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If at First you don't succeed at Supply Chain Finance?

If at First you don't succeed at Supply Chain Finance?

As the Saying goes – Try, Try, Again. You learn from what you did wrong, make the necessary adjustments and try again. Of course, learning from others mistakes in the first place is even better and a highly recommended approach.

 

The same is true in Supply Chain Finance. It is an attitude and a mindset that there is value to be had in the supply chain. It takes collaboration and creative thinking in order to be successful.

With Supply Chain finance there are a few pitfalls to be aware of and make sure you don’t fall into them. This week’s esourcing wiki is Supply Chain Finance Primer: Strategies for Failure. It discusses three pitfalls to watch out for.

The main message is that the process has to benefit all parties. If it is just benefitting the buying organization, the supply chain is being ‘squeezed’ somewhere upstream. That can be managed in the short term but it will not be sustainable for large volumes or for long periods of time.

As a buyer, you are offering strategic suppliers better financing by leveraging their open accounts receivables. If you are then turning around and asking them to carry more inventory, delaying your purchases and extending your payment terms, it is not an approach that is taking costs out. It is just pushing them onto the supplier. If your customers do that to you, it snowballs and the supply chain becomes inefficient and costly.

Did you have any stumbles as you were getting your supply chain finance program started? Did you dust yourself off and try again?

 

Share your thoughts by commenting below or tweeting us @buyersmeetpoint.

Proving Procurement’s Strategic Value, Part 2
Proving Procurement’s Strategic Value, Part 1

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Wednesday, 23 October 2019

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