Towards Efficient Financial Supply Chains: How to Leverage Inter-organizational Working Capital by Digitalizing the Financial Flows

Lotta Lind () and Florian Schupp
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Lotta Lind: ABB Oy
Florian Schupp: Jacobs University Bremen

A chapter in The Nature of Purchasing, 2020, pp 205-232 from Springer

Abstract: Abstract Traditionally, the focus in the supply chains has been on enabling the smooth material and information flows along the chain. However, in recent years, the potential of efficient financial flows and the inter-organizational perspective to working capital (WC) management have received increasing interest among companies as well as researchers. The purpose of this chapter is to illustrate the potential of financial collaboration by proposing a model for WC optimization in the supply chain via payment term adjustments. The model is tested with seven scenarios, which show that remarkable amounts of WC could be released by adjusting and harmonizing the payment terms in the supply chain. The introduced model provides a novel perspective on collaborative WC management in the supply chain by enabling win-win situations with a unique incentive system, sets the supply chain up in a financially lean way and saves capital for real investments. The chapter provides practical support for the optimization of WC at the supply chain level.

Keywords: Digitalization in purchasing; Working capital management; Financial supply chain management (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:spr:mgmchp:978-3-030-43502-8_10

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DOI: 10.1007/978-3-030-43502-8_10

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