| Author: | Huang, Chaorui |
| Title: | Optimizing the performance of operations-finance interface by implementing supply chain finance schemes |
| Advisors: | Chung, Nick (ISE) Chan, Felix (ISE) |
| Degree: | Ph.D. |
| Year: | 2023 |
| Subject: | Business logistics -- Finance Hong Kong Polytechnic University -- Dissertations |
| Department: | Department of Industrial and Systems Engineering |
| Pages: | xiii, 106 pages : color illustrations |
| Language: | English |
| Abstract: | Via identifying three significant problems contained in the interface of operations and finance in the supply chains, this research attempts to solve these problems and seeks to optimize supply chain cash flows by implementing supply chain finance (SCF) schemes with different real-life settings. The problems we identified, are largely ignored in the previous literature due to the business environment changing. Therefore, we are motivated to rigorously examine these areas and innovatively raise the appropriate solutions. Specifically, SCF is an innovative solution dedicated to optimizing financial flows in supply chains. Considering the ever-evolving nature of SCF, we first investigate the novel achievements that have been reported in the current literature. By conducting a systematic literature review (SLR), we build up a novel theoretical foundation that helps us to effectively work on the following problems. The first problem is related to how to smooth the cash flow in a payment-delayed supply chain. Substantial evidence has shown that payment delays generate negative effects on suppliers' working capital levels. The adoption of emerging solutions such as SCF is considered an innovative approach to overcome this issue. We establish a multi-cycle model and identify the conditions under which extended payments will impact on the supply chain's collaborative cash to cash (CC2C) cycle and the shareholder-value added (SVA). Finally, the numerical analysis not only confirms the major findings but also provides additional insights that can assist practitioners in mitigating the adverse effects caused by payment delays. The second problem is an extension of the first one by considering the time value of cash accumulated in the payment delay. Some third-party logistics (3PL) companies are now taking on a new financing role to help achieve advance payment for suppliers. By establishing a Stackelberg game model, we find that when players face a homogeneous time value of cash, the advance-payment scheme brings no profit growth for all players. In addition, we identify that the merit of the 3PL's new role in terms of improving profits only exists for the 3PL itself when players face a heterogeneous time value of cash. The third problem is another extension of the first one by locating the problem in the Chinese electric vehicle (EV) industry. In the current Chinese EV industry, two financing schemes have been adopted commonly to enable EV-makers to obtain financing for purchase if needed, i.e., bank loan financing (BLF) and trade credit financing (TCF). By examining the EV-maker's moral hazard, we show that, when there is no information asymmetry between the battery supplier (BS) and the bank, each player's performance under BLF and TCF is completely different. In addition, if the EV-maker's asset level is zero, the BS can efficiently signal her private information of the EV-maker's efficiency via the contract under the asymmetric information case, making BLF a better scheme. Nevertheless, when the EV-maker's asset level falls into particular regions, the BS's information advantage over the bank makes TCF a better option when working with an efficient EV-maker and the latter's alternative financing cost satisfies certain conditions. |
| Rights: | All rights reserved |
| Access: | open access |
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