Integration of Finance and Supply Chain : Emerging Frontier in Growing Economies (A Case Study of Exporting Companies)

Abstract: Financing is necessary for investments in new production processes, in new production equipment, in new innovative products, and for expansion in new markets. Firms operating under cash constraints may not be able to order or produce optimally. Especially for fast-growing firms in emerging countries, money acts as a catalyst if potential demand is high but financial constraints leave them no choice but to order less. In this setting, implications for supply chain can be detrimental where lack of financial resources at one level can plague the performance of the whole supply chain, at least temporarily until restored. In this study for supply chain finance we focused on supply side of the exporting firms and especially length of Accounts Receivables (A/R) and Cash Conversion Cycle (CCC) because it’s directly related to the supply chain used by the exporting companies and this can squeeze or prolong the time of A/R. It is obvious that the period of the receivables will be squeezed and the working capital will be required for a shorter period of time and it can save cost of interest. As the period of CCC shortened exporting firms can get benefits from that. We took one exporting firm each from China and India as a case study to know how these firms use logistics for exporting because logistics is the largest single expenditure in the cost of products sold and is a major critical success facto impacting on productivity, profitability, shareholder volume and competitive advantage. It is important to note the key role and impact of logistics in the exporting companies, on the sustainability, competitiveness and profitability as well as in the economy of the country.