sourcing and manufacturing
of the goods.

In cases where a buyer finds he has cash surpluses these can be used to make early payment
to suppliers, as part of the supply chain finance programme. The buyer can be remunerated
for using his treasury surpluses in this way. A bank may also be willing to help the buyer
extend payment terms by providing finance at the normal maturity of the invoices.

Regional Challenges:

Regional differences in the way that trade is transacted can offer some significant challenges
to both trading corporates and their banks. For example, while some US banks and corporates
have made significant advances in terms of SCF and implementing reverse factoring
structures, there are potentially still advances to be made in terms of improved supply chain
services. The number of payments between corporates in the US that are still settled by paper
cheque, for example, is an indicator of the progress that could potentially be made in terms of
dematerialisation and electronic invoicing.
The situation in Europe is somewhat different. With process efficiency being relatively
advanced the bigger focus is on providing appropriate financing opportunities along the
supply chains of European corporates.

Yet in all regions, the situation can differ significantly from sector to sector. Industries that
are particularly dependent on a tight network of supplier relationships - automotives or
chemicals, for example - will generally have more sophisticated and efficient structures in
place than those with looser supplier relationships, such as retail.

There will also be legal and cultural differences- both between and within regions- that affect
the approach taken towards financial supply chain management. The early payment culture in
Germany, for example, will necessitate a certain approach to receivables financing, while
legislation regarding electronic signatures varies across jurisdictions and thus affects how
corporates and their banks address paperless invoicing.

However, despite regional differences within Europe, and between Europe and the US,
addressing the Asian market remains the key challenge for those wishing to implement SCF
initiatives. And even though this region will be the most important growth area for some time
to come, banks and corporates should be wary that Asian economies are undergoing rapid
change. The Asia of tomorrow will certainly look very different from that of today. Indeed,
the nature of North/South trade has already changed significantly, with capital goods now
increasingly likely to be produced outside of OECD economies.

Another common problem in this region is that developed world banks often underestimate
the depth and sophistication of local bank offerings in countries such as India and China.
Financial institutions in these areas are now well established and have considerable
experience in providing trade finance and related services to their domestic corporates.
European and US providers will often find that opportunities for offering packages attractive
enough for local suppliers to accept are more limited than anticipated. Yet despite these
ongoing issues- and the rapidly changing economic profile of the region- the large number of
small to medium sized exporting firms means that Asia is set to remain a key area for
implementing SCF packages.

The overall message here- and, indeed, across the whole of the financial supply chain - is that
the approach from banks and buying corporates should be flexible enough to accommodate
different approaches towards trade across different sectors and regions.
Legal Aspects of the Electronic Financial Supply Chain:

As the financial supply chain is linked with the physical supply chain, it uses various events
happening in the physical supply chain to trigger monetary transactions between the entities
involved. Document exchanges built in with the physical supply chain are therefore very
important for triggering actions in the financial supply chain.

Various systems or software applications are being used to process transactions propelling the
financial supply chain. These systems are being implemented in discontinuous systems
installed with various entities participating in the financial supply chain. With the advent of
Internet, however, standards for exchanging information across applications and new legal
structures supporting electronic information exchanges between parties, a new paradigm of e-
financial supply chain has emerged.

Two principal pillars of e-financial supply chain are dematerialised documents and
communication standards for exchanging these documents across different entities. With the
help of the United Nations Commission on International Trade Law (UNCITRAL) model
legal framework supporting e-commerce, legal systems of various countries have adopted
changes required for e-commerce and have therefore paved the way for dematerialised
documents. On the other hand, several agencies like RossettaNet, Bolero and SWIFT TSU
have attempted to solve the problems involved in document exchange standards and security
arrangements certifying the origination and recipients of the documents.

A lot has changed in the world of business within the physical supply chain, due to practices
and developments such as:

 Japanese for introducing leaner and flexible manufacturing systems (machines and
practices both).

 BRIC countries (Brazil, Russia, India and China) have embraced globalization and
allowed businesses to really look for global sourcing locations, increasing the number
of trading interconnections a business typically had.
  The management gurus that convinced businesses to concentrate on core
competencies have given rise to the great SME phenomenon.

 Modernization of transportation has led to ever-increasing ship tonnage, air

connectivity, and freight handling capacity at various hubs.

 And last, but not least, the fact that the global political community chose to repeatedly
go back to discussion tables through GATT, WTO etc. rather than engaging in trade
blockade through political or military means.

But while the physical supply chain has experienced the changes that reduced typical
shipment size and days of credit enjoyed by the buyer, the financial community and banks in
particular have not seen many changes in the traditional trade services practices and
offerings. Momentum is building for significant enhancement in services in this field and
now it will be the banks' turn to lead this evolution.

On the other hand, the real risks of trade transaction i.e. the delivery risk faced by the buyer
and payment risk faced by the seller have not disappeared. So what the banks need to do is to
refit their practices (operations) and offerings (products) to the new world where documents
can be exchanged in dematerialized form, information can be available in the shortest
possible time and discount information in no more time than it took to arrive.

One of the key aspects that banks have to consider when they look at the e-financial supply
chain is the legal challenge they face when offering e-financial supply chain services. In
some circumstances, these laws may not be different from the underlying legal framework for
offering typical electronic banking services but there are other aspects, specific to trade
business, which need to be considered when offering such services for the e-financial supply
chain.

Financial Supply Chain is becoming more sophisticated, due to innovations - Role of

Banks:

Banks are being increasingly challenged by their customers to play a part in assisting them to
realise the supply chain optimization they strive to create. By way of an example, within
RBS, we have focused on initially enhancing our supply chain offering in the established
trade finance area. Here we aim to, at the simplest level, enable a businessman to log on from
any location to manage their traditional trade banking needs through web access. While we
continue to see steady growth in our LC and collections activity, we have recognised the
growth in open account trading.

During the last few years, our efforts with larger customers have increasingly been to help
finance their trading partners. This has been achieved by effectively reversing a typical
factoring scenario to provide selected suppliers with immediate settlement of their invoices at
a discount following buyer approval, but prior to the credit term previously agreed between
the two trading partners.

The main benefit for the buyer is that they are able to maintain or improve key balance sheet
metrics such as days payables outstanding and working capital retention while achieving
lower costs within their supply chain. This is because the discount paid by the supplier for
earlier settlement reflects the bank's view of the buyer's risk and credit rather than that of the
given supplier. For a supplier, it is a win, as they will receive cash settlement of the buyer's
related receivable, at a much lower charge than their normal cost of funds. In addition, they
also have online visibility as to which invoices have been approved by the buyer and
therefore early knowledge of those invoices that may require additional chasing.

The 'post approval' finance solution above, where the bank pays the supplier after the buyer
has approved the invoice, is very attractive to suppliers but does not provide finance earlier
than the invoice stage in the order to pay cycle. For many suppliers, especially for those
trading partners domiciled in emerging markets, access to working capital finance to fulfill
the order is often very important. From a bank perspective, the provision of finance starting
against a purchase order and supplemented by further tranches as the transaction progresses
to the post approval stage is our objective.

Emerging Markets:

Banks that working with counterparts in emerging markets can provide earlier working
capital finance. This can be achieved by developing or expanding partnerships with regional
banks that already have a presence in these local markets. For example, RBS has such a
relationship with the Bank of China (BoC). They have 13,000 branches situated throughout
China, some 38% of the Chinese Corporate market.
Known challenges still remain and new challenges will of course continue to emerge as banks
work with their customers to extend financing solutions through the supply chain. Whether
banks provide end-to-end finance solutions across a supply chain or work with strong
regional banking partners, the need to match and reconcile data in the supply chain is vital. A
practical example of this is the matching of the final supplier invoice to the purchase order
and/or other documents (e.g. shipping) that have been raised as the transaction progresses.
This brings the discussion back to how such data is best managed.

For the banks, the challenge is how to assist customers in this space? There is a growing
consensus within the banking sector that the push by the more sophisticated corporate to
integrate the physical and financial supply chains to achieve greater efficiencies and therefore
lower costs will provide ample opportunity for the banks to add value through the provision
of extended services and financing propositions.

The key point, therefore, is to define what the role of the bank is. Some propositions are more
obvious than others. Banks should consider how they can unlock working capital value in the
supply chain earlier in the transaction by using the data that is presently produced through the
process. However, gathering and linking such data emanating from the physical and financial
supply chains is not so easy. The flow of information between the corporate, its trading
counterparties and the bank can be hampered by disparate systems, processes and a lack of
standardization.

Some in the banking sector believe that, given the sector's vast experience in handling and
pushing through a mass of data related to payments and other transactions, they are well
qualified to provide an outsourced service - where the bank handles the whole data flow
between a corporate and its trading partners.

Also, within sectors such as retail, there is a greater degree of focus in 'dematerializing the
paperwork' and many have signed up with specialist technology partners to electronically
manage the flow and reconciliation of the data passing to and from their trading partners.
Certainly a bank can replicate some of these aspects. There is no doubt that the information
provided is vital to a bank looking to finance at different stages within the financial supply
chain. Therefore, banks have, in my view, a responsibility to at least connect or partner with
those who are already handling transactional data on behalf of our customers.
Each bank will make up its own mind as to how far it wishes to extend its activities around
the managing of data across a supply chain. Some will look to provide a fully outsourced
service, managing all the data across the purchase to pay transaction whilst others will look to
capitalize on using already managed data, linking into these services to offer financing
solutions on the back of these data flows. One of the main considerations for the bank will be
whether the customer will be willing to pay for any offered services over and above the
financing solutions.
ABOUT ALLCARGO LOGISTICS:

Allcargo Logistics Ltd, part of the Avvashya Group, is a logistics firm

headquartered in India. Its services comprise global multimodal transport operations (non-
vessel-operating common carrier, less than container load, and full container load), pan India
container freight stations, inland container depots, third-party logistics, warehousing, ship
owning and chartering. The company operates across 90 countries through 200 offices. As
one of India’s largest publicly listed logistics companies, Allcargo Logistics has a
consolidated turnover of INR 56.18 billion (approx USD 900 million) as of March 2015.

HISTORY:

In 1993, Chairman of Allcargo Logistics Mr. Shashi Kiran Shetty founded Allcargo
Logistics as a cargo handling operator at Mumbai port. Initially Allcargo Logistics was a
shipping agency house and provided freight forwarding services.

In 1995, ECU Line, an Antwerp-based non-vessel operating common carrier (NVOCC),

appointed Allcargo as their India agent. In 2003, the company started its first container
freight station (CFS) at the largest Indian port, Jawaharlal Nehru Port Trust (JNPT) in
Mumbai. In 2007, it started two new CFSs at Chennai (in Tamil Nadu)
and Mundra (in Gujarat) ports followed by a second CFS at JNPT in the year 2012. In 2006,
private equity firm New Vernon Capital Fund acquired 6.42% stake in Allcargo. In 2008,
Blackstone GPV Capital Partners picked up a 6% stake in the company which was later
increased to 14.99% in September 2009 by converting warrants worth USD 23 million which
the global private equity fund subscribed in February 2008.

ACQUISITION:

ECU Line (2005–06): Allcargo's first acquisition was of the Belgium-based ECU
Line, spanning three stages from 2005-06. Allcargo acquired 33.8% stake in ECU Line in
June 2005, increased its stake to 49.9% in Jan 2006 with an option to increase the stake
further, and acquired the remainder in Jun 2006, making Allcargo Logistics one of the largest
NVOCC in the world. ECU Line’s revenues at the time of the acquisition were 4.3 times the
revenues of Allcargo Logistics.

Hindustan Cargo Ltd. (2006): A former subsidiary of travel and forex Major Thomas Cook,
Hindustan Cargo is predominantly engaged in air freight forwarding and custom clearance.
The company was acquired by Allcargo Logistics in 2006 for an undisclosed amount.

Hong Kong-based Companies (2010): Allcargo acquired two Hong Kong-based companies
with operations in China (one in Shanghai with 75% stake and the other in Ningbo with
100% stake) for USD 22 million.

MHTC Logistics Pvt. Ltd (2012): Allcargo acquired 100% equity in MHTC Logistics Private
Limited, engaged in project logistics and freight forwarding.

Econocaribe Consolidators (2013): Allcargo through its wholly owned subsidiary, ECU-
LINE acquired Econocaribe Consolidators, a US based Logistics Company. Econocaribe
specializes in freight consolidation and FCL services to Latin America, the Caribbean,
Europe, the Mediterranean, the Middle East, Africa and Asia. It also offers import LCL/FCL
transportation services from around the world to the United States and Puerto Rico.

FCL Marine Agencies (2013): Allcargo Logistics through its step down wholly owned
subsidiary company Ecuhold NV acquired majority stake in FCL Marine Agencies
Rotterdam, a Netherlands-based Logistics company.
SERVICES:

Multimodal Transport Operations (MTO) Allcargo’s MTO service comprises

NVOCC operations related to LCL consolidation and FCL activities globally, through its
wholly owned subsidiary ECU Line (based in Belgium). Initially Allcargo entered the
business of LCL consolidation as agents of ECU Line. With an international network across
89 countries and 189 own offices, the division provides direct export/import and multicity
consolidation services. Container Freight Stations (CFS) and Inland Container Depots (ICD)
Allcargo commenced CFS operations in 2003 at JNPT (near Mumbai). At present it operates
in all four CFSs (two at JNPT and one each in Chennai and Mundra-Gujarat). In 2009
Allcargo entered the business of Inland Container Depots (ICD)’s. Its first ICD was at
Kheda-Pithampur near Indore in the state of Madhya Pradesh, in a joint venture with Hind
Terminals (part of the Samsara Group), with Allcargo’s stake at 51%. Its second ICD was
started at Dadri in the national capital region, in a joint venture) with Container Corporation
of India (CONCOR), with Allcargo’s stake at 51%. Its services comprise export/import
handling, LCL shipments, bonded/open warehousing, first/last mile transportation,
maintenance and repair of dry container, reefer monitoring and hazardous material handling.
The total installed capacity across its CFSs and ICDs is around 441,000 TEUs per annum.

AWARDS AND RECOGNITION:

 2015 - Samudra Manthan Award- Logistics Company of the Year, 2015 from
Bhandarkar Group of Publications

 2013 - Global Indian Maritime Personalityaward from Maharashtra Chamber of

Commerce, Industry and Agriculture (MACCIA)

 2013 - Leadership and Innovation award from International Women Leadership

Forum (IWLF)

 2012 - News Maker of the Year award from Maritime and Logistics Awards (MALA
2012)

 2012 - Heavylift Mover of the Year award from MALA 2011

 2012 - Outstanding Contribution Award from Port of Antwerp.

 2011 - LCL Consolidator of the Year award from 3rd South East CEO Conclave and
Awards.

 2011 - Indian Freight Forwarder of the Year award from 1st Northern India
Multimodal Logistics Awards.

 2010 - Logistics Company of the Year award from MALA 2010.

 2010 - Private Container Freight Stations (CFS) Operator in India award from
Maritime Gateway Award.

 2009 - Logistics Company of the Year award from NDTV Profit.

 2008 - Best Logistics Company award from Indian Maritime Gateway Awards.

 2007 - Deal of the Year (for the acquisition of ECU LINE business) award from
Seatrade.
 REVIEW
OF
LITERATURE
REVIEW OF LITERATURE:

1) In this paper, we review the literature on SCFM with a focus on identifying applicable
and explanatory organizational theories that have been utilized to expand
understanding and knowledge of this research field. We find that researchers in SCM
have started to apply a number of organizational theories in explicit ways. Some of
the research has also helped to further understand and strengthen some of these
theories. We also expound on future possibilities for organizational theory
development and linkages. We can make a number of observations of this initial
review and integration of the literature. First, the organizational theory provides a
very valuable source of theoretical underpinnings for investigating and furthering
research in SCM.
Second, there are ample opportunities for future research and investigation with
theories that have already been applied. Significant questions still exist that require
investigation.
Third, there is also an ample room for new theories examining the SCM management,
introduction, and diffusion that have not seen significant investigations.
Fourth, much of the literature on the applications and uses of theory in SCM research
has been relatively recent. This observation means that we are at the growth stages of
SCM and organizational theory linkage.
Fifth, additional and emergent organizational theories may exist that can help address
unforeseen and nascent SCM issues.
Finally, even though we identify some additional theories, researchers in SCM could
be able to develop theories that may explain other organizational phenomena. We
believe that this paper can serve as a good foundation for those seeking to develop
theories and broaden research in SCM.
We did not discuss various methodologies and tools that could be used to investigate
the linkage of SCM and the organizational theory. Methodological developments and
application for supply chain and SCM research are also promising areas for future
studies. We believe that significant growth and opportunities to understand our world
exist at the nexus of these important environmental-based organizational research
fields.
2. SCM can reduce the ecological impact of industrial activity without sacrificing quality,
cost, reliability, performance or energy utilization efficiency. It involves a paradigm shift,
going from end-of-pipe control to meet environmental regulations to the situation of not only
minimizing ecological damage, but also leading to overall economic profit.

The area throws various challenges to practitioners, academicians and researchers. We

present a state-of-the-art literature review of SCM integrating the whole gamut of activities in
the area. Our literature review highlights the ongoing integration process in SCM. We find
that the depth of research in various categories has been different. Many specific empirical
studies have been carried out, and categories such as remanufacturing have been studied to a
great depth. Even, within remanufacturing disassembly has been studied to a very detailed
level. Of late, other categories such as RL have started getting more attention. We focus more
on relatively unexplored categories, as they offer potential for further exploration and
research.

Our classifications will help academicians, practitioners and researchers to understand

integrated SCM from a wider perspective. Based on our problem context classification and
scope for future practice and research, an evolutionary timeline has been prepared taking into
account all the relevant and seminal papers published in the area of SCM. Our classifications
along with timeline and cited references may be used as a broad frame of reference to
develop concepts and models that facilitate managers and other stakeholders trying to
integrate environmentally sound choices into supply-chain management. Practitioners can
also gain good insight into real-life problems and how some companies have tried to address
them by referring to the empirical studies. This can serve as a platform for them to adapt and
develop their own initiatives and practices.

Research in SCM to date may be considered compartmentalized into content areas drawn
from operations strategy. The primary areas of emphasis have been quality, operations
strategy, supply-chain management, product and process technologies, which are collectively
beginning to contribute to a more systematic knowledge base. It is reasonable to expect that
these research areas will continue to hold the greatest promise for advance in the short term.
However, more integrative contributions are needed in the longer term, including intra- and
inter-firm diffusion of best practices, green technology transfer and environmental
performance measurement. One of the biggest challenges facing the field of SCM is
extending the historical ‘common wisdom’ about managing operations.
3. Our concern with the "finding that the literature is primarily empirical-descriptive is that
any development of a cognate supply chain management discipline requires more rigorous
and structured research in the topic. We would argue that theoretical development is critical
to the establishment and development of supply chain management study. However, it is not
our contention that empirica studies are valueless.

Rather, we feel that the inductive} deductive dichotomy is best addressed through the
constant relection of empirical against theoretical studies. However, what is of concern is the
lack of a significant body of a priori theory a point Andrew Cox argues forcibly in his 1997
treatise. Furthermore, our content analysis of the supply chain literature highlights the
contrasting themes and antecedents of the "eld. In some ways we feel this olders an even
greater challenge for the development of supply chain management research. As an
illustration of this we recently conducted a survey of published research into supply chain
management currently conducted at the University of Warwick a leading UK research
university.

By applying our content-oriented matrix to the analysis of publications within all the
departments of the University, we found that research covering at least one of the cells in the
matrix could be found in science, social science, engineering and a number of humanities
departments. We recognise that developments in our understanding of supply chain
management require multi-disciplinarity in order to address the contrasting antecedents.
Certainly the importance of transaction cost economics and interorganisational theory has
been recognised by a number of researchers (Lamming, 1993; Harland, 1994; Croom, 1996).

In addition, our survey at the University of Warwick identi"ed a number of key antecedent
disciplines currently evidenced in supply chain research included amongst these being
systems thinking, information theory, industrial dynamics, production economics, social
theory, game theory and production engineering. If one begins to include some of the hybrid
"eld such as marketing or strategic management, then it is apparent that the subject is being
explored from a multiplicity of perspectives. This paper has thus set out to provide a
taxonomy or topology of the "eld of supply chain management as an aid to both the
classi"cation of research in the "eld, and as a means of providing a framework for the
identi"cation of the key content of the subject. Of signi"cance we feel is the need for
researchers to be aware of complementary studies outside of their own &normal' domain of
expertise.

Thus, as Dietrich (1994) pointed out, future developments in theory concerned with business
to business phenomena may require a more cosmopolitan approach, incorporating a
combination of contrasting social and technical disciplines.
4. Supply Chain Management is a network of facilities that produce raw materials, transform
them into intermediate goods and then final products, and deliver the products to customers
through a distribution system. It spans procurement, manufacturing and distribution (Lee &
Bollington 1995) the basic objective of supply chain management is to “optimize
performance of the chain to add as much value as possible for the least cost possible”. In
other words, it aims to link all the supply chain agents to jointly cooperate within the firm as
a way to maximize productivity in the supply chain and deliver the most benefits to all related
parties (Finch 2006). Adoption of Supply chain management practices in industries has
steadily increased since the 1980s. A number of definitions are proposed and the concept is
discussed from many perspectives. However Cousins et al. (2006); Sachan and Datta (2005);
Storey et al. (2006) provided excellent review on supply chain management literature. These
papers define the concept, principals, nature, and development of SCM and indicate that there
is an intense research being conducted around the world in this field they critically assessed
developments in the theory and practice of supply management.

Gunasekaran and McGaughey (2003) extended the scope of SCM beyond material
management, partnership, information technology to the Total Quality Management areas
like management commitment, organizational structure, training and behavioural issues. As
firms' survival lies on integration, a good understanding of the integration process is a key
aspect in SCM. Mouritsen et al. (2003) discussed that basic hypothesis “the more integration
(wider the scope) – the better the management of the chain" is not always true and proved
that it depends very much on the “environment" of the supply chain and the power relations
between the participants in the supply chain. Authors proposed a set of management
techniques and tools to analyze successful SCM strategies. It is also observed that research is
not limited to hypothesis testing and data analysis, but more advanced techniques like
simulation, Artificial Neural Network, and Fuzzy logic are also used for optimization and
decision making in SCM. Koh and Tan (2006) used the principles of fuzzy logic for
analyzing and monitoring performance of suppliers based on the criteria of product quality
and delivery time where as Chiu and Lin (2004) showed how the concepts of collaborative
agents and artificial neural networks (ANNs) can work together to enable collaborative
supply chain planning (SCP). It appears from literature review that researchers have studied
supply chain management from a system perspective, or the systemic natures of interactions
between the participants of supply chain are observed. Although numerous studies views
SCM from different perspectives, this paper gives the better understanding of supply chain
activities.
5. Through a systematic and structured review of literature, provides insights into the
conceptualization and research methodological bases of the SCM field. The review enables
us to succinctly describe SCM, suggest how it should be described from a philosophy of
knowledge perspective, and chart an agenda for future research. The review shows that the
SCM is a relatively “young” field with exponential growth in interest from researchers.

However, a set of dominant characteristics was found. Most notably there is: a reliance on the
manufacturing and consumer goods IJOPM 26,7 720 industries for empirical as well as
analytical illustration; a conceptual framing of SCM mostly as a process; a predomination of
transaction cost economics and strategy-based competitive advantage theoretical grounding;
the presence of mostly descriptive-type theories; strong positivist paradigmatic stances in the
research methods employed; and, the utilization of analytical conceptual, as well as empirical
statistical sampling and case study methods. These dominant characteristics appear to have
prevented plurality of ideas in terms of how the area is conceptualized, theoretically
described and researched, making the development of the field a narrowly concentrated one.
This, in turn, has prevented wider dissemination and greater acceptance of ideas outside the
functional areas that SCM has traditionally been associated with.

As a consequence, the soundness and robustness of the ideas underpinning SCM have not
been fully tested. If this pattern continues, then there is a risk that SCM will get confined to a
narrow intellectual base. This could lead to SCM being considered unworthy of serious
scholarship by the broader academic community. How can a more encompassing approach be
achieved in developing the field? The answer to this, at least partially, is provided by the
meta-analysis presented earlier. From the philosophy of knowledge perspective, the
Lakatosian research program may be the best way to conceptualize the SCM body of
knowledge as it could assist in overcoming the “operations management – manufacturing –
process – positivist” dominance while also being able to integrate research designs that are
outside of these focal points.

If the present trend continues, then one implication is that doing more of the same type of
research will most likely produce more of the same order of results. Given that SCM appears
to be “struggling” to develop a coherent body of knowledge, such an approach seems both
illogical and wasteful of scarce resources. SCM needs to rapidly expand the methods of
inquiry if it wishes to speed up its rate of knowledge development. As it is, SCM stands at the
crossroads. The choices are either to retreat to the narrowly defined operations management
approach, or to expand the research framework to embrace the rapidly emerging protection
belt. The former is not a feasible option if the area is to develop broad appeal.

The Lakatosian approach provides a viable way forward for SCM which can both embrace
the emerging challenges of SCM, and assist in resolving the present conceptual and research
methodological confusion. While we feel that the discussions presented in this paper provide
useful insights into SCM body of knowledge, we feel that even greater insights are possible.
One possible avenue for achieving this is through the further development and improvement
of the analysis framework presented in this paper. This could be in the form of including
additional disciplines, intellectual traditions, theoretical perspectives, practitioner activities
and historical trends associated with SCM. Another possibility is through further inquiries
into SCM in the form of content analysis and cross-tabulations of data reported in this paper.

Finally, the accuracy of the findings reported in the paper can be confirmed by other
researchers who can independently classify the set of articles, choose larger samples, use
databases other than ABI/Inform Global Proquest and include articles that are not limited to
the English language. These inquiries will need to test the findings of this study and thus
facilitate the development of knowledge in a manner by which researchers might better
adjudicate the different claims of those seeking to cover SCM. Accelerated knowledge
Supply chain management 721 development should also follow such endeavors which in turn
will assist industry to determine if SCM is a serious subject which warrants on-going
investment or if it is a fad which should cease to be supported by scare resources that can be
more effectively used elsewhere.
6. Stevens (1989) identified four stages of supply chain integration and discussed the
planning and operating implications of each stage:

Stage 1) Represents the base line case. The supply chain is a function of fragmented
operations within the individual company and is characterized by staged inventories,
independent and incompatible control systems and procedures, and functional segregation.
Stage 2) Begins to focus internal integration, characterized by an emphasis on cost reduction
rather than performance improvement, buffer inventory, initial evaluations of internal trade-
offs, and reactive customer service. JOURNAL OF BUSINESS LOGISTICS, Vol.22, No. 2,
2001 9

Stage 3) Reaches toward internal corporate integration and characterized by full visibility of
purchasing through distribution, medium-term planning, tactical rather than strategic focus,
emphasis on efficiency, extended use of electronics support for linkages, and a continued
reactive approach to customers.

Stage 4) Achieves supply chain integration by extending the scope of integration outside the
company to embrace suppliers and customers.

7. It is apparent from these findings that although we espouse the benefits of supply chain
management and sing the virtues of closer ties throughout levels of the supply chain, the
results suggest that business has not yet fully operationalized the concept of supply chain
management. It appears that buyers tend to be reluctant players and are far more skeptical
about the benefits afforded through such close integration. One can infer that buyers consider
less favorably the benefits gained and are more likely to highlight the risks associated with
heightened dependence on a smaller number of suppliers. We can infer also that buyers think
about the gains afforded by an integrated supply chain and are more easily swayed by more
traditional purchasing metrics related to cost or initial purchase price.

Buyers consistently view the cost-saving aspects of supply chain management as more
important than the revenue-enhancing benefits. They seem to understand, on one level, the
importance of customer-driven supply chains; the need to focus on core competencies; and,
the importance of leveraging the skills and capabilities of their suppliers.

On another level, such rhetoric appears to make buyers uncomfortable, and they easily revert
to their cost-driven behaviors in which suppliers are viewed as substitutable and value is
determined by negotiation. Again, we hear the theme that a gap exists between the goals and
concerns of senior managers and the activities of the procurement function – buyers have not
fully responded to the challenges of managing suppliers with the intent of gaining the full
complement of skills afforded by an integrated supply chain.

Exacerbating this lack of strategic thinking on the part of buyers is the finding that buyers
and sellers do not share the same values and beliefs regarding the advantages of supply chain
management. In fact, the data suggest that buyers and sellers have very little in common, and
their “world views” tend not to converge. While some differences are expected, the
divergence in motivations and beliefs relative to supply chain management is quite stark.

This suggests that it is not surprising that supply chain management practices are difficult to
implement. For buyers and sellers to achieve a common goal there must exist a level of
consensus (Spekman et al., 1996). At the very least, buyer and seller must have a shared
perspective of the merits of such close ties within the supply chain. Thus, the challenge
becomes one of forging a common view in which both sides can accomplish compatible
goals. This begs the question as to who will orchestrate the roles and responsibilities of the
supply chain members. It would appear that buyers are less able to fill this leadership role as
they appear to lack both vision and commitment to the advantages of supply chain
management. Without such leadership skills, buyers’ firms suffer and their potential
competitive advantage is diminished.

We should note that, although we strongly advocate supply chain management, we readily
admit that not all trading relationships should be collaborative and that it is perfectly
acceptable (if not absolutely necessary) to engage in arm’s-length transactions provided that
such behavior is appropriate. The data imply that criticality, to a large degree, drives the
partnering strategy employed. We say this with the full recognition that criticality affected
performance only as it related to cost reduction. It had no impact on performance as it related
to customer satisfaction. Nonetheless our findings do imply that trust and commitment do
affect customers’ satisfaction. The spirit of our findings does support other work on supply
chain management in which the purpose of such joint effort is to achieve a competitive
advantage across the set of supply chain partners. Our findings suggest:

• The road from open market negotiations to co-operation to co-ordination and to

collaboration is a long one and should not be traveled by each and every buyer-seller
relationship.

• One must select both partners and supply chain strategies carefully. Coordination and
collaboration are different; require different levels of trust and commitment; and, often lead
to different outcomes.
ARTICLE
1.ARTICLE

October 2009:

Supply Chain Finance (SCF) represents an innovative opportunity to reduce working

capital. Its underlying mechanism is reverse factoring making the technique buyer- rather
than supplier-centric. Implementing SCF is a difficult and time-consuming task that requires
top management attention. Yet, it promises significant savings. Our survey results show that,
on average, companies reduce working capital by 13% and suppliers reduce working capital
by 14%. Three factors differentiate successful implementations of SCF from less successful
ones: Choosing the right banking partner, ensuring CEO sponsorship, and involving at least
60% of the supply-base.

Working capital reduction is not exactly the new kid on the block: Business press
articles have heralded its benefits for nearly two decades; it has been explored in detail in
scientific journals for about a century; and numerous conferences unite practitioners to
discuss best practices every year. But, for some companies, the topic has recently moved to
the top of the agenda. With banks less willing to hand out loans, companies are finding it
difficult to maneuver.

Despite the longstanding attention to reducing working capital, the only

component that has dropped over the years is inventory – representing a mere 30% of total
working capital. Collection and payment delays have remained largely flat with most
companies sticking to industry standards and collecting and paying invoices after 30 or 45
days. Also, most continue to keep suppliers at arm’s length. One executive we recently
interviewed described his company’s approach to negotiating payment terms as a “no
tolerance” strategy.

In the past, suppliers often reacted to these long payment delays by factoring their
receivables when they needed cash.1 Factoring is a transaction in which suppliers sell
receivables to factors for immediate cash. Because the receivables are sold rather than
pledged, factoring is different from borrowing – there are no liabilities on the suppliers’
balance sheet. Typically, suppliers sell receivables from more than one buyer. Thus, factors
have to evaluate buyer portfolios before entering an agreement. This has made factoring an
expensive source of finance in emerging markets. A lack of historic credit information or
credit bureaus, fraud, and weak legal environments have meant high operating costs.

Today some buyers are recognizing their suppliers’ difficulties in accessing

finance. And instead of taking a “no tolerance” approach, they have started to implement a
collaborative approach termed Reverse Factoring or Supply Chain Finance. This technique’s
underlying mechanism is factoring. There are, however, three important differences.

First, since the technique is buyer-centric, factors do not have to evaluate

heterogeneous buyer portfolios and can charge lower fees. Second, since these buyers are
usually investment grade companies, factors carry less risk and can charge lower interest
rates. Third, as the buyers participate actively, factors obtain better information and can
release funds earlier.

As a process, SCF is slightly more complicated than factoring. Citibank’s process,

for example, involves seven steps. First, the buyer sends a purchase order to the supplier and
notifies Citibank. Second, the supplier delivers and presents documents to Citibank. Third,
Citibank checks the documents and notifies the buyer. Fourth, the buyer approves or rejects.
Fifth, Citibank notifies the supplier of the buyer’s acceptance. Sixth, if the supplier requests
early payment, Citibank credits the supplier’s account. Finally, when the invoice is due,
Citibank debits the buyer’s account.

The advantages of this technique are clear. Truck maker Scania, for example,
helped its suppliers finance growth when demand surged in 2006. Magnus Welander, Head of
Cash Management, explains: “Our suppliers had difficulties financing the increased demand.
The situation was especially tense because Scania didn’t encourage traditional factoring. The
implementation helped them – especially the smaller ones – to enjoy unprecedented liquidity
levels. Now, they sometimes receive payment after as little as five days.”

Yet, the technique is far from being a mainstream phenomenon. Some companies
have hesitated to adopt SCF because it is unclear how much buyers and suppliers really save.
Innovators treat their figures confidentially or report numbers that are hard to compare.
Additionally, it has not always proved to be a failsafe solution – stories about companies
where the implementation of SCF has failed have been making the rounds leaving other firms
in the dark as to what it takes to succeed.
 Therefore, in collaboration with Springer’s Supply Chain Magazine and IMD, we
conducted a worldwide survey of executives who use SCF solutions as buyers. How much
were they able to reduce their working capital? Which approaches to implementing SCF
made most sense? The survey’s aim was to assess the benefits of SCF, both quantitatively
and qualitatively, and to statistically derive the key success factors. We received 213 replies
from executives in 55 countries, covering all major industries. Of the respondents, 23
reported using an SCF solution. The following analyses are based on their answers.

Recommendation:

Contrary to our expectations, cross-functional teams do not appear to play a role.

At least statistically, it does not matter which or how many departments a company involves.
The most successful implementations involve five departments (Finance, Purchasing, Supply
Chain Management, IT, Legal), but implementations that involve only two departments
(Finance, Purchasing) closely track their performance.

This finding is consistent across different life cycle stages, i.e., implementation
and operation. Given the attractive benefits and the clear key success factors, we recommend
executives take a closer look at SCF. It will not solve the liquidity issues that some
companies will face over the next months. But it seems a sustainable approach to reducing
working capital in the long run. As our analysis suggests, there are three key success factors
that companies should focus on: Choosing the right banking partner, ensuring CEO
sponsorship, and involving at least 60% of the supply-base. Admittedly, getting these three
factors right is a difficult and time-consuming task and is one of the reasons that companies
have been slow to adopt the technique. But persevere and the payoffs, in terms of working
capital reduction, will be worth working for. So while it may no longer be the new kid on the
block, it seems working capital reduction will continue to create a buzz for some time to
come.
 2.ARTICLE:

A BRIEF INTRODUCTION TO SUPPLY CHAIN FINANCE:

Globalisation has created internationally dispersed supply chains as production has been
relocated to emerging markets, logistics have become more cost effective and global
communications easier and pervasive. Large buying organisations are much more sensitive to
the inherent risks within, and the resilience of, their supply chains, as critical product
components are frequently dependent on thirdparty suppliers. For chief executive officers
focusing on profitable growth, working capital control has become a key metric. Working
capital represents the amount of day-by-day operating liquidity available to a business.
Supply chain finance can be defined (EBA 2013) as the use of financial instruments,
practices and technologies for optimising the management of the working capital and
liquidity tied up in supply chain processes for collaborating business partners. The
development of advanced technologies to track and control events in the physical supply
chain creates opportunities to automate the initiation of SCF interventions.

Methodology:

Reverse factoring (also called approved payables finance) allows a supplier to receive a
discounted payment of an invoice due to be paid by a buyer (ie an account payable). The
buyer approves the invoice for payment and finance is raised separately against the payable
by the supplier from a bank or other finance provider, who relies on the creditworthiness of
the buyer. The buyer pays at the normal (or another, mutually agreed) invoice due date,
whereas the supplier receives a discounted payment through the financing facility. The
funding provider relies on the creditworthiness of the buyer and the attraction to the supplier
is based on an ‘arbitrage’ between the higher credit rating of the buyer and the typically
higher cost of financing for the supplier, as well as the attraction of the availability of the
finance. Because it is the ordering party – usually a large company with a high-quality credit
rating – that starts the process, it is that party’s liability that is engaged and therefore the
interest applied for the deduction is less than the one the supplier would have obtained on its
own account. Figure A1 in the Appendix provides a more detailed representation of the
process flows of this SCF instrument. Owing to the nature of SCF and the financial
institutions involved in such services, the study had a global perspective. Nonetheless, the
study focused on the European market by default when specific findings were impossible to
obtain without a geographic specification. To encourage participation, prospective
participants were given an overview of ACCA’s identity and background as well as ACCA’s
interest in the subject matter.
FEE STRUCTURE:

The structure of a funding fee is typically composed of two elements: • interest rate • spread
(see Glossary). The interest rate usually depends on the country where the SCF arrangement
is structured and can be either: • Libor • Euribor • Federal Discount Rate • Other country-
specific rate. For reverse factoring (ie SCF) programmes, the discount is usually at 30 or 60
days. The value of the spread is the main point of negotiation on which finance providers
compete and depends on commercial decisions, customer relationship strategies, and
opportunities for cross-selling. Aite Group’s research has identified some average values,
depending on whether funds are sourced directly from a bank or through a service provider1
of the SCF electronic platform, and the region where the SCF programme is arranged.

TRANSFER OF TITLE:

Once the supplier has selected the invoices to be discounted, it is advisable for both buyer
and supplier to verify whether the bank/fund provider is obliged to purchase (ie finance) all
payables, or whether the collection of payables is still the supplier’s own responsibility. The
bank/finance provider needs to be notified whether the payables it is required to finance
represent the net value of the invoice after any discounts, rebates, offset or adjustments. The
bank/finance provider also nominates the party who notifies it about that information, and
this party can be:

• the buyer

• the supplier, or

• both

It is usual practice that the bank/fund provider will also establish how that information is
notified (eg via formal letter or email).

LIMITS AND THRESHOLDS:

Only eligible payables can be financed. The following is a series of decision constraints – in
order of use frequency – normally adopted by the bank/fund provider.

• Payables must be free from any liens or security interests, and must not have been
previously pledged, sold, assigned or transferred, and must be readily available to be
assigned.

• There must be no commercial dispute between buyer and supplier related to that payable.
• The minimal value of the amount payable that is to be financed for the entire SCF contract
must be established between parties.

• The minimum period that must elapse before the amount payable is financed must be agreed
(eg ‘payable not sooner than ‘n’ days from date of issue’).

• A facility limit may be imposed by the bank/fund provider.

• There may be a maximum number of payables that can be submitted in one month.

• There may be a minimum/maximum allowed discount to the supplier.

• There may be a minimum discount period (eg shall not be less than ‘n’ calendar days).

RISKS:

The interest rate applied by the finance provider to the borrower takes into account not just
the time value of money, but also the risk or uncertainty of future cash flows; the greater the
uncertainty of future cash flows, the higher the discount rate. The bank needs to minimise its
exposure to risk and there are various options possible:

• risk is wholly on the supplier with no recourse (see definition in Glossary)

• risk is wholly on the supplier with possible form of recourse

• risk is wholly on the buyer without recourse to the supplier

• risk is shared in some agreed proportion between the parties.

While in the reverse factoring SCF scheme the general rule is that the funding provider relies
on the creditworthiness (ie risk) of the buyer, suppliers must be aware that there are
nonetheless some conditions that allow the bank recourse to the supplier:

• existence of fraud in relation to a payable or a commercial dispute between the supplier and
the buyer

• payables that are not eligible

• supplier omits to pay any duties or taxes due

• supplier breaches any of its obligations as collection agent

• loss in the purchased payables as a result of the application of credit notes or marketing
rebates.

Although this is not frequent, some reverse factoring contracts stipulate that, in case of
recourse to the supplier, the supplier may have to repurchase such receivables immediately.
LEGAL ASSISTANCE:

There are various additional cost elements that must be included to prepare a complete view
of the SCF business case:

• auditors’ fees for accounting treatments

• advisory services to verify the applicable country laws in case of multi-country SCF
programmes

• advisory and legal assistance to establish contractually who pays for tax withholdings,
VAT, deductions, charges, translations of documents, fees.

Advisory and legal assistance to determine and agree contractually on who will pay, where
the bank/fund provider needs more information before executing the financing (eg audit of
supplier’s credit control and collection procedures – in case supplier is a collection agent).

Impact points:

Of the numerous varieties of financial instruments that fall under the supply chain finance
(SCF) ‘umbrella’ the most popular and most widely used is reverse factoring.

When approaching a reverse factoring programme, the important elements of a company’s

checklist for planning a successful business case are:

– fee structure

– transfer of title

– limits and thresholds

– payments

– dates

– risk

– benefits

– costs.

The estimated global market size for reverse factoring ranges between US$255 billion and
US$280 billion, of which about one-third can be attributed to Europe. An extrapolation for
estimating the business potential of reverse factoring is to apply a 20–25% ‘conversion
factor’ to the value of accounts payables.
 Reverse factoring reduces costs across the supply chain by letting suppliers ‘borrow’ against
their customers’ creditworthiness instead of their own. On average, 80% of the resulting
value is shared between the suppliers and the buyer, with varying degrees of allocation
depending on whether the buyer wants to facilitate its key suppliers’ financials (ie the largest
share goes to supplier)or, instead, take all the benefits by extending payment terms.
Typically, the buyer will capture 35% to 50% of all savings, while suppliers will get 25% to
45%. Another 15% goes to the financial intermediary while the remaining 5% is for the
service provider.
 3.ARTICLE

Abstract. Financial supply chain is all about the movement of money along the chain. To
optimize these financial processes, Financial Supply Chain Management (FSCM) helps
companies looking from a more external point of view to the whole chain. This holistic
approach is focusing on collaboration with other parties within the chain. The paper is aimed
at finding differences in Working Capital Management (WCM) between Small and Medium
sized Enterprises within the Dutch and Slovakian construction industry. Furthermore, the
focus of the research is on finding a way a Small and Medium sized Enterprise can improve
its WCM. A Case Study research method is used, because a rich understanding of the context
of the research is gained. The primary data of this research is obtained via questionnaires
whereas the secondary data is collected and gathered via databases. Research has shown that
there are big differences in the way working capital is optimized between SMEs within the
Dutch and Slovakian construction industry as well as opportunities for application of FSCM.
Keywords:

working capital, financial supply chain, construction industry Introduction The current global
economic unpredictability and the resulting tightening of credit is impacting trade flows and
extending financial pressure not only on global buyers, but also on a growing number of
global suppliers. The result is an increase in risk that firms need to proactively manage.
Financial supply chain programmes get more popular as a way for large buying entities to
protect strategic components of their supply chain. Many companies recognize the
importance of working capital management to support their business in difficult times, and
many have begun to look across the financial supply chain for opportunities to improve
processes and unlock trapped cash. To achieve long-term cash optimization, companies need
an integrated and sustainable approach to liquidity management, including measurable
objectives and key performance indicators. This requires a systematic and consistent
approach offered by financial supply chain management. The goal of financial supply chain
management is 1to obtain visibility over processes, such as purchase-to-pay and order-to-cash
cycles, as well as processes involved in ordering, invoicing, reconciliation and payment.
Companies often overestimate their ability to extend payment terms with their suppliers.
They lack awareness of financing opportunities which may add value to the firm, and most
SME’s do not know how working capital is optimised. 1 The paper was prepared partially
within the research project VEGA 1/0967/11 “Innovative approaches to the system of
company´s performance measurement”. The paper starts with discussing the concept of
financial supply chain management, to be followed by the research method and the findings,
exploring practices in the Dutch and Slovak SME’s in the construction industry.

Financial supply chain:

Financial Supply Chain Management is about looking at how to optimise working capital of a
company, not only from an internal point of view, but also from an external point of view
(from the point of view of other parties within the chain). This optimisation can be achieved
by collaboration in managing accounts payable, accounts receivable, cash and risk.
Eventually, the goal is to obtain visibility over the purchase-to-order and order-to-cash
processes. This can lead to efficiencies and cost savings throughout the chain. The better the
parties know how and where the cash flows throughout the chain (in other words, better
visibility), the better companies may optimise these flows and may need less working capital
resulting in less credits to be obtained from banks. This will lead to cost savings for all parties
(Treasury Today, 2007), and consequently, to more investment opportunities. Companies
generally focus on their supply chains when they are interested in the following issues
(Krištofík, 2010):

• Obtaining visibility over all the processes involved in the financial supply chain.

• Increasing efficiencies throughout the chain.

• Reducing costs throughout the chain.

• Freeing up working capital by obtaining a clearer picture of where funds are required.

• Adopting a collaborative approach towards other parties in the chain.

Appropriate financing techniques are needed to benefit from the collaborative approach. That
also counts for right liquidity structures. If liquidity structures are all different within the
chain, it can affect the benefits of FSCM in a negative way by not working as optimal as
possible. Besides, efficient internal processes are required to optimise a financial supply
chain, because, if the internal processes are not efficient, the total chain cannot be efficient.
Efficient internal processes are therefore a requirement to optimise a financial supply chain.
Furthermore, effective collaboration with financial partners is a must, because all parties
involved depend on each other to achieve optimisation (Cronie, 2008). Cronie (2008)
describes the following limitation of a Financial Supply Chain: “An optimised financial
supply chain requires efficient internal processes, effective collaboration with financial
partners, the right liquidity structures and the use of appropriate financing techniques.”
Cronie (2008) wants to prove with this statement that many factors are important for an
optimised Financial Supply Chain. If one of the factors is lacking, the Financial Supply Chain
may not be as optimised as it could be. Stephenson and Hutter (2009) add another factor that
is important in order to optimise the Financial Supply Chain: there is a “need to implement
technology, for instance to ensure that files of approved payments can be routed from buyer
to bank and from bank to suppliers”. Furthermore, Cronie (2008) mentions the problem that
different departments are holding responsibilities (e.g. treasury, trade finance, accounts
payable and accounts receivable) that are all elements of the Financial Supply Chain. These
different responsibilities among departments make it difficult for a Financial Supply Chain to
function smoothly. Each department has its own objectives and performance measurements
which can be different from the overall Financial Supply Chain objectives and performance
measurements.
Working Capital Management:

From an accounting point of view, Sanders (2006) defines working capital as “the difference
between short-term assets and short-term liabilities. Cronie (2008) gives the following
definition of working capital: “the amount of cash which a company requires to fund the
difference between payment and collection”. Van Thienen (2011) criticises the definition of
Cronie. He argues that working capital “represents the liquidity a business requires for day-
today operations”. Mathur (2002) defines WCM as “the management of current assets and the
entire current liabilities, as also a portion of long-term or deferred liabilities, which go to
meet the financial requirements of working capital“. Krištofík (2010) has another definition
for WCM: “Working capital management is the part that sits between the purchase-to-pay
and order-tocash cycles “. The goal of WCM is to keep working capital on an optimal level.
This optimal level is the level needed in order to meet the obligations of the company without
having excessive levels of cash. WCM is concerned with the cash flows moving around the
company and it is a big advantage if a company has a clear picture of where funds are
required. Nevertheless, it is important to know that working capital levels differ between
industries. Working capital would not exist if every product sold was distributed on the same
days as the invoice was raised and paid (Treasury Today, 2007). The amount of necessary
working capital depends on several factors. According to Mathur (2002) the amount of
working capital a company requires largely depends on:

• Nature of business (e.g. automobiles)

• Seasonal character of industry (e.g. fans)

• Production policy (e.g. varying with peak and slack season)

• Market conditions (e.g. competition)

• Supply condition (e.g. materials)

However, WCM is not only concerned with payables and receivables. Inventory management
and cash management are important aspects as well. The longer inventory is held, the longer
cash is tied up and will not be directly available for the company (Treasury Today, 2007).
According to Cronie (2008), good WCM is providing the following benefits: “reducing the
working capital requirement enhances the balance sheet and reduces the need for short term
borrowing. Furthermore, it improves financial ratios and therefore increasing the ability to
obtain financing for more strategic purposes “. According to Bhattacharya (2008) a limitation
concerning WCM is the “currentness of assets and liabilities that enter into the domain of
WCM”. If some assets are not as current as the liabilities used in the WCM, it can lead to
difficulties to make proper decisions. Furthermore, the maturity period of an item can be
different from company to company. “In case of both current liabilities and current assets,
there may be firms where maturity period of any of the items may be more than a year If,
therefore, we follow the logic of ‘natural business year’, then the true operating cycle of a
business should be either the days of current assets or current liabilities whichever is higher.
Only in such an operating cycle all current items will mature (Bhattacharya, 2008, p. 7).”
“Poor working capital performance is a symptom of a breakdown in business or financial
processes that are also impacting on your ability to generate revenue and earnings (Sanders,
2006).” This means that poor WCM eventually has a negative effect on generating revenue
and earnings. \

Supply Chain Financing:

Supply Chain Financing (SCF) is a product offered by banks to realise lower prices for
credits. This product is offered to the supplier on the basis of the creditworthiness of the
buyer. Credits can therefore been offered at a lower rate of financing than the supplier would
be able to negotiate on its own. The Aberdeen Group defines Supply Chain Financing as: “A
combination of trade financing provided by a financial institution, a third-party vendor, or a
corporation itself and a technology platform that unites trading partners and financial
institutions electronically and provides the financing triggers based on the occurrence of one
or several supply chain events (Kerle, 2009).” Key performance indicators for financial flows
include the following (Hausman, 2003):

• Days of working capital (DWC)

• Days of sales outstanding (DSO)

• Days of inventory (DIO) Days payables outstanding (DPO)

• Other important characteristics of financial flows are:

• Reliability of payment methods

• Predictability of payment inflows and outflows

• Information management (invoice-level data with financial data).

The financial flow management challenges such as slow processing, unreliable and
unpredictable cash flows, costly processes, high DSO and suboptimal credit decisions require
higher working capital than needed. If these challenges were removed, the cash saved could
be shifted to more valuable users. Underlying business arrangements between buyer and
supplier need to be taken into account by banks. This will provide the bank a better insight of
the risks the SCF packages are bringing along. According to the Bank of America “A SCF
programme requires customised solutions tailored to a buyer’s business, systems and
processes (Bank of America, 2009).” However, Jacquot (2011) does not agree with the
statement of the Bank of America. He argues: “The corporate must avoid a custom-built SCF
programme “. Implementing SCF packages by banks is not always that easy. Wohlgeschaffen
(2010) describes in his article the challenges of implementing a SCF package: “It was a
challenge to make sure that the system was able to deal with credit notes and different
currencies as well as individual limits for each supplier in order to mitigate or reduce risk to
the buyer”. When a buyer wants to implement a SCF programme, several objectives need to
be taken into account. According to the Bank of America the objectives of SCF are:

• To improve a supply chain’s working capital.

• To enable a buyer to extend the payment terms of domestic and foreign suppliers.

• To give suppliers access to affordable liquidity by leveraging the buyer’s stronger credit
rating.

• To create a value exchange that translates into extended DPO or lower COGS for the buyer
and affordable access to liquidity for the seller.

According to Philipps (2007), this is the moment to improve relationships and loyalty by
offering suppliers SCF packages: “Yet, this is an opportunity for buyers to develop strong
reciprocal relationships of trust and loyalty by offering suppliers supplier finance packages”.
Main benefits of SCF are: “SCF enables sellers to reduce receivables as a lower-cost source
of financing while lowering Days Sales Outstanding and limiting credit risk exposure (Bank
of America, 2009).” Friede (2010) supports the statement of the Bank of America by
mentioning something similar, “They can reduce unitisation of their own credit lines and
optimise their own working capital through a reduction of Days Sales Outstanding”. SCF
brings several other benefits along. For instance, buyer, bank and supplier benefit from cost
reduction as well as risk mitigation. Moreover, qualitative benefits can be achieved as well,
for instance greater visibility and transparency in the trading process, which provides
additional confidence for banks. It will be clearer for banks what amounts of money flow
throughout the chain. Furthermore, it will provide the banks with more information about the
current situation of the buyer (Wohlgeschaffen, 2010; Stephenson and Hutter, 2009).
Wohlgeschaffen (2010) agrees with the statement of the Bank of America by mentioning the
benefit: “Conversion of accounts receivable to cash through attractively priced, true
nonresource sale and cheaper cost of finance (based on buyer’s credit risk) and improvement
of financial ratios (Wohlgeschaffen, 2010).” Cronie (2008) adds to this statement: “SCF has
substantial potential to enhance cash flow and DPO for buyers and improve cash flow and
finance costs for suppliers”. Philipps (2009) argues that there are some conditions that need
to be done before a SCF project can become a success. Without these conditions, the benefits
of a SCF project will not be as successful as it might be. “In order for the supply chain
financing project to be a success, a corporate, with its bank’s assistance, needs to get the
major stakeholders on board, whether that is within the many different entities of the
corporate or in its suppliers’ organisations. Without this buy-in, the project will not deliver
the benefits to treasury operations that are needed in today’s economic climate.” An online
trade finance facility is necessary to make a SCF programme a success. “The launch of a
successful online trade finance facility has – in recent years – proved to be the backbone to
success in offering efficient supplier finance solutions for clients (Philipps, 2007).”

Purchase-to-pay Cycle:

The purchase-to-pay cycle deals with the payables of a company. Krištofík (2010) defines
the purchase-to-pay cycle as follows: “The purchase-to-pay cycle is the trade cycle from the
point of view of the company making a purchase. During the purchase-to-pay cycle, the
company selects, receives and pays for the materials or other inputs needed in order for it to
produce its goods or services”. To measure the average number of days taken by a company
to pay its creditors in a given period, the Days Payables Outstanding (DPO) formula can be
used. In case of cash payment directly, a company has to take opportunity costs into account.
According to Van Sten & Knapen (2009), “An opportunity cost is one that measures the
opportunity that is lost or sacrificed when the choice of one course of action requires that an
alternative course of action be given up...” If a company holds too many products in its
warehouse, it will have high storage costs. Besides, if a company has a shortage of goods, it
may face lost sales. “From a working capital perspective, ideally DPO should be as high as
possible as this means that the cash is available to the company for longer (Treasury Today,
2007).” A high DPO has the same effect as high Accounts Payable. However, there is some
criticism on this statement. Negative consequences for high accounts payable can be
“sacrificing early payment discounts or adversely affecting the company’s relationship with
its existing and potential future suppliers (Treasury Today, 2007).” Cronie (2008) agrees with
this criticism by stating: “In addition to processing, managing payments is also a strategic
element of working capital to ensure that the company is able to take advantage of early
payment. discounts offered by suppliers where these are beneficial.” Both authors focus on
the early payment discount that companies forgo in case of late payment. According to
Mathur (2002) these are some limitations: “If we would be taking these figures from the
balance sheet of the company, we may have to take the average by adding the closing
balances of the two successive years divided by two. But, with a view to getting a more
accurate and realistic picture, we may take the total of month-end figures for the last twelve
months divided by 12, or better still, if we take the weekly figures for the last 52 weeks and
divide the total by 52”. Mathur (2002) describes clearly the problem of what figures to take
when calculating.

Order-to-cash Cycle:

Bhattacharya (2008) defines accounts receivables as follows: “Accounts receivables are

created by a firm when it sells its outputs on credit”. The order-to-cash cycle relates to a
company’s receivables. The order-to-cash cycle is the same cycle as the purchase-to-pay
cycle, however, from a supplier’s perspective. Krištofík (2010) defines the order-to-cash
cycle as follows: “It begins when a quote is prepared for a customer and ends when payment
has been received and reconciled with the appropriate invoice”. To measure the average
number of days taken by a company to collect payment from completed sale in a given
period, the Days Sales Outstanding (DSO) formula can be used. “The lower the DSO, the
faster payment is collected and the sooner cash can be used for other purposes (Treasury
Today, 2007).” According to Cronie (2008), prioritising collections is more valuable than
payments, because benefits are more tangible and receivables are sometimes the largest or
second largest asset on SME’s balance sheets. A criticism concerning accounts receivables is
that selling on credit is more expensive than cash sales. “It involves more paperwork, more
control and the risk involved is higher (van Sten & Knapen, 2009).” The limitations described
by Mathur (2002) on accounts payables and the calculation of the DPO also counts for
accounts receivables and the calculation of the DSO. A company usually does not know
beforehand which receivables will become uncollectible. “Accounts receivable are shown in
the balance sheet at the estimated collectible amount, the net realisable value. An account
receivable that has been determined uncollectible is no longer an asset (van Sten & Knapen ,
2009).” So, receivables need to be shown at net value. Furthermore, DSO is very sensitive to
the pattern of sales. “If sales are decreasing, DSOs would tend to fall even if there is no
change in the payment behaviour of the customers. Thus changes in DSOs may be misleading
if sales vary, such as with seasonal sales (Kallberg and Parkinson, 1993, p. 271).

Research Method:

The research is an explanatory case study based on working capital management in SMEs in
the Dutch and Slovak construction industry. The primary data of this research are obtained
via interviews and questionnaires. The secondary data are collected and gathered via
databases, books, and journals. To ensure validity and reliability, the same questions were
asked to all participants. To obtain information concerning bank products related to FSCM,
in-depth interviews were held with managers in the ING bank and the Royal Bank of
Scotland.

The quantitative data obtained were used to support the qualitative data. The quantitative
information gives an idea of the financial situation of the selected companies by using two
liquidity ratios, the current and quick ratio, as well as the ‘Days Sales Outstanding (DSO)’,
‘Days Payments Outstanding (DPO)’ and the ‘Days Inventory Outstanding (DIO)’. However,
using ratios for gathering the quantitative data brings along some limitations as outlined in
previous section. The financial data (for the current ratio and quick ratio in the years 2008 –
2010) of the SMEs in the Dutch construction industry are gathered via the online database
‘Company Info’. The financial data of SMEs in the Slovak construction industry is obtained
via the questionnaire (years 2008 – 2010). Fourteen interviews were held in SMEs in the
Dutch construction industry. The selected companies were contacted by phone, after being
selected on their industry (construction), size (SME) and location (province ‘Zuid-Holland’).
During these interviews, the questionnaire, which is the same for SMEs in the Slovak and
Dutch construction industry, was discussed and filled in by the interviewee. Additional open
questions were asked to find out more about strategies, knowledge of and experience with
FSCM and SCF. Five Slovak companies, selected in the database from The Association of
Construction Entrepreneurs of Slovakia, submitted answers to the questionnaire. Limitation
of the research was the limited number of companies willing to participate. Moreover, the
construction industry consists of all sorts of companies, such as constructors, subconstructors,
etc.), some of which are really small and without inventories.

Findings:

The interviews revealed that working capital is a major concern for all parties involved in the
financial supply chain. Suppliers want to receive their payments as fast as possible; while
buyers want to wait as long as possible to do the payments. However, suppliers may have to
increase prices due to extra costs they will face by extending the payment terms. Some
suppliers may face so many financial difficulties that they will be driven out of business. This
will automatically have a negative effect on the buyer, because he will lose one of his
suppliers. Therefore, different parties within the chain should start collaborating with each
other. Financial Supply Chain Management (FSCM) helps parties involved in the chain
looking from a more holistic approach, as Oskam said in an interview. A holistic approach
helps companies to consider the processes associated with the movement of cash. The focus
is on financial processes. FSCM can help SMEs obtaining credits easier, something that has,
in general, been a problem for many SMEs since banks are more hesitant in giving loans after
the crisis. In the pre-crisis period, SMEs have benefited from the relatively low financing
costs: cash was available and cheap. However, after the crisis, SMEs were badly hit, because
their financing costs increased. Collateral requirements increased and loan limits decreased.
At the moment, SMEs still have difficulties to get enough credits. Therefore, collaborating
with other parties in the financial supply chain may help to obtain credits at an attractive rate.
To make collaboration easier within the financial supply chain, automated business processes
are key factors for success. Concerning invoices, companies are still using paper rather than
electronic invoices. Paper invoices are much more sensitive for postal delays, data entry
errors and the loss of paper invoices. Costs are not even mentioned. Electronic invoices (e-
invoicing) are much faster, safer and easier to use, because details will be directly recorded in
the system. However, companies are still quite reluctant to implement the e-invoicing system,
because of the general lack of consensus on standards and the difficulties it will face in
persuading suppliers to change to an e-invoicing system as well.

Due to the fact invoices are sometimes not used in the most optimal way, credits are held
longer, which negatively affects the working capital. The same problem counts for payments.
Paper processing is often still used, which can cause huge delays. The solution will be
electronic payments. Most of the Dutch companies already use electronic payments.
However, for a well-functioning and effective financial supply chain management, all parties
in the chain should use electronic payment systems. By automating processes in the financial
supply chain, a large collaborative platform will be necessary. This platform should span the
entire financial supply chain, covering for instance, status updates, document matching,
payments, purchase order distribution and invoice submission. A holistic approach to
liquidity management enhances process efficiency due to the use of electronic invoices and
electronic payments. Supply Chain Finance products have existed for a while. The ‘Asset-
Based Financing’ is the traditional and still the most used Supply Chain Finance variant in
business. Examples include selling receivables at a discount to a financial institution or using
different stages in the supply chain, such as inventory, receivables and purchase orders as
assets for loan collaterals. This variant is known as ‘Factoring’. However, the ‘Buyer-Led
Financing’ is the Supply Chain Finance variant in this research. It is led by buyers
(customers) rather than sellers (suppliers). This variant is called ‘Supply Chain Financing’
(SCF) and is also known as ‘Reverse factoring’ or ‘Supplier finance’. The question is how to
optimise the chain and make sure suppliers have possibilities to obtain credits at attractive
rates. SCF works as follows: companies with a strong credit rating can support their
suppliers, which eventually will lead to benefits on both sides. The buyer will have longer
payment terms which will provide them greater cash flexibility and reduce reliance on
external sources of working capital. It will also extend the Days Payables Outstanding (DPO)
of the buyer. The supplier will gain earlier payments and will benefit from a lower rate of
financing from their buyer’s bank as well as access to immediate liquidity. Furthermore, it
will lower the Days Sales Outstanding (DSO) of the supplier and it will limit credit risk
exposure. Eventually this product will enhance the stability of the financial supply chain. The
use of e-invoicing is a need for companies that want to join a SCF programme. The main
difference between SCF (Buyer-Led Financing) and factoring (Asset-Based Financing) is that
the risk of the bank is concentrated on a single buyer, as with factoring it is concentrated on
one seller (supplier), and many buyers. Nowadays, SCF programmes are mostly used in
industries or companies in which working capital is relatively high.

A challenge for banks, when offering Supply Chain Finance products, is to know the
creditworthiness of the supplier and the buyer. By focusing on the suppliers (which can be
difficult, because there can be many) it is important to be aware of the risks. Problems or
risks that banks face include a supplier already receiving cash from the buyers bank (part of
the SCF programme), but the buyer not yet having received the products from the supplier.
This means the bank takes a risk if the supplier goes bankrupt. Since the buyer has not yet
received products, he may not pay the bank.

Therefore, the creditworthiness of the suppliers is very important. SCF programmes are
always customised, because every buyer has its own, different, suppliers. No SCF programme
is identical. SCF is offered in the Netherlands by Royal Bank of Scotland, ING, CitiBank and
BNP Paribas. ASYX is a Supply Chain Finance services company, helping companies to find
supply chain finance solutions. Factoring (‘Asset-based Financing’) is offered in the
Netherlands by many banks and factors such as Rabobank, De Nederlandse Krediet- en
Factormaatschappij and ABN-AMRO.

According to Mikoviny, working for the ING bank in the Slovak Republic, products related
to Supply Chain Finance (SCF) are not yet offered in the Slovak Republic, because the
country is not yet ready for these modern bank products. SCF or ‘Reverse factoring’ is a
modern variant of traditional factoring. Traditional factoring (‘Asset-based Financing’) is
offered by several banks and factors in the Slovak Republic (Slovenská sporitelna, Tatra
banka, Volksbank Slovensko and VUB Factoring, a.s.). The Royal Bank of Scotland in the
Netherlands offers liquidity and electronic services, such as electronic invoicing platforms
that enable suppliers to send their invoices via this platform and the bank can automatically
provide the credit to the supplier based on the einvoice. The costs of starting a SCF
programme differ per buyer. If the buyer has a lot of suppliers, the costs will be higher. The
bank has to evaluate suppliers’ financial position to judge their creditworthiness and
reliability.

Experiences of SMEs within the Dutch construction industry:

FSCM is not well known within the Dutch construction industry, because the industry is very
conservative and traditional. Competition is high and margins are low. Instead of
collaboration, companies demolish each other. However, collaboration with preferred
suppliers takes place.

The construction industry has the advantage that most companies have had long relationships
with their banks (like the Royal Bank of Scotland has with its clients). Banks know the
companies and companies know what to expect from the banks. However, a disadvantage is
the volatility in demand, particularly at the moment when firms face a financial crisis.

The SCF product and e-invoicing:

None of the companies that filled in the questionnaire and have been interviewed have a SCF
programme. One of the conditions of implementing a SCF programme is to make use of
einvoicing with a XML standard. Since 2004, ‘Sales in de bouw’, an initiative of ‘Bouwend
Nederland’, started to stimulate the whole construction chain to change to automated business
processes like electronic invoicing (with the use of the XML standard). As an independent
party they offer the guidance and help for a smooth implementation within the chain. All
parties within the chain (e.g. subcontractors, constructors) can participate in this programme
by paying a yearly fee. Interviewees mentioned the following reasons for not using e-
invoicing:

• Companies have to invest a lot.

• Companies do not see the benefits of e-voicing.

• Constructors do not want to use it (important party within the chain).

• Automation systems in use do not offer the possibility of implementing einvoicing.

Due to the financial crisis, SMEs in the Dutch construction industry started to have
difficulties in getting credits from banks. Banks became stricter and demand higher
requirements. The role of the bank changed as well according to the interviewees. Companies
first have to find ways to get money somewhere within the chain instead of going directly to
the bank.

Selected ratios concerning working capital:

DSO (Days Sales Outstanding) ratios:

Dutch industry: Slovak industry:

2010 = 42 days 2010 = 35 days
2009 = 46.5 days 2009 = 39.5 days
2008 = 48. 5 days 2008 = 33 days
The average number of days it takes before sales on credit are paid by buyers has been
decreased over the last three years for SMEs in the Dutch construction industry. Within the
Slovakian construction industry, the number of days decreased as well in 2010. However, it is
still not on the level that companies had in 2008. In overall, SMEs in the Dutch construction
industry need more days to receive their payments as SMEs in the Slovakian construction
industry.

DPO (Days Payables Outstanding) ratios:

Dutch industry: Slovak industry:

2010 = 41.5 days 2010 = 46.5 days
2009 = 44.5 days 2009 = 48 days
2008 = 47 days 2008 = 43 days

The average number of days it takes before invoices are paid by the companies that filled in
the questionnaire has been decreased over the last three years for SMEs within the Dutch and
Slovakian construction industry. This has mainly to do with the fact that many suppliers
wanted their buyers to pay sooner. Therefore the payment periods became shorter. For both,
SMEs within the Dutch and Slovakian construction industry, the number of days is more or
less the same.

DIO (Days Inventory Outstanding) ratios:

Dutch industry: Slovak industry:

2010 = 30 days 2010 = 38 days
2009 = 31.5 days 2009 = 42.5 days
2008 = 34 days 2008 = 46 days

The average number of days it takes before inventory was changed into cash has been
decreased over the last three years among the five Dutch and five Slovakian companies that
filled in the DIO ratio. As mentioned before, many companies in the construction industry do
not have inventories (or just a really small inventory, e.g. screws). They have only ‘work in
progress (the buildings which are still under construction).

Outcomes CCC (Cash Conversation Cycle) ratios:

Dutch industry: Slovak industry:

2010 = 35 days 2010 = 27 days
2009 = 40 days 2009 = 34 days
2008 = 41 days 2008 = 35 days

The average number of days it takes to convert company’s resources into cash has been
decreased over the last three years among the five Dutch and five Slovakian companies that
filled in the DIO ratio. The DIO ratio has to be known to calculate the CCC. Therefore of
only five SMEs within the Dutch construction industry the CCC ratio is known.

Conclusions:

Effective supply chain management requires a different approach to doing business than
many companies have had in the past. In particular, collaboration and transfer of information
between different departments managing each element of the supply chain is a key.

A holistic approach to liquidity management may enhance process efficiency due to the use
of electronic invoices and electronic payment. Finance divisions need to be more innovative
in the ways they raise finance and manage liquidity.

By implementing electronic data transfer, companies can increase their competitiveness,

freeing up working capital and reducing risk. Companies which ensure that their internal
processes are aligned with the new opportunities are likely to derive the greatest benefits.
Since the financial crisis financial markets are failing with increasing number of distortions.
Companies can use the financial crisis as an opportunity to rethink their business model.

Both the Dutch and the Slovak construction industry may benefit by paying more attention
towards their financial supply chain management. This requires also further development of
research in the area of short term financial management and tools for a more accurate risk
management.

4.Article:

Defining the Supply Chain:

The definition of “supply chain” seems to be more common across authors than the definition
of “supply chain management” (Cooper and Ellram 1993; La Londe and Masters 1994;
Lambert, Stock, and Ellram 1998). La Londe and Masters proposed that a supply chain is a
set of firms that pass materials forward. Normally, several independent firms are involved in
manufacturing a product and placing it in the hands of the end user in a supply chain—raw
material and component producers, product assemblers, wholesalers, retailer merchants and
transportation companies are all members of a supply chain (La Londe and Masters 1994).

By the same token, Lambert, Stock, and Ellram define a supply chain as the alignment of
firms that brings products or services to market. Note that these concepts of supply chain
include the final consumer as part of the supply chain. Another definition notes a supply
chain is the network of organizations that are involved, through upstream and downstream
linkages, in the different processes and activities that produce value in the form of products
and services delivered to the ultimate consumer (Christopher 1992).

In other words, a supply chain consists of multiple firms, both upstream (i.e., supply) and
downstream (i.e., distribution), and the ultimate consumer. JOURNAL OF BUSINESS
LOGISTICS, Vol.22, No. 2, 2001 3 Given these definitions, for the purposes of this paper, a
supply chain is defined as a set of three or more entities (organizations or individuals)
directly involved in the upstream and downstream flows of products, services, finances,
and/or information from a source to a customer.

SCM as a Management Philosophy:

As a philosophy, SCM takes a systems approach to viewing the supply chain as a single
entity, rather than as a set of fragmented parts, each performing its own function (Ellram and
Cooper 1990; Houlihan 1988; Tyndall et al. 1998). In other words, the philosophy of supply
chain management extends the concept of partnerships into a multifirm effort to manage the
total flow of goods from the supplier to the ultimate customer (Ellram 1990; Jones and Riley
1985). Thus, SCM is a set of beliefs that each firm in the supply chain directly and indirectly
affects the performance of all the other supply chain members, as well as ultimate, overall
supply chain performance (Cooper et al. 1997).

SCM as a management philosophy seeks synchronization and convergence of intrafirm and

interfirm operational and strategic capabilities into a unified, compelling marketplace force
(Ross 1998). SCM as an integrative philosophy directs supply chain members to focus on
developing innovative solutions to create unique, individualized sources of customer value.
Langley and Holcomb (1992) suggest that the objective of SCM should be the
synchronization of all supply chain activities to create customer value. Thus, SCM
philosophy suggests the boundaries of SCM include not only logistics but also all other
functions within a firm and within a supply chain to create customer value and satisfaction. In
this context, understanding customers’values and requirements is essential (Ellram and
Cooper 1990; Tyndall et al. 1998). In other words, SCM philosophy drives supply chain
members to have a customer orientation. Based upon the literature review, it is proposed that
SCM as a management philosophy has the following characteristics:

1. A systems approach to viewing the supply chain as a whole, and to managing the total flow
of goods inventory from the supplier to the ultimate customer;

2. Astrategic orientation toward cooperative efforts to synchronize and converge intrafirm

and interfirm operational and strategic capabilities into a unified whole; and

3. Acustomer focus to create unique and individualized sources of customer value, leading to
customer satisfaction.

SCM as a Set of Management Processes:

As opposed to a focus on the activities that constitute supply chain management, other
authors have focused on management processes. Davenport (1993) defines processes as a
structured and measured set of activities designed to produce specific output for a particular
customer or market. La Londe proposes that SCM is the process of managing relationships,
information, and materials flow across enterprise borders to deliver enhanced customer
service and economic value through synchronized management of the flow of physical goods
and associated information from sourcing to consumption. Ross defines supply chain process
as the actual physical business functions, institutions, and operations that characterize the
way a particular supply chain moves goods and services to market through the supply
pipeline.

In other words, a process is a specific ordering of work activities across time and place, with
a beginning, an end, clearly identified inputs and outputs, and a structure for action (Cooper
et al. 1997; Cooper, Lambert, and Pagh 1997; Ellram and Cooper 1990; Novack, Langley,
and Rinehart 1995; Tyndall et al. 1998). Lambert, Stock, and Ellram (1998) propose that, to
successfully implement SCM, all firms within a supply chain must overcome their own
functional silos and adopt a process approach. Thus, all the functions within a supply chain
are reorganized as key processes.

The critical differences between the traditional functions and the process approach are that
the focus of every process is on meeting the customer’s requirements and that the firm is
organized around these processes (Cooper et al. 1997; Cooper, Lambert, and Pagh 1997;
Ellram and Cooper 1990; Novack, Langley, and Rinehart 1995; Tyndall et al. 1998).
Lambert, Stock, and Ellram suggest the key processes typically include customer 10
MENTZER, DeWITT, KEEBLER, MIN, NIX, SMITH, AND ZACHARIA relationship
management, customer service management, demand management, order fulfillment,
manufacturing flow management, procurement, and product development and
commercialization.

Consequences of SCM:

The motive behind the formation of a supply chain arrangement is to increase supply chain
competitive advantage (Global Logistics Research Team at Michigan State University 1995;
Monczka, Trent, and Handfield 1998). Porter (1985) defines two types of competitive
advantage: cost leadership and differentiation. According to Giunipero and Brand (1996),
improving a firm’s competitive advantage and profitability through SCM can be
accomplished by enhancing overall customer satisfaction.

By the same token, La Londe (1997) proposed that SCM aims at delivering enhanced
customer service and economic value through synchronized management of the flow of
physical goods and associated information from sourcing to consumption. According to
Porter, competitive advantage grows fundamentally out of the customer value a firm creates,
and aims to establish a profitable and sustainable position against the forces that determine
industry competition. Thus, it is proposed that the implementation of SCM enhances
customer value and satisfaction, which in turn leads to enhanced competitive advantage for
the supply chain, as well as each member firm. This, ultimately, improves the profitability of
the supply chain and its members. Specific objectives to improve profitability, competitive
advantage, and customer value/satisfaction of a supply chain, as well as its participants, are
suggested by several researchers.

For example, a key objective of SCM is to lower the costs required to provide the necessary
level of customer service to a specific segment (Houlihan 1988; Jones and Riley 1985;
Stevens 1989). The other key objective is to improve customer service through increased
stock availability and reduced order cycle time (Cooper and Ellram 1993). Customer service
objectives are also accomplished through a customer-enriching supply system focused on
developing innovative solutions and synchronizing the flow of products, services, and
information to create unique, individualized sources of customer service value (Ross 1998).
Finally, low cost and differentiated service help build a competitive advantage for the supply
chain (Cavinato 1992; Cooper et al. 1997; Cooper and Ellram 1993; Cooper, Lambert, and
Pagh 1997; Ellram and Cooper 1990; Lee and Billington 1992; Novack, Langley, and
Rinehart 1995; Tyndall et al. 1998).

As such, SCM is concerned with improving both efficiency (i.e., cost reduction) and
effectiveness (i.e., customer service) in a strategic context (i.e., creating customer value and
satisfaction through integrated supply chain management) to obtain competitive advantage
that ultimately brings profitability. If we distinguish between the operational function of
customer service and the resultant goal of customer value and satisfaction, this discussion
leads us to conclude the consequences of SCM are lower costs and improved customer value
and satisfaction to achieve competitive advantage. Industry reports support this contention
(Performance Management Group 2001).

CONCLUSIONS:
There are several contributions of this paper to the knowledge of supply chain management.
First, it provides an integrative framework of the phenomenon called SCM. As such, it should
help practitioners as well as researchers understand SCM, give guidance to what SCM is, its
prerequisites, and potential effects on business and supply chain performance. Without a clear
understanding of SCM, we cannot expect wide application of SCM in practice or research.

It provides guidance as to the preconditions that need to be in place in order for a company to
implement supply chain management with its suppliers and customers. It serve as a guide and
reminder to practitioners to include all the typical business functions in supply chain
management planning, organization, and processes. Without such inter-functional
coordination, supply chain management cannot achieve its full potential. The same can be
said for including all the supply chain flows in any supply chain management planning,
organization, or process. Managers that we do not live in a domestic world—most supply
chains are global in some respect and should be managed as such. Finally, practitioners to
stay focused on the ultimate goals of supply chain management—lower costs, increased
customer value and satisfaction, and ultimately competitive advantage.

For researchers a wealth of research questions to investigate. What is the role of each of the
various business functions in supply chain management? Do these roles shift
dependJOURNAL OF BUSINESS LOGISTICS, Vol.22, No. 2, 2001 19 ing on the
company’s position in the supply chain? How can these functions be effectively coordinated
within a company and across the supply chain? The flows also raise the question of who in
the supply chain should best manage each of these flows—in other words, should there be a
single supply chain leader or does this leadership role shift for different types of flows. If the
latter, what conditions lead to the shifting of this flow-related leadership role? In addition, the
longterm performance impacts of SCM need to be examined.

Finally, the area of global supply chains provides many opportunities for research into the
phenomenon of supply chains, SCO, and SCM. Do the antecedents and nature of SCM
presented under and across different national cultures? How does supply chain management
itself change across different global regions and across different types of companies? Does
the management of inter-functional coordination and intercorporate coordination change
under these same cultural variations? These provide fascinating avenues for future research.

This paper also highlights the need for rigor to further develop a theoretical framework of
SCM. In addition to the research questions suggested by testing the antecedent, phenomenon,
and consequence structure would tell us much about the structure of supply chains and supply
chain management. Related to this research question is the interesting research question: How
prevalent is supply chain management? Much is written about supply chain management, but
no research has been published that benchmarks the degree of SCO and SCM, and the
conditions under which both exist. Such benchmarking research is clearly needed at this point
in the exploration of supply chain management, and the constructs and relationships proposed
are intended to guide this research
 RESEARCH
METHODOLOGY
 RESEARCH METHODOLOGY

Research Methodology: The study is carried out with the help of primary data and
secondary data.

Objective:-

To study the supply chain finance management of Allcargo Logistics.

To find the working of the supply chain management.

To find out how does the supply chain management helps in the functioning of the
comapany.

Data Collection: the primary data was collected from 100 employees using structured
questionnaire. The secondary was collected from various websites.

Tools of Analysis: The data was analysed using MS EXCELL.

Sample Size: The study included 100 employees from Allcargo Logistics who work in this
company. The convenience sampling method was used for the purpose of study.
DATA ANALYSIS
1) Gender: Male ____ Female ____

 FEMALE  30%
 MALE  70%

AGE

5%

30%
15%

Less than 20
20-30
30-40

30% 60%

Interpretation:
 Out of the total employees 30% were female and the remaining 70% were male.

2) Age: less than 20 ____ 20 - 30 _____ 30 – 40 _____ 40 - 50 ______

50 above _____

No. of people Age

Less than 20 20%
20-30 30%
30-40 30%
40-50 15%
50 above 5%
 AGE

5%
20%
15%

Less than 20
20-30
30-40
40-50
50 above
30% 30%

Interpretation:

Among all the employees 20% of the repondent was less than 20 years,30% of the
respondent were belong to the age group of 20 to 30 years,30% respondent were from a
group of 30 to 40 years ,15% of the respondent were from the age group 40 to 50 years and
rest 5% were above 50years.

3) Income: Up to 10000_____ 10000 – 25000 _____ 25000 – 50000 _____

50000 – 100000 ______ 100000 and Above_____

INCOME NO. of PEOPLE

Upto 10000 20%
10000-25000 30%
25000-50000 30%
50000-100000 15%
100000 and above 5%
 INCOME

5%
20%
15%
Upto 10000
10000-25000
25000-50000
50000-100000
100000 and above
30% 30%

Interpretation:

Among all the respondent 20% of the respondent had the monthly income up to 10k,
30% of the respondent were having the income of 10k to25k, 30% of the respondent was
have the income of 25k to 50k,15% of the respondent having the monthly income of 50k to1
lac and rest 5% was hacing the monthly income above 1 lakh.

4) Are you satisfied with the present Supply Chain Finance Management of
the organization?

YES ______ NO ______

YES 60%
NO 40%
 Ans.

40%

YES
NO

60%

Interpretation:

Among the 100 respondents 60% of the employees are satisfied with the present
working of Supply Chain Finance Management of the organization and the rest 40% are not
satisfied.

5) Rate the working strategies of Supply Chain Finance Management

department on the basis of the current programs?

a) Outstanding ____ b) Excellent ____ c) Good ____ d) Average ____

RATES PERCENTAGE
Outstanding 30%
Excellent 40%
Good 20%
Average 10%

RATING

10%

30%
Outstanding
20%
Excellent
Good
Average

40%

Interpretation:

40% of the respondents have rated the Supply Chain Management as excellent, 30% of
them have rated outstanding, 20% of them rated as good and the remaining 10% rated it as
average.

6) According to the current growth process of the organization, which of the

following needs much attention and progress to boost the production?

a) Operational activities _____ b) Tactical activities _____ c) Current programming

strategies _____

NEEDS PERCENTAGE
Operational activities 50%
Tactical activities 20%
Current programming strategies 30%

NEEDS

30%

Operational activities
50% Tactical activities
Current programming strategies

20%

Interpretation:

50% of the respondents think that operational activities needs highest attention
followed by current programming strategies and the least attention is required for tactical
activities.

7) What impact does the changes in Supply Chain Finance Management has on the
organization?

CHANGE PERCENTAGE
Positive 70%
Negative 30%
 CHANGES

30%

Positive
Negative

70%

Interpretation:

70% of the respondent think that changes in the Supply Chain Finance Management would
lead to positive impact in the organization and the rest 30% feels it would be negative impact.
RECOMMENDATIONS
AND

SUGGESTION

RECOMMMENDATION
1) Based on the resultant outcome of the project, the following suggestions have been
highlighted. The organization should try to give proper attention to the Supply Chain
Finance Management activities in which they are lagging behind.

2) They should try to improvise the present working strategies in order to smoothen the
Supply Chain process.

3) Though the old method of Supply Chain Finance is preffered by the employees still, the
organization should try to modernize their method.

4) Should try to make the Supply Chain sustainable as it will have a positive impact on the
environment and save the money in the process.

5) Manage risk responsibly and review the Supply Chain Mangement.

6) For managing the Supply Chain Finance Management invest in future proof technologies
as it would help in reducing the miscommunication problems with the clients from
different countries.

7) Organization should consider a single Supply Chain solution.

8) Must monitor the performance of all the Supply Chain Finance partners.

9) Integrate marketing expenditures into Supply Chain Finance planning.

SUGGESTION

1) Keep a proper track on the Supply Chain Finance Management of the organization.
2) It can improve supply chain finance by automating Accounts Payable (AP) and AR
process with an ePayments and electronic invoicing solution like Direct Insite’s
PAYBOX platform.

3) Oraganization can use Electronic invoicing facilitates supply chain financing and
dramatically reduces the invoice processing cycle from 23 days down to just five.

4) Direct Insite’s PAYBOX solution is an all-in-one solution that transforms AP and AR

processes to help organizations improve financial stability and bottom line revenue
growth.
ANNEXURE

QUESTIONNANIRE
1) Name of the employee _____________________.

2) Gender : Male ( )
Female ( )

3) Age: less than 20 ( )

20 - 30 ( )
30 – 40 ( )
40- 50 ( )
50 above ( )

4) Income: Up to 10000 ( )
10000 - 25000 ( )
25000 – 50000 ( )
50000 – 100000 ( )
100000 and Above ( )

5) Are you satisfied with the present Supply Chain Finance Management of the
organization?

Yes ( ) No ( )

6) Rate the working strategies of Supply Chain Finance Management department on the
basis of the current programs?
a) Outstanding ( )

b) Excellent ( )

c) Good ( )

d) Average ( )

7) According to the current growth process of the organization, which of the following needs
much attention and progress to boost the production?
a) Operational activities ( )

b) Tactical activities ( )

c) Current programming strategies ( )

8) What impact does the changes in Supply Chain Finance Management has on the
organization?
Positive ( ) Negative ( )
BIBLIOGRAPHY

BIBLIOGRAPHY

BOOKS:
1. Kotler Philip Marketing Management, Millenium Edition, Prentice Hall
Inc. Publication.
2. Kothari C.R. Research Methodology, 3rd Edition.

WEBSITES:

1. www.allcargologistics.com
2. www.learncscp.com
3. www.scribd.com
4. www.businessbee.com
5. www.enterpriseappstoday.com