Supply Chain Management Best Practices, 3rd Edition

CHAPTER 15The Financial Supply Chain: Cash Is King

Flashpoints

• One of the most important things a company can do is to improve the management of its cash flow.
• Zero-based budgeting shifts a supply chain's strategic focus from savings to profitability.
• Rolling forecasts allow companies to shift their budgeting plans more quickly based on more current information.
• Supply chain finance helps companies free up cash while lengthening supplier payment terms.

What exactly is a supply chain? No, we're not reverting back to basic definitions this late in the book, but most of what we've looked at to this point has focused on physical (or in some cases, digital) supply chains, specifically involving the movement of goods or services from the point of origin to the point of consumption. “From dirt to dust” is a commonly used cliché to describe end-to-end supply chains, implying a product's lifecycle extends from the moment its raw materials are first processed to the moment its usefulness ends.¹ But it's not quite accurate to suggest that a company's most crucial supply chain decisions are always centered on improving the inbound and outbound flow of components and products; in many cases the most important thing a company can do is to improve how it manages its cash flow. Let's take a look at some of the best practices companies use to manage their financial supply chain.

A Convergence of Talent

A company's financial supply chain management framework should start with the ...