Global Sourcing Approach to Improve Cash Flow of Agribusiness Companies in Brazil

Ricardo Hamad () and Nicolau Dionísio Fares Gualda ()
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Ricardo Hamad: Transportation Engineering Department, Polytechnic School, University of São Paulo, São Paulo, 05508-900 Brazil
Nicolau Dionísio Fares Gualda: Transportation Engineering Department, Polytechnic School, University of São Paulo, São Paulo, 05508-900 Brazil

Interfaces, 2014, vol. 44, issue 3, 317-328

Abstract: We developed a multiechelon location-inventory modeling approach and applied it to redesign the global network of four large transnational agricultural companies operating in Brazil. The results show that tax planning is the most significant factor in minimizing the operating cash outflow and that inventory carrying costs play a more important role than transfer freight, handling, and fixed costs. Distribution centers and production plants in countries within the Mercosur are excellent targets for cash outflow reduction and service level improvement. Furthermore, contrary to common sense, reducing operating costs can sometimes increase cash outflow in companies with large volumes of tax credit in Brazil. Our methodology generated processes that helped one company reduce its logistic cash outflow by 49 percent and its logistics costs by $10 million.

Keywords: logistic network design; inventory modeling; multiechelon location-inventory modeling; tax planning; supply chain network optimization (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:inm:orinte:v:44:y:2014:i:3:p:317-328

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