Supply Chain Finance Goes to College

Trade Financing Matters welcomes this guest post from Prof. Dr. David Wuttke, EBS Business School, Institute of Supply Management

When Tom Dunn, CEO Orbian, and I met the first time at a supply chain finance conference four years ago, we did not know which answers we would find, but we were determined to find them. After we had observed many cases of supply chain finance adoption, studied firms through interviews, and listened to the voices of managers – Tom because it is his daily business, I because supply chain finance is my research area – we decided on a joint study on more rigorous grounds. Instead of studying what managers said their motives were and what benefits they believed to obtain, we wanted to know what their true motives are, how they really benefit from supply chain finance, and what adoption challenges they were facing. Not only did we conjecture that this would lead to more generalizable insights and interesting statistics, but also to new insight that we have not even thought at the beginning. This conjecture turned out to be right.

During our webinar on June 22, Supply Chain Finance Goes to College,  we will walk you through our journey starting with answers to our initial question: how are firms using supply chain finance? Not only will mention substantial payment term extensions, but also, when they are greatest and why. Our journey continues in the backyard of supply chain finance, where we will reveal a serious adoption challenge for almost all buyers: getting suppliers on board and doing so quickly: without supplies, there is no supply chain finance. But what makes some suppliers adopt faster than others? Is it only expected benefits, or are institutional forces in play, too?

Briefly touching on this topic, we will share our insights characterizing successful onboarding approaches. Finally, we come to the latest highlight of our research endeavor, where we study a particular type of suppliers: those, who use supply chain finance manually; that is, for each invoice they decide deliberately whether and when to use supply chain finance, rather than using an automated as-early-as-possible approach. With about 25% of revenues, manual suppliers are not only a substantial part of all supply chain finance users, but also a quite instructive one. You will likely agree that suppliers using supply chain finance automatically expect substantial benefits, be it in terms of earlier cash or lower cost of finance. That is, after all, why they agree to adopt supply chain finance. But what benefits do manual suppliers expect? If it was lower cost of finance, why do they not use it automatically? Analyzing 80,000 transactions we will provide answers in our webinar on June 22.

Spoiler alert: it has something to do with balance sheets…

You can register for Supply Chain Finance Goes to College here

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