The crucial role of Supply chain finance: Boosting cash flow, reducing risk, saving lives

17th May 2024

The crucial role of Supply chain finance: Boosting cash flow, reducing risk, saving lives

Supply chain finance is an increasingly critical aspect of supply chain management, enabling organisations to improve their cash flow, mitigate risk in their supply chains, and ensure the continuity of supply and the financial health of their suppliers, according to SAPICS (The Professional Body for Supply Chain Management).

In the public health sector, lives depend on efficient supply chains, to ensure that essential medicines, vaccines and healthcare commodities are available to patients and vulnerable communities when and where they are needed. However, the financial side of these supply chains can often be a complex hurdle that impedes the effectiveness of health programmes, SAPICS says.

Recognising the imperative to intensify the focus on finance in supply chain management, and to ensure that its members are empowered with the latest knowledge, skills, tools and technology, SAPICS has partnered with the global Supply Chain Finance (SCF) Community. This group consists of international knowledge institutions, corporations and supply chain finance professionals who share best practice and new research in an open, collaborative environment. Its founder members are leading business schools supported by corporations, banks, consultancies and technology vendors. The SCF Community aims to promote and accelerate the understanding, development and implementation of supply chain finance models.

Too many companies protect working capital by slow-paying suppliers

“Supply-chain finance today takes many forms, including early payment with dynamic discounting, inventory financing, pre-shipment purchase-order financing, and asset-based lending,” explains Luca Gelsomino, academic director at the SCF Community. “But the sector offers plenty of room for growth,” he states. “Too many companies continue to limit their efforts at protecting working capital to slow-paying suppliers. More creative solutions are needed to benefit both parties, especially at a time when economic uncertainty promises to put even more pressure on already challenged margins.” Based in The Netherlands, Gelsomino is also an assistant professor at the University of Groningen.

Supply chain finance will be in the spotlight at the upcoming 46th annual SAPICS Conference, which is Africa’s leading event for the supply chain profession. Taking place in Cape Town from 9 to 12 June 2024, it will see hundreds of attendees from around the world gather to network, learn and share knowledge through panel discussions, presentations, workshops and case studies.

A powerful practical workshop facilitated by Gelsomino is on the programme along with an insightful presentation on supply chain finance that he will share with SAPICS 2024 attendees.

Managing physical and financial flows in supply chains

These sessions will delve into the relevance of supply chain finance for today's supply chain manager. SAPICS Conference delegates will have the opportunity to work on real-world case studies, applying supply chain finance principles to day-to-day operations. “This hands-on approach ensures a deeper understanding of how supply chain finance principles can be applied to enhance cash flow optimisation, supply chain resilience and sustainable performance. In today’s rapidly evolving business landscape, the integration of supply chain and finance has become paramount for success. It is critical that we jointly manage physical and financial flows in supply chains,” Gelsomino stresses. His not to be missed contributions to this year’s SAPICS Conference have been sponsored by financial technology solutions provider Addendum, which is also a Silver Sponsor of the event.

SAPICS is hosting this year’s conference in association with the Southern African Association of Freight Forwarders (SAAFF).