Supply chain management as a whole has evolved over the period of time, especially in the recent decades. The entire supply chain management can be divided into two parts such as Operational and Financial. By analyzing their progress, operational activities have progressed leaps and bounds but the financial flows’ status is the same as the world had decades ago. The major challenges as discussed earlier in financial flow management are slow processing of information, costly processes, not so reliable and predictable cash flows generated, lack of optimality in credit decisions etc. All of the above mentioned hurdles keeps the processing costs and WC needs high while keeping revenues on lower side.
To minimize these effects on the performance
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There are certain areas where still there is enough space for the improvements and processes can be more optimized. Few of the gaps that are identified while analyzing are discussed below:
First, significantly reduced Days Sales Outstanding (DSO) can generate exemplified cash flow improvements in the financial supply chain management.
Days Sales Outstanding (DSO) = (Accounts Receivable/Total Credit Sales) * Number of Days
DSO, in general terms, means the average number of days it takes for company to collect revenue after the sale has been made. The sensitivity analysis given in the figure against the reduction in DSO is depicted in the above figure which very well describes the impact of DSO on the annual P&L benefits of the
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So these are few of the gaps in which the financial supply chain management has scope to improve and strengthen the company’s overall supply chain management. Implementing these in Indian companies will take its time but it will certainly help the financial flows and informational flows of the company become faster and more predictable.
CONCLUSION
The international best practices and its level of acceptance and implementation in India is an issue to be resolved. In a nutshell, the figure summarizes about financial supply chain management challenges and the way forward for companies in India as well as at global level.
Supply chain management is critical to the company and very important part of it to keep the company healthy is free flow of finances in the company i.e. Financial Supply Chain Management. The ongoing practices in the companies clearly depicts a brighter future in the field of completely automated system, starting from order to replenishment to payments. Also the organizations should look out for the high potential opportunities for:
1) Reducing the processing costs
2) Reconciliation of invoice and accelerating payment process
3) Reducing the Days of Sales Outstanding (DSO)
4) Centralizing procurement process in order to have greater
Secondly, the company’s payables turnover ratio shows that the company’s payable’s turnover decreased from 201-2015 but improved in 2016 more than the value recorded in 2014. Thirdly, company’s working capital turnover ratio improved from 2014 to 2015 and similarly in 2015-2016. Information in Appendix B indicates that the payables turnover ratios, which is the activity, calculated as the cost of products olds over the payables declined in 2014-2015. However, in 2015-2016 the payables turnover ratio increased more than the level recorded in
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Esteemed Heads Aid at Crucial Corners Around the World Vijay Kunapareddy Fairleigh Dickinson University Author Note This paper was prepared for writing assignment in EPS, EPS 5109 81/5119, taught by Professor John Suh Abstract Who are activists?
Numbers of Days' Sales in Inventory didn't increase nor decrease. The company has no average inventory. Ratio of Fixed Assets to Long-Term Liabilities decrease by -39.9%. This change is unfavorable. This decrease indicates the company have put themselves in twice as much as long-term debt.
This ensures quality of product and “smooth” running of the
We worked out and the net present values of each option and thereafter picked the option that has lower present value of cash outflows. Our NPV calculations for both options were backed with sensitivity scenario analysis of both the buy and leas options. Sensitivity Scenario Analysis Sensitivity analysis scenario is used to show how changes in one or more variables below and above the used variables would affect the intended results. I our sensitivity analysis scenario for Dragon Air lease vs buy decision we varied the cost of capital between 1% and 5% as the main driver in the case. The tables below show the results.
Also, the indicators that have been used in this are limited in number. By increasing the number of indicators the accuracy of the study can be increased dramatically. When the number of indicators used for analysis is lower not only will a lot of data not get considered but also the accuracy that one requires for the study will not be achieved.
Q. 2. Recent development in Technology has enabled huge global organizations to avail information easily in their premises for smooth functioning of various departments within an organization. Much of a company's success comes down to its Supply Chain Management and logistics. The development of Information Systems in SCM helps in cost reductions, customer satisfaction and productivity.