Focusing the financial flow of supply chains: An empirical investigation of financial supply chain management

By David A. Wuttke, Constantin Blome, Michael Henke. 2013

363 citations recorded by the source corpus.

The objective of this paper is to establish a theoretical foundation for financial supply chain management (FSCM) in order to strengthen managerial decisions concerning financial flows in supply chains. Although such decisions are made frequently and partial aspects of FSCM are already understood in business practice, empirical knowledge about FSCM is in its early stages. The study provides fundamental information derived from eight case studies based on 40 interviews. The analysis extends previous studies of the interface between operations management and finance by (i) contributing to a mid-range theory of FSCM by exploring two distinct but not exclusive FSCM categories, their antecedents, and performance effects, (ii) empirically deriving a testable framework for FSCM, (iii) relating FSCM to established theories in the field of SCM, and (iv) basing the analysis on transaction cost economics. Managerial insights reveal that weak working capital causes firms to focus on FSCM. More specifically, the study identifies two FSCM categories: pre-shipment FSCM (before invoice release) and post-shipment FSCM (after invoice release). Managers can improve upstream supply chain working capital with pre-shipment FSCM, whereas post-shipment FSCM strengthens the buying firm’s working capital position. Based on transaction cost economics, we analyze how these improvements stem from risk reductions, which are more effective if firms are integrated internally and externally.

Subfields: Accounting, Management Information Systems

View Paper: https://www.semanticscholar.org/paper/be9fa3be74d33d824a15bfe9b13ed7b3af4d4442

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Citations in the corpus

Supply chain finance: From traditional to supply chain credit rating (2019, background): “Finally, these models hardly take into consideration supply chain information or an inter-organizational perspective, such as the existence of strategic relationships between buyers and suppliers or the operational performance of the supplier as perceived by the buyer (Edwards, 1997; Wood, 1981).”
Supply chain finance: Historical foundations, current research, future developments (2019, background): “One of the most widely diffused SCF solutions is reverse factoring (Wuttke et al., 2013), which is a financial agreement where a financial institution purchases accounts receivable from”
Does finance solve the supply chain financing problem (2016, methodology): “For example, Wuttke et al. (2013b) states that the most complex solutions require a high level of digitalisation in the trade process, but this variable does not find space in the final framework, while Liebl et al. (2016) do not recognise this variable among the barriers identified.”