Development of Financial Supply Chain Management and Supply Chain Finance Model

Abstract

Expansive economic, production and commercial development today has made businesses and enterprises to have active presence and contribution in network-based and chain economy. Although focusing on this approach has brought some privileges and productivities for the firms which are members of networks and supply chains, it has been accompanied by various problems and complexities for financial crisis management, cash flow and flow capital amount of the foundations and their commercial partners. To overcome such problem, besides developing the concepts of supply chain management and logistics, Financial Supply Chain Management (FSCM) was also promoted to minimize inefficiencies of financial flow in supply chain using financial, engineering and management approaches, and to provide an effective management ground for cash inventory and flow capital all throughout the supply chain by making use of various tools and techniques of supply chain finance and/or SCF. Hence, by changing approach and role of financial services provider from just supplier of financial resources as the commercial partners of economic and commercial firms, it caused that a major part of managerial duties of financial flow of chain enterprises could be defined in collaboration with financial services provider, and they may be executed in a more desirable manner considering the capacities and capabilities of banks and financial institutes. Thus, regarding the significance of financial flow management in the chain and benefitting the principles and fundamentals of research by fact finding and case study, it was tried to present a framework to make use of financial flow management and its principles and fundamentals effectively by reviewing evidences as well as applicable experiences in this area. The present paper emphasized that as logistic services providers are responsible in supply chains to improve inventory level; financial services providers also have the same role concerning liquidity level in the chains. Therefore, by making coordination and integrity in the inventory flows, information and financial flows through supply chain, we can handle financial risks and provide more stable value flow in supply chain till distribution, and create a ground better for materializing objectives of the firms which are members of supply chain.

Keywords: Financial Supply Chain Management, Supply Chain Finance, Supply Chain Management, Financial Services Providers.

DOI: 10.7176/RJFA/10-1-03