Detecting working capital models in the ICT supply chains Online publication date: Tue, 20-Dec-2016
by Lotta Lind; Sari Monto; Timo Kärri; Florian Schupp
International Journal of Supply Chain and Inventory Management (IJSCIM), Vol. 1, No. 3, 2016
Abstract: A working capital model, consisting of the management of inventory, accounts receivable and accounts payable, is a part of the business model and can be a source of competitive advantage. This paper studies working capital models in the ICT industry from the supply chain perspective. The financial value chain analysis showed that companies within the same branch had remarkable differences in their working capital management. Some companies were even able to operate with a negative cycle time of working capital (CCC). The key to a negative CCC was a short cycle time of inventories, but the efficient management of payables was critical as well. With cluster analysis, four different working capital models (clusters) were indicated: long cycle companies, inventory holders, optimisers, and credit granters. Identifying different working capital models helps supply chain actors in optimising the working capital management of the chain to improve its competitiveness.
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