An organization’s growth is greatly influenced by its supply chain management. This is one of the most important factors for bringing the organization to the next level. In addition to generating top-line revenue, the supply chain also generates bottom-line revenue.
As part of the vertical supply chain meaning, the Distribution Unit is responsible for ensuring that stocks are available at the point of sale and expanding the company’s distribution network. An association with a wider distribution reach, such as 200 cities, will have a greater sales number and therefore a greater revenue than one with a distribution reach of 100 cities. As a result, companies can tap into more and more markets by expanding their distribution reach, resulting in horizontal growth.
A wide range of Supply Chain verticals contributes to the growth of a company’s bottom line by lowering costs. In procurement, supplies must be purchased at a lower cost from vendors, and in planning, inventory needs to be controlled to reduce wastage. In order to make manufacturing cost-effective, the manufacturing vertical must improve efficiency. In logistics and warehousing, a stock must be stored and moved cost-effectively while minimizing waste. So each vertical contributes to reducing costs and maximizing profit and bottom line growth.
Finance is the key to supply chain success.
In order to achieve further product procurement, supply chain finance is a worthwhile consideration since it can allow suppliers and distributors to get funds early. It is easier and more predictable to manage cash in the system when it is turned around quicker. As a result, business growth is boosted, and working capital is managed effectively.
What is the best way to integrate supply chain financing seamlessly? Technology plays a critical role in this context, providing you and your suppliers with a more efficient way to finance their projects. A supply-chain financing platform that integrates treasury or supply chain management with ERP reconciliation goes beyond traditional supply-chain financing platforms.
As a result of supply chain finance, traditional trade finance has now lost market share to supply chain finance. Three waves are driving this trend: deeper integration of established solutions targeted at suppliers, further sophisticated products for buyers, and finally, the convergence of supplier and buyer-oriented solutions.
What is supply chain finance?
A supply chain has competing financial interests between buyers and suppliers. It is in the buyer’s interest to pay as late as possible, and it is up to the supplier to get payments as quickly as possible.
An increase in the number of funding and risk control solutions is designed with one goal: to optimize the liquidity and working capital available across supply chains. Supply chain finance emerges to resolve these conflicting interests. Suppliers receive some products directly, while buyers receive others through distributors.
Automobile, leisure, and retail companies have borrowed more, increased their current liabilities, and bridged themselves through extremely challenging operating conditions. The temporary boost to capital has nonetheless led to many subsectors within these industries becoming riskier.
In recent years, supplier collaboration has emerged as one of the biggest trends in supply-chain risk. Financials, intellectual property, information security, environmental, social, and governance initiatives, and other sensitive information are more readily disclosed by private-company suppliers, who recognize the commercial value of transparency.
Providing financing earlier in the production cycle.
Finance can be extended earlier in the production cycle based on advanced buyer and supplier data analysis. The buyer must approve invoices for significant volumes of “unfinanced” tradable goods before the goods can be shipped to the buyer. By using historical data on purchase orders, shipments, invoices, and payments, new predictive analytics can enable financing to be extended before all invoices are approved. Fintechs have begun creating business models based on analytics to take advantage of this data, as banks have begun exploring its value.
