Title: Supply Chain Finance enabled early pay: unlocking trapped value in B2B logistics

Authors: Preetam Basu; Suresh K. Nair

Addresses: Operations Management Group, Indian Institute of Management Calcutta, Diamond Harbor Road, Kolkata 700104, India ' Operations and Information Management, School of Business, University of Connecticut, Storrs, CT 06269, USA

Abstract: Recent breakthroughs in Business-to-Business (B2B) trade have opened new avenues for value creation in the financial supply chains. Based on supply chain event triggers, innovative financing is being provided at different points of the supply chains. This new phenomenon, termed as Supply Chain Finance (SCF), is transforming Working Capital Management (WCM). In this study we focus on payables management of a buying firm in a supply chain with SCF enabled early payment program in place. A stochastic dynamic programming model is developed and the value of SCF enabled early payment program under varying future cash-flows are ascertained through extensive numerical analysis.

Keywords: SCF; supply chain finance; B2B trade; early payment discounts; WCM; working capital management; financial SCM; supply chain management; stochastic dynamic programming; business-to-business; B2B logistics.

DOI: 10.1504/IJLSM.2012.047605

International Journal of Logistics Systems and Management, 2012 Vol.12 No.3, pp.334 - 353

Published online: 28 Nov 2014 *

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