Supply chain finance: Optimal introduction and adoption decisions
By David A. Wuttke, Constantin Blome, H. S. Heese, Margarita Protopappa-Sieke. 2016
210 citations recorded by the source corpus.
Supply chain finance (SCF) can improve supply chain performance by facilitating longer payment terms for buyers and better access to financing for suppliers. In spite of these clear benefits, there is empirical evidence for some hesitation and resistance to SCF adoption, manifesting in an often substantial time lag between a buyer's introduction of SCF and its adoption by all targeted suppliers. Observed adoption processes often resemble the s-shaped Bass-curve suggesting that successful early adoptions support adoption decisions by other suppliers. Based on these observations, we consider supplier SCF adoption decisions within a diffusion model, to obtain insights regarding a buyer's optimal SCF introduction decisions in terms of timing and payment terms. We find that initial payment terms and procurement volume strongly affect the optimal timing of SCF introduction and optimal payment term extensions. The degree to which the buyer can influence suppliers in their adoption decisions affects the optimal introduction timing, but not optimal payment terms. Interestingly, our results suggest that, in spite of the clear benefits, many buyers might be well-advised to postpone their SCF implementations.
Subfields: Business and International Management, Management Information Systems, Management Science and Operations Research
View Paper: https://www.semanticscholar.org/paper/c7417f46a2f8195672de37d159e97b0ad846c60e
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In Management Information Systems
In Management Science and Operations Research
Citations in the corpus
- Supply chain finance, financial constraints and corporate performance: An explorative network analysis and future research agenda (2019, background): “Importantly, it demonstrates that (focal) companies are well advised to refrain from systematically extending their payment terms to suppliers or from forcing their customers to pay earlier (Holter et al., 2010; Wuttke et al., 2016).”
- Exploring the relationship between mechanisms, actors and instruments in supply chain finance: A systematic literature review (2019, methodology): “An optimised NWC management (Hofmann and Belin, 2011; Basu and Nair, 2012; Dello Iacono et al., 2015; Wuttke et al., 2016) and improved cash conversion cycle (Hofmann and”