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Journal article
Market adoption of reverse factoring
International journal of physical distribution & logistics management, v 45(3), pp 286-308
07 Apr 2015
Featured in Collection : UN Sustainable Development Goals @ Drexel
Abstract
Purpose - The purpose of this paper is to show that market dynamics can significantly influence the lifecycle and value of a supply chain finance (SCF) arrangement.
Design/methodology/approach - Based on a review of scientific and trade literature, the authors construct a model of market dynamics for reverse factoring, a specific type of SCF arrangement. The authors assume that firms' participation in a reverse factoring arrangement is determined by the direct benefits they can derive from it. The authors analyse the model by means of simulation in system dynamics.
Findings - The authors identify the following market factors as key for direct benefits: competition, interest rates, receivables volumes, and firms' working capital goals. The authors find that reverse factoring can yield direct benefits for all supply chain participants, but that these benefits are highly sensitive to market conditions.
Research limitations/implications - The model is stylized, but this study shows the need for further research on the dynamic aspects of SCF arrangements.
Practical implications - The authors show that supply chain actors should carefully consider the expected evolution of market factors when deciding on participation in a reverse factoring arrangement.
Originality/value - Existing research on SCF arrangements almost exclusively considers a static context, where market factors take fixed, known values. The authors provide the first study that links the direct benefits of SCF arrangements to dynamic, interacting market factors. The authors utilize system dynamics, a methodology well-suited to the analysis of such settings, to show that a comprehensive assessment of SCF arrangements cannot neglect the evolutionary perspective.
Metrics
Details
- Title
- Market adoption of reverse factoring
- Creators
- Umberto Dello Iacono - Eindhoven University of TechnologyMatthew Reindorp - Eindhoven University of TechnologyNico Dellaert - Eindhoven University of Technology
- Publication Details
- International journal of physical distribution & logistics management, v 45(3), pp 286-308
- Publisher
- Emerald Group Publishing
- Number of pages
- 23
- Grant note
- Dutch Institute for Advanced Logistics DINALOG
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Decision Sciences (and Management Information Systems)
- Web of Science ID
- WOS:000354647600005
- Scopus ID
- 2-s2.0-84925245441
- Other Identifier
- 991021810269304721
UN Sustainable Development Goals (SDGs)
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Data related to this publication, from InCites Benchmarking & Analytics tool:
- Web of Science research areas
- Management