Inventory financing in supply chains: a logistics service provider-approach
Journal
International Journal of Physical Distribution & Logistics Management
ISSN
0960-0035
ISSN-Digital
1758-664X
Type
journal article
Date Issued
2009-12-01
Author(s)
Hofmann, Erik
Abstract
Purpose - Against the background of the scanty knowledge about inventory financing in supply chains, the goal of this article rests in a conceptual explanation of the relevance and the implications of alternative inventory financing by a logistics service provider (LSP).
Design/methodology/approach - First, based on a literature review, inventory-related conflicts of interest between actors in the supply chain are discussed. Second, a concept of inventory financing through an LSP is developed. Third, the concept introduced is illustrated by means of a numerical example.
Findings - The results of an illustrative example from Switzerland and a rough revenue and expenditure calculation highlight the effects that inventory financing through a logistics service provider might have for LSP. For the LSP profit depends mainly on the value and amount of the goods to be financed.
Practical implications - The results of this paper can be applied to logistics service providers. The model developed can accordingly be used to calculate the additional effects of inventory financing service.
Originality/value - This research offers initial insights into the importance of inventory financing from an LSP perspective. As activities in this field may offer additional profits and differentiation options, decision-makers at logistics service providers might want to estimate the potential resting in this expansion of their service catalogue.
Design/methodology/approach - First, based on a literature review, inventory-related conflicts of interest between actors in the supply chain are discussed. Second, a concept of inventory financing through an LSP is developed. Third, the concept introduced is illustrated by means of a numerical example.
Findings - The results of an illustrative example from Switzerland and a rough revenue and expenditure calculation highlight the effects that inventory financing through a logistics service provider might have for LSP. For the LSP profit depends mainly on the value and amount of the goods to be financed.
Practical implications - The results of this paper can be applied to logistics service providers. The model developed can accordingly be used to calculate the additional effects of inventory financing service.
Originality/value - This research offers initial insights into the importance of inventory financing from an LSP perspective. As activities in this field may offer additional profits and differentiation options, decision-makers at logistics service providers might want to estimate the potential resting in this expansion of their service catalogue.
Language
English
Keywords
Supply chain management
Third party logistics
Retail
Cost of capital
Interest rate
Cash-to-cash cycle
Value-added service
Decision model
HSG Classification
contribution to scientific community
Refereed
Yes
Publisher
Emerald
Publisher place
Bingley UK
Volume
39
Number
9
Start page
716
End page
740
Pages
25
Subject(s)
Eprints ID
58582