How to Create a More Competitive End-to-End Supply Chain

Supply-chain finance (SCF) is emerging as the next frontier that manufacturers and retailers are focusing on to drive financial advantage over their competitors. Early adopters report dramatic improvements in days payable outstanding (DPOs), supply-chain cost of capital and cost of goods sold.

By merging physical supply-chain information with financial supply-chain data and flexible funding methods, companies are able to not only automate payables and receivables but also to inject much-needed liquidity at various stages of the supply chain. For a supplier, this can mean faster access to lower-cost capital. For a buyer, it can mean the ability to:

Optimize working capital by reducing inventory ownership and improving A/P and A/R balances.

Reduce product unit costs by taking advantage of arbitrage opportunities due to a higher cost of capital for many suppliers (e.g., offering suppliers access to third-party capital at a lower rate in return for a lower cost of goods sold or by offering early payment discounts using a company's own cash).

Extend days payable outstanding (DPOs) by offering suppliers more visible and predictable payment.

Companies that have improved end-to-end supply chains have enjoyed substantial benefits, such as being able to extend DPO by over 50 days, improve cash flow by hundreds of millions of dollars or decrease unit costs by 5 percent to 10 percent.