Supply Chain Finance Techniques Seen Yielding Significant Savings

Boston — December 11, 2006 — In managing their global supply chains, most companies are still leaving significant money on the table because they fail to take into account the supply chain finance opportunities that could bring millions in savings, according to a new Aberdeen Group report.

In the report, "New Strategies for Financial Supply Chain Optimization: Rethinking Financial Practices with Your Suppliers to Maximize Bottom Line Performance," Aberdeen writes that applying supply chain finance innovations can bring the next wave of cost savings into the global supply chain, especially if a company sources from emerging markets under a low-cost country sourcing program.

According to Aberdeen, supply chain finance helps a buying organization to:

  • Optimize its working capital;

  • Extend payment terms;

  • Reduce product unit costs by taking advantage of arbitrage opportunities due to the higher cost of capital in emerging markets;

  • Reduce supply base risk by enabling faster and more predictable payments to emerging market suppliers.