The Power of Supply Chain Finance

Supply chain finance is an established route to accessing credit, new opportunities and growth in the the supply chain management field.

Milan, 15th October 2015

The Problem

Today's global economy demands sophisticated supply chains that can cope with the flexibility and pace of the market. This translates into a highly optimized and integrated flow of goods, information and finance- and a struggle to prevent the fragmentation of these resources.

In the wake of the financial crisis, many organisations reacted with diminished liquidity and aggressive cash management strategies that helped protect their financial assets. As a consequence, this often translated into extended payment terms for suppliers, which would eventually disrupt the supply chain, in exchange for providing cash resources that could be reinvested in growth.

The Solution

Supply Chain Finance (SCF) provides organisations with the possibility to control the working capital of a supply chain, optimize its financial performance and put their specialized knowledge of supply chain relations to best use. SCF employs a combination of models, solutions and services to achieve this.

Large buyers typically control and steer supply chain improvement processes. “We see several examples of large multinationals using SCF models such as reverse factoring for this purpose” says Stefano Ronchi, Scientific Director of the Osservatorio Supply Chain Finance and Professor at MIP Politecnico di Milano “An early example of successful reverse factoring implementation is that of Unilever, which has freed up 2 billion USD in overall working capital. The first movers in SCF, located mainly in Europe and the United States, are experimenting with Supply Chain Finance models on a global scale, reaching to second, or even third, tier suppliers.”

The power of such models is very clear:

• It creates stability in the supply chain, letting suppliers survive times of financial difficulties.
• It allows the supply chain to grow, providing financial resources at the right moment and the right time.
• It ensures the loyalty of the best in class.

To meet the demand for Supply Chain Finance professionals, MIP Politecnico di Milano offers the Global Executive Master in Operations & Supply Chain (GEMOS). This is an international program for professionals with a passion for helping manufacturing and service companies address the demands of an evolving supply chain management environment. 

MIP's international faculty and relationship with the Osservatori on Supply Chain Finance make the educational offer in line with the latest trends, among which Supply Chain Finance, allowing their deeper understanding and practical development.