Financial supply chain management (FSCM) is a set of software tools and processes designed to enhance an organization’s product flow, maximizing profitability and minimizing expenses. To accomplish this objective, FSCM takes advantage of principles that have proven effective in supply chain management (SCM) for decades.
Traditionally, SCM has comprised the oversight of resources as they make their way from supplier to manufacturer to wholesaler to retailer to consumer. The SCM process breaks down into three main flows: the product flow, the information flow and the finances flow.
In FSCM, the finances flow is expanded. The FSCM process recognizes and analyzes interrelated events that impact working capital, payment terms, pricing, and inventory. In addition, FSCM takes into account the needs and behaviors of employees and departments in the organization. For example, sales trends might be influenced by employee bonuses, scheduling delays, department-head changes, or unexpected resignations.
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