Finance and Supply Chain management

1. By Israr K. Raja
FINANCIAL SUPPLY CHAIN
MANAGEMENT

2. Financial Supply Chain
Management

3. Financial Supply Chain
Management
 Financial supply chain management (FSCM)
is a set of software tools and processes
designed to enhance an organization’s
product flow, maximizing profitability and
minimizing expenses.
 To accomplish this objective, FSCM takes
advantage of principles that have proven
effective in supply chain management for
decades.

4. Financial Supply Chain
Management
 FSCM is not a product; rather, it’s a key to
developing streamlined financial processes that
are designed to integrate with an organization's
physical supply chain operations to produce a
positive impact on the business.
 It allows CFOs to compare performance through
key indicators versus projected outcomes, while
at the same time helping them to keep a close
eye on factors such as industry trends,
competitors or peers.

5. The SCM processes
:
 the product flow,
 the information flow
 the finances flow.

6. The Finances Flow.
 In FSCM, the finances flow is expanded. The FSCM process
recognizes and analyzes interrelated events that impact
 working capital,
 payment terms,
 pricing, and
 inventory.
In addition, FSCM takes into account the needs and
behaviors of employees and departments in the
organization. For example, sales trends might be
influenced by employee bonuses, scheduling delays,
department-head changes, or unexpected resignations.

7. Effective Financial Supply
Chain Management
 Effective Supply Chain Management (SCM) helps
organizations plan and manage activities across
the enterprise including
 sourcing,
 procurement,
 production, and
 logistics.
It also allows them to better coordinate and
collaborate with channel partners such as
suppliers, intermediaries, third-party service
providers and customers.

8. Importance of FSCM
 Effective SCM of an organization's physical
operations is critical to its success, to remain truly
competitive it must also implement an ongoing
process of identifying the financial benefits within
the supply chain simultaneously.
 Financial Supply Chain Management (FSCM) plays
an important role as it allows CFOs and other
guardians of an organization's financial resources to
identify metrics for monitoring and benchmarking.
 It also provides them with the ability to continually
evaluate and take advantage of opportunities to the
benefit of not only the organization but also
shareholders and customers alike.

9. Importance of FSCM
 It allows CFOs to identify the amount of working
capital within their organizations’ assets that is
tied up in the overall ‘cash to cash’ cycle.
 This allows them to assess whether the
organization is obtaining its optimum level of
reward.
 Conversely, FSCM also allows CFOs to identify
the financial burden of supporting their current
physical supply chain in terms of interest
charges, as well as the cost of labor and other
overheads.

10. Importance of FSCM
 FSCM can help CFOs steer their companies
towards being more profitable and
 resistant to market volatility.
 It ties together a multitude of financial
transactions that take place in the supply
chain every day and
 provides visibility on areas of opportunity,
 as well as those that need improvement.

11. Objective of FSCM
 meeting its strategic objectives,
 remains as profitable as possible,
 optimizing its cash flow.

12. Implementing FSCM
 identify areas for improvement in the business
processes
 prioritize the Areas
 quantify the benefits or pitfalls of any changes.
 This practice of identifying process-driven
profitability based on financial merit coupled with
the ability to rank changes in operations based on
achievability enables the business to carefully pick
the ‘lowest hanging fruit’.
 The upside of this approach means that the business
is able to free up funds to support larger more
profitable opportunities down the line.

13. Implementing of FSCM
 a future-proofed ERP backbone needs to be in place
to allow integration with other sub-systems that
produce data on factors such as raw materials
ordering and customer cash receipts.
 then need to adopt the integration and standards
(or de facto standards) of the particular industry it
belongs to, such as fashion or distribution.
 Further to this, business intelligence tools
incorporated into the system provide organization-wide
reporting and analysis via role-based
dashboards, helping deliver the right information to
the right people at the right time.

14. Implementing of FSCM
 processes can be built into the system allowing
for a high degree of automation internally that
facilitates collaboration with customers,
suppliers and other business partners.
 The natural effect of the Internet will of course
add to the ‘enablement’ through Information
technologies ensuring an open architecture is
created. This makes it easier to collaborate
seamlessly with external systems and to adopt
new technologies in the future.