A research study co-authored by Prof. Mike LAI Kee-hung, Co-Director of Research Centre for Environmental, Social, and Governance Advancement (RCESGA), Associate Dean (Academic Support) of Faculty of Business, Chair Professor and Interim Head of Department of Logistics and Maritime Studies, examined the impact of supply chain finance on supply chain resilience from three perspectives: (1) the accuracy of supply-demand matching; (2) the stability of supply-demand relationships; and (3) the quality of supply. The findings indicated that supply chain finance can effectively enhance performance in these three areas, thereby strengthening enterprises’ ability to cope with frequent—albeit relatively minor—disruptions such as demand fluctuations and localised logistics delays in day-to-day operations.
Furthermore, the study found that higher levels of supply chain finance foster stronger collaboration between upstream and downstream participants in the logistics industry, leading to more stable, closer supply-demand relationships. By extending the creditworthiness of core enterprises to small and medium-sized enterprises (SMEs), supply chain finance helps them overcome financing challenges and improve cash flow. Meanwhile, banks can leverage data such as orders, shipments, and payments to continuously monitor contract performance, reduce moral hazard and default risk, and enhance the predictability of collaboration.
The study recommended that enterprises incorporate supply chain finance into their long-term cooperation frameworks, rather than viewing it merely as a short-term financial instrument, and design dedicated financing solutions for core suppliers and customers to secure stronger collaborative commitments, such as supply priority and joint contingency arrangements.
Prof. Lai suggests that enterprises can promote supply chain finance in three steps: First, establish a robust data foundation by integrating Enterprise Resource Planning (ERP), logistics, and financial systems to ensure that order, inventory, and payment information can be securely accessed and verified by banks and fintech partners. Second, select an appropriate supply chain finance model. Export-oriented enterprises may focus on developing accounts receivable factoring and order financing, while those with a high proportion of procurement from the Chinese Mainland may consider building platforms in partnership with core suppliers and Mainland banks. Finally, link supply chain finance to resilience KPIs. In addition to monitoring financing costs, enterprises should also continuously track indicators such as the supply stability rate, fluctuations in transaction cycle, days of inventory for key materials, and innovation output, to provide a concrete assessment of the effectiveness of financial tools.
Online coverage:
Wen Wei Po - https://polyu.me/3ZAXhBf
| Research Units | Research Centre for Environmental, Social, and Governance Advancement |
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