Issue: Sep 2006


Innovations in supply chain finance technology and financing helping companies gain cost advantages



by Charles Faulkner

Citing a new Supply Chain Finance Benchmark Report released by the Aberdeen Group, InStream Financial President Tom Cross echoes findings that the next cost battleground for companies lies in the finance portion of the supply chain.

"Supply chain finance is the next wave in cost improvement," said Cross. "There's money to be saved by companies that use supply chain finance techniques and leverage emerging technology platforms to improve cash flow and access to working capital."

The Aberdeen Group study was based on research into the practices of 110 manufacturing, distribution, and retail companies. The study found that fully 69 percent of companies surveyed are investigating how to use new supply chain finance (SCF) techniques for their supply chains, but just 13 percent are actively using SCF techniques to improve cash flow and access to capital. The SCF leaders were found to create a lower cost and more financially stable end- to-end supply chain, resulting in strategic advantage.

"Finance, procurement, and supply chain professionals need to educate themselves about the new innovations occurring in trade financing and enabling technology," said Beth Enslow, SVP of Enterprise Research for Aberdeen Group. "Early supply chain finance adopters are gaining an end-to-end cost advantage while building a lower-risk supply chain."

Cross added, "Supply chain finance is a refreshing departure from the traditional supply chain cost-shifting practice where someone always got squeezed from the top down. Enlightened companies are now finding that supply chain finance can create cost advantages and benefit everyone in the supply chain."

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