Abstract:
BACKGROUND : Global sourcing has impacted inventory levels, lead times and the availability of
working capital, affecting the standard financial flow of a supply chain. Poorly managing the
link between the financial and physical supply chains could therefore lead to unnecessarily
high inventory investments or to a short supply of inventory, affecting cash flow, working
capital, sales and, subsequently, a firm’s profitability.
OBJECTIVES : The aim of this generic qualitative study was to explore how firms manage their
financial supply chain alongside their physical supply chain.
METHOD : Data were collected from 12 semi-structured interviews with senior managers across
six small- to medium-sized enterprise (SME) importing firms in various industries.
RESULTS : The research finds that the buyer is the driver of both upstream and downstream
financial supply chain management (FSCM) as SME importers in Gauteng are proactively
managing their financial alongside their physical supply chains. Through the continuous
evaluation of sourcing strategies, exchange rate risk management strategies and inventory
investment management strategies, firms can align their physical and financial supply chains.
CONCLUSION : This study highlights the lead time and disruption risks and costs of global
sourcing and identifies FSCM tools that can be used to alleviate the financial burden associated
with long lead times.
