E-Supply Chain Technologies & Applications
EBC 6230 – Winter Session 2014

Financial Supply Chain Management
Submitted to:...
Introduction


Financial supply chain management
consists of the holistic and
comprehensive activities of planning
and co...
Agenda
Introduction on Financial Supply Chain
Management
 Traditional Financial Supply Chain
Management
 Current Financi...
Introduction on Financial Supply
Chain Management


What is Financial Supply Chain
Management?
◦ A set of cross-functiona...
Introduction on Financial Supply
Chain Management (Cont.)


Why is Financial Supply Chain Management
important?
◦ The imp...
Traditional
Financial Supply Chain
Management


Paper-based method, for example
accounts payable process:
◦ Buyer creates...
Current Financial Supply Chain
Management
EDI technology allows transactions
between different systems and data
format to ...
FSCM Element – Working
Capital Management


Working capital refers to the difference
between current assets and current
l...
FSCM Element – Working
Capital Management




WCM means the management of current
assets and the entire current liabilit...
FSCM Element – Working
Capital Management (cont.)


Supply chain finance
◦ The Aberdeen Group defines Supply Chain
Financ...
FSCM Element – Working
Capital Management (cont.)


Supply chain finance
◦ Factoring – Asset-Based Financing
◦ Reverse Fa...
FSCM Element – Working
Capital Management (cont.)


Benefits of supply chain financing
FSCM Element – Working
Capital Management (cont.)


Funds management
◦ Funds management plays a vital role in
financial s...
Challenges of Supply Chain
Finance
Different Level of Automation
 Incomplete Financial statement of
SMEs

Business Case – SAP Financial
Supply Chain Management
•

P2P Cycle – Accounts Payable
◦ Create purchase requisition. From ...
Business Case – SAP Financial
Supply Chain Management (cont.)
• O2C Cycle – Accounts Receivable
◦ From supplier side, fina...
Business Case – SAP Financial
Supply Chain Management (cont.)
• Streamline FSCM by Integration of Account
Payable and Rece...
Business Case – SAP Financial
Supply Chain Management (cont.)
• Streamline FSCM by Integration of Account
Payable and Rece...
Business Case – SAP
Financial Supply Chain
Management (cont.)


Streamline FSCM by Fund
Management for Public Sector
◦ P2...
Conclusion
The paper defines FSCM as to manage key processes
around risk, working capital and information between parties
...
Bibliography
















CGI Group Inc. (2007). SUPPLY CHAIN FINANCE : A new way for trade banks to
strengthen...
Financial Supply Chain Management
Financial Supply Chain Management
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Financial Supply Chain Management

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Financial Supply Chain Management
EBC 6230 – Winter Session 2014

Beichuan He
Doaa shaikh
Jingya Liu
Xiaoming Liang

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  • Current assets can be inventory, cash, accounts receivables, etc.Liabilities can be bank loans, accounts payables, etc.
  • Current assets can be inventory, cash, accounts receivables, etc.Liabilities can be bank loans, accounts payables, etc.
  • In many organizations, for example public sector, revenue collection is centralized. Any department expenses will be fund driven in SAP system. That means if funds is not available, for example, the purchase will not happen because at the purchase requisition and purchase order stages, the validation for fund will be automatically checked by system; if funds is available, P2P process will help streamline the FSCM.
  • Financial Supply Chain Management

    1. 1. E-Supply Chain Technologies & Applications EBC 6230 – Winter Session 2014 Financial Supply Chain Management Submitted to: Dr. Mohamed Baymout Prepared by: Beichuan He Doaa shaikh Jingya liu Xiaoming Liang
    2. 2. Introduction  Financial supply chain management consists of the holistic and comprehensive activities of planning and controlling all the financial processes both within a company and with the external parties
    3. 3. Agenda Introduction on Financial Supply Chain Management  Traditional Financial Supply Chain Management  Current Financial Supply Chain Management  FSCM Element – Working Capital Management  Challenges of Financial Supply Chain Management  Business Case – SAP Financial Supply Chain Management 
    4. 4. Introduction on Financial Supply Chain Management  What is Financial Supply Chain Management? ◦ A set of cross-functional disciplines that manage key processes around risk, working capital and information ◦ The management of the cash flowing between parties within the supply chain
    5. 5. Introduction on Financial Supply Chain Management (Cont.)  Why is Financial Supply Chain Management important? ◦ The improved network technology that leads to improved visibility through the physical supply chain ◦ The deep understanding of the end to end processes and the cooperation inside and outside the organization
    6. 6. Traditional Financial Supply Chain Management  Paper-based method, for example accounts payable process: ◦ Buyer creates, prints and mails the PO ◦ Vendor creates sales order, prints an invoice and encloses it with the shipment and/or sends it separately by mail ◦ Buyer creates the invoice into the Accounts Payable system
    7. 7. Current Financial Supply Chain Management EDI technology allows transactions between different systems and data format to automatically complete the accounts payable and accounts receivable processes  System monitors the working capital/cash flow inside the supply chain in real time 
    8. 8. FSCM Element – Working Capital Management  Working capital refers to the difference between current assets and current liabilities.
    9. 9. FSCM Element – Working Capital Management   WCM means 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. WCM is the part that sits between the P2P and O2C cycles. The goals of WCM is to keep the company able to continue its businesses and operations to meet the obligations of the firm, and to satisfy short-term debt without excessive expenses.
    10. 10. FSCM Element – Working Capital Management (cont.)  Supply chain finance ◦ 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.”
    11. 11. FSCM Element – Working Capital Management (cont.)  Supply chain finance ◦ Factoring – Asset-Based Financing ◦ Reverse Factoring – Buyer Led Financing ◦ The main difference between these two 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.
    12. 12. FSCM Element – Working Capital Management (cont.)  Benefits of supply chain financing
    13. 13. FSCM Element – Working Capital Management (cont.)  Funds management ◦ Funds management plays a vital role in financial supply chain management, especially in working capital management. ◦ To budget all relevant revenues and expenditures ◦ To control future funds movements ◦ To prevent the budget from being exceeded
    14. 14. Challenges of Supply Chain Finance Different Level of Automation  Incomplete Financial statement of SMEs 
    15. 15. Business Case – SAP Financial Supply Chain Management • P2P Cycle – Accounts Payable ◦ Create purchase requisition. From financial perspective, accounting assignment must be filled out, such as GL Account, Cost Center, Fund, etc. ◦ Converted PR to PO with the same financial data. Also, payment term will be agreed in the PO. ◦ Once get the shipment, GR will be created. ◦ After three-way match, incoming invoice will be created to record an accounts payable.
    16. 16. Business Case – SAP Financial Supply Chain Management (cont.) • O2C Cycle – Accounts Receivable ◦ From supplier side, financial recode will be based on sales order, goods issue to customer, and invoice to customer to confirm accounts receivable
    17. 17. Business Case – SAP Financial Supply Chain Management (cont.) • Streamline FSCM by Integration of Account Payable and Receivable ◦ Idea Model of Accounts Payable and Receivable
    18. 18. Business Case – SAP Financial Supply Chain Management (cont.) • Streamline FSCM by Integration of Account Payable and Receivable ◦ Collections and Dispute Management to Streamline the Idea Model
    19. 19. Business Case – SAP Financial Supply Chain Management (cont.)  Streamline FSCM by Fund Management for Public Sector ◦ P2P process helps streamline the FSCM in Public Sector
    20. 20. Conclusion The paper defines FSCM as to manage key processes around risk, working capital and information between parties within the supply chain. Traditionally, FSCM is paper-based and managed in different functional departments. Currently, due to advanced networking and EDI technologies, FSCM breaks the functional silos by crossing different functional departments to complete end-to-end business processes in real time.  To manage supply chain financially, the most important element is working capital that including cash management, inventory management, debtors management and short term financing. In public sector, from cash flow perspective, the funds management must be in place for any transactions.  Finally, as “Working capital management is the part that sits between the P2P and O2C cycles”, SAP case analysis provides detail explanation of how FSCM is working in an ERP system. P2P represents accounts payable, and O2C represents accounts receivable that has mainly been dealt by 
    21. 21. Bibliography         CGI Group Inc. (2007). SUPPLY CHAIN FINANCE : A new way for trade banks to strengthen customer relationships . From http://www.cgi.com/files/whitepapers/cgi_whpr_74_supply_chain_financec_e.pdf Fallon, P., Sergeant, P., & Ensor, R. (2007, Aprial). The 2007 guide to Financial SupplyChain Management P.11. (P. Robinson, Ed.) Retrieved January 2014 from http://www.euromoney.com/images/502/51463/financial_supply_chain_management.pdf Fallon, P., Sergeant, P., & Ensor, R. (2007, Aprial). The 2007 guide to Financial SupplyChain Management P.9. (P. Robinson, Ed.) Retrieved January 2014 from http://www.euromoney.com/images/502/51463/financial_supply_chain_management.pdf Kristofik, P., Kok, J., & Vries, S. (n.d.). FINANCIAL SUPPLY CHAIN MANAGEMENT – CHALLENGES AND OBSTACLES P.134. Retrieved January 2014 from http://www.acrn.eu/resources/Journals/Joe022012/201202h.pdf Kristofik, P., Kok, J., & Vries, S. (n.d.). FINANCIAL SUPPLY CHAIN MANAGEMENT – CHALLENGES AND OBSTACLES p.135. Retrieved January 2014 from http://www.acrn.eu/resources/Journals/Joe022012/201202h.pdf Kristofik, P., Kok, J., & Vries, S. (2012, November). FINANCIAL SUPPLY CHAIN MANAGEMENT – CHALLENGES AND OBSTACLES P.136. From http://www.acrn.eu/resources/Journals/Joe022012/201202h.pdf Kristofik, P., Kok, J., & Vries, S. (2012, November). FINANCIAL SUPPLY CHAIN MANAGEMENT – CHALLENGES AND OBSTACLES P.137. From http://www.acrn.eu/resources/Journals/Joe022012/201202h.pdf SAP. (n.d.). SAP Financial Supply Chain Management - Collections & Dispute Management . Retrieved January 2014 from http://www.mphasis.com/pdfs/sap-financialchain-management-collections-dispute-management.pdf

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