Optimizing working capital and payment system through integrating financial and physical supply chain and the role of banks

Abstract

It is an unquestionable fact that supply chain has existed since different manufacturing organization have brought their product and services to the customers. The hypothesis of financial supply chain management is relatively a contemporary thinking in literature. The importance of financial supply chain management is gaining attention towards the scholars but only few researches have been directed towards a structural identification of financial supply chain management. Global financial crises played a major role to increase a steady interest in financial supply chain management over the past decades. Most of the organizations has witnessed the advantage and benefit of collaborative relations within and beyond their own organization. Many organizations have identified that, without the process of financial supply chain they can no longer compete in the current business environment. Link among organizations supply chain strategies and their general business plans are the key to achieve a successful financial supply chain management practice and to achieve the comparative advantage. This paper aims to demonstrate the concept of optimization of working capital with integration of physical and financial supply chain management and a review of theoretical research. The main goal of this paper is to provide a theoretical literature review of working capital optimization. Initially, this paper discusses about the main elements constituting the term physical and financial supply chain management and decode the meaning of the study. Moreover, organizations, suppliers and financing institutions collaboration in physical and financial supply chain management has given an emphasis. Afterwards, a standard review from different theoretical literature is provided to verify importance and significance of this study in contemporary management theory and provided constructive conclusion. Finally, practical recommendations are proposed to get the best out of the integration of physical and financial supply chain management.