Trends In Supply Chain Management

Supply chain management as a whole has evolved over the period of time, especially in the recent decades. The entire supply chain management can be divided into two parts such as Operational and Financial. By analyzing their progress, operational activities have progressed leaps and bounds but the financial flows’ status is the same as the world had decades ago. The major challenges as discussed earlier in financial flow management are slow processing of information, costly processes, not so reliable and predictable cash flows generated, lack of optimality in credit decisions etc. All of the above mentioned hurdles keeps the processing costs and WC needs high while keeping revenues on lower side.

To minimize these effects on the performance

There are certain areas where still there is enough space for the improvements and processes can be more optimized. Few of the gaps that are identified while analyzing are discussed below:

First, significantly reduced Days Sales Outstanding (DSO) can generate exemplified cash flow improvements in the financial supply chain management.

Days Sales Outstanding (DSO) = (Accounts Receivable/Total Credit Sales) * Number of Days

DSO, in general terms, means the average number of days it takes for company to collect revenue after the sale has been made. The sensitivity analysis given in the figure against the reduction in DSO is depicted in the above figure which very well describes the impact of DSO on the annual P&L benefits of the

So these are few of the gaps in which the financial supply chain management has scope to improve and strengthen the company’s overall supply chain management. Implementing these in Indian companies will take its time but it will certainly help the financial flows and informational flows of the company become faster and more predictable.

CONCLUSION

The international best practices and its level of acceptance and implementation in India is an issue to be resolved. In a nutshell, the figure summarizes about financial supply chain management challenges and the way forward for companies in India as well as at global level.

Supply chain management is critical to the company and very important part of it to keep the company healthy is free flow of finances in the company i.e. Financial Supply Chain Management. The ongoing practices in the companies clearly depicts a brighter future in the field of completely automated system, starting from order to replenishment to payments. Also the organizations should look out for the high potential opportunities for:

1) Reducing the processing costs

2) Reconciliation of invoice and accelerating payment process

3) Reducing the Days of Sales Outstanding (DSO)

4) Centralizing procurement process in order to have greater