Supply Chain Management and its Benefits in Food Industry

Effective supply chain management is essential for the food industry because of the fact that the food gets spoiled. The business should take care that the right products reaches the right customer at the right price and at the right time in right condition and this can be done by the managing the supply chain effectively. This improves the customer satisfaction.

The supply chain process involves the two way flow of goods or services and the information between the manufacturers and the customers. Lot of companies in the food industry Nestle, Unilever, Magnolia etc., are getting the feed back from the customers and they utilize the suggestions given by the customers in the development of the products. Globalization has its impact on the supply and demand in the food industry, globalization of the supply chain means transporting food across the world to be processed and back again to the country of origin to be sold can make environmental and commercial sense. Ineffective and incompetent supply chain management can lead to the bankruptcy of the business.

The technological changes in the supply chain management improves the communication, and brings the significant changes in the relationship between the partners in the supply chain, enhances the productivity and the profits of the businesses in the food industry.

Financial Supply Chain Management

The banks are working hard to increase levels of automation and integrate financial transactions with the physical supply chain to help their corporate clients. Financial Supply Chain Management (FSCM) consists of services that combine the data and transactions which are the results of trade and payments activity. These services provides the parties like banks, corporates and technology vendors in the supply chain with all the information they need to effectively complete their business transactions. For every physical movement of goods between supplier and buyer, there exists a financial flow traveling in the opposite direction.

Supply chain services refers to the providing services in order to increase the efficiency of supply chain. Supply chain finance (SCF) provides the appropriate financing facilities at the relevant points in the physical supply chain. This helps in orderly making of payments and receipts with out damaging the relationships between the parties involved in the supply chain.

The benefits provided by the financial supply chain suppliers are, it enhances the relationship value with dealers and cash flow forecasting, it helps in effective management of the cash conversion cycle and unlock the working capital.

The benefits to the banks includes greater fee and fund based income, cross selling opportunities, enhancing the relationship value with suppliers and dealers.

Easy accessibility to low cost working capital, dynamic discounts, effective management of days payable outstanding, enhanced cash flow forecasting and relationship with customers are benefits provided by the FSCM to the dealers.
According to SWIFT's Conn, the biggest challenge to the development of FSCM as a profitable business line for banks is the number of parties involved and standardization will lead to greater adoption and maturation of financial supply chain management.