The document discusses financial supply chain management. It summarizes that the financial supply chain refers to the end-to-end trade processes and information that drive a company's cash, accounts, and working capital. It also compares physical supply chain management to financial supply chain management, noting they both involve the movement of documents, data, physical goods, and money. Key aspects of financial supply chain management discussed include order-to-cash cycles, accounts payable and receivable, cash management, working capital, and transaction costs.

1. Financial
Supply Chain
Management
Group 5A
Amit S
Archana K
Kamal P
Kushagra P
Mahesh K
Shubham K
Venkatesh N

2. Financial Supply Chain Management
The Financial Supply Chain refers to the end-to-end trade processes and information that
drive a company’s cash, accounts, and working capital
BUYER SELLER
procurement-to-
Order-to-cash cycle
payment process
Accounts payable and receivable
Cash management
Working capital
Transaction costs
Risk
Administration

3. Physical SCM Vs Financial SCM
Movement of
Movement of
Documents
Documents
Data
Data
&
&
Physical Goods
Money
Raw
Retailer /
Goods Manufacturer Customer
Distributor
Supplier
• What to buy? • What and how to pay?
• When to buy? • When to pay?
• How much to buy? • How much to pay?
• From whom to buy? • Who to pay?
• Just-in-time-manufacturing • Just-in-time-cash
Source: www.apec-ecba.org/english/ppt/CarlWegner.ppt

4. Physical and Financial Supply Chains
across a Transaction
Physical Supply Chain
Transportation process
Factory Inland Port of Lading- Steamship Port of Inland Distribution
Dray Terminal Line Discharge- Dray Center
Terminal
Customs Clearance
Booking Request
Proof of Delivery
Bill of Lading
Purchase Order
Inventory Update
Inventory Update
Status Update
Status Update
Status Update
ASN
Containers Containers Containers are Containers are Containers Final delivery
loaded moved to port Vessel at sea
loaded on ship loaded on ship moved DC.
of lading.
Flow of Goods, Information and Funds
Physical Supply Chain and the Financial Supply chain are closely integrated
Receivables
Pre-shipment Finance
Financing
Invoice Factoring
PO Financing Financial Supply Chain Forfaiting
Letters of Credit
Buyer Financing Inventory Financing
Documentary Post-shipment Finance
Collections
Buyer’s Credit Supplier’s Credit
Source: www.apec-ecba.org/www/upload/2.ppt

5. Functional Perspective of Financial
Supply Chain Collaboration
Source of financial Source of financial
resources resources
Investors/ (external financing) Accounting (external financing) Financial
government services/
Use of Use of financial banks
financial resources Investment Financing resources
(dividends & taxes) (pay loans & fees)
Use Source Financial
of financial of financial activities
resources resources
Operating
(investment) (internal financing)
activities
Procurement Production Sales
(Outsourcing)
Logistics
provider
Source: www.baft.org/content_folders/1stEuropeanBank...

6. Financial – SCM Connection
•SCM can improve the below financial drivers of a company – growth , profitability and capital
utilization
•SCM strategic and tactical decisions need to be made from an enterprise-wide perspective
Source: Financial Supply Chain by Dr. Stephen G.Timme (FinListics Solutions)

7. Financial and Supply Chain Connection–
Top Down Approach
CFO adopts a 3 step , top-down
approach to make this connection
•Identify gaps in the financial metrics as
motivation of change
•Investigate gaps in SCM related
business processes like distribution and
logistics , forecasting , demand planning
etc
•Gaps in business processes are linked to
activities , tasks , KPIs like collaborative
forecasting , CPFR, strategic outsourcing
Top-Down Approach
Source: Financial Supply Chain by Dr. Stephen G.Timme (FinListics Solutions)

8. Characterization of SCF Collaboration
Source: www.baft.org/content_folders/1stEuropeanBank...

9. Characterization of SCF Collaboration
Source: www.baft.org/content_folders/1stEuropeanBank...

10. Why Buyer Should Focus on SCF?
• Pressure to lower the cost
of goods sold
• Manual-intensive financial
processes becoming too
burdensome
• Opportunity to lower the
overall weighted cost of
capital for end-to-end
supply chain
Source: www.apec-ecba.org/www/upload/2.ppt

11. Buyer Challenges to Better SCF
• Suppliers unwilling to
extend payment terms as
much as needed
• Lack of automation for
managing SCF processes
• Financial transaction
processing takes too long /
is too costly
Source: www.apec-ecba.org/www/upload/2.ppt

12. Why Supplier Should Focus on SCF?
• Pressure to lower the cost of
goods sold
• Opportunity to lower the
overall weighted cost of capital
for our end-to-end supply
chain
• Shortage of funds to support
production / work in process /
buyer-required inventory
• Pressure to shorted DSOs
Source: www.apec-ecba.org/www/upload/2.ppt

13. Supplier Challenges to Better SCF
• Cash flow uncertainty
• Difficult to obtain short-
term financing due to high
cost of capitol
• Lack of automation for
SCF processes
• Supporting multiple buyers
Source: www.apec-ecba.org/www/upload/2.ppt

14. Key Market Trends
 Enterprises are sourcing more globally, creating a demand for
international trade finance products
 Letters of Credit are decreasing as a percentage of global trade
 Companies are pro-actively driving Banks towards cheaper Open
Account solutions
 SMEs and Large Enterprises seeking opportunities to lower overall
cost of financial supply chains through access to lower cost credit
 Banks are open to lending to new enterprises based on improved
information made available through use of technology
Source: www.apec-ecba.org/www/upload/2.ppt

15. Thank You
Finance
Supply Chain