Who needs supply chain automation? The thought of increased automation has long been brushed under the carpet because it does not contribute to company growth or productivity. SUPPLY CHAKRA – Boring supply chain! Supply chains used to be this interesting but then suddenly, the dreaded pandemic arrived. Suddenly, all realized how much value is entailed in the efficient working of those relationships and how much better business world can be when all of those factors are considered. However, supply chain automation is an important tool that enhances business productivity and profitability and makes operations smoother and more streamlined.
In supply chain, efficiency means reaching the customer first and making a good impression on him. It implies getting things right the first time, every time. This calls for building solid relationships with both the buyer and the supplier. But all this is only possible if the supplier and the buyer know each other well enough and have established a solid rapport. And this happens primarily through trade finance, the lifeline of every supply chain transaction and a vital ingredient in smooth operations.
Trade finance plays a critical role as it facilitates smooth communication and facilitates early payments. It facilitates timely delivery and cost savings. It also helps organizations in meeting their financial obligations and accruals. When an organization has a good trade finance system in place, they can expect to have lower inventory turnover, greater profit margins and more customers offering better terms. And all these can be achieved through adoption of best practices like flexible pricing, cost savings and prompt delivery.
However, what if trade finance alone cannot deliver? What if the organization needs additional resources that can pull it out of its financial hole? What if the buyer is reluctant to make a payment? What if the organization has no experience supplying the product? Well, never fear for there are alternative supply chain finance options that you can opt for to infuse additional funding into your operations.
Cost Effective Options: One of the major advantages of using trade finance is the option of using early payment. In this case, the buyer pays for a certain volume at the very beginning. The suppliers save money as they do not have to pay for the entire amount at one go. They can pay in small amounts at regular intervals over a specified period. And hence, they are able to sustain their profitability and their share price.
Another advantage of using sc-tf is the provider-provider relationship that is promoted. The buyer pays for the goods but the suppliers maintain the quality and the reputation of the product in the long run. Thus, the buyers have the assurance of getting their money’s worth. Needless to add, when the buyer pays with CFOS, he is also pro-actively participating in corporate treasurers’ long term vision of the company.