Viktor Elliot PhD is assistant professor at the School of Business, Economics and Law at the University of Gothenburg, Sweden, and has recently joined the board of the Supply Chain Finance Community. SCF Briefing invited him to share his preliminary thoughts.
I entered into the field of supply chain finance approximately two years ago, after finishing my PhD on Performance Management and Regulation in Banks.
The advantage of being fairly new to a field is the ability to bring a fresh perspective. Before doing so, however, one must first familiarise oneself with the field, understand the basic principles and build relationships and networks. The field of SCF is great that way: not only are there dedicated people working with SCF that allow a newcomer to get an easy access to the subject, but SCF is also an industry buzzword meaning that there is an immediate interest when the topic is brought to the fore.
But – and there are always a few buts – disentangling SCF from an academic perspective is easier said than done. While there exist numerous examples of practical solutions that can be fitted into the definition of SCF it is not always clear how the solutions are distinct from other well-known concepts.
Reverse factoring is an excellent example. Analytically it is quite challenging to distinguish reverse factoring from traditional bank products such as regular factoring, credit commitments, or even plain vanilla asset-based lending.
The question thus becomes: is SCF more than the actual products and solutions themselves? Based on what I have learnt about the field so far, my current answer is yes – SCF is about reducing information asymmetry across supply chains. This implies using technical solutions to create visibility across the flows of information, goods and services, as well as money. Better visibility means reducing information asymmetry and allowing for more efficient supply chains.
This brings me to the second but: who gains from these more efficient supply chains? In the best of worlds, society gains and it is not uncommon to describe SCF as a win-win or even a win-win-win solution in an era of cut-throat competition and liquidity-constrained firms. There are definitely examples of SCF solutions designed to strengthen the weakest link in the supply chain (such as the Betaalme.nu initiative), but in many instances SCF is also used by large firm to extend payment terms or by banks to attract new customers and arbitrage on stricter regulatory requirements.
I believe that a pivotal contribution that the SCF Community can make is to identify and promote inclusive solutions and this is constantly being done. However, what is not so common is analysis where we disclose solutions that exclude or even hurt the very links we set out to strengthen.
I believe that a pivotal contribution that the SCF Community can make is to identify and promote inclusive solutions and this is constantly being done. However, what is not so common is analysis where we disclose solutions that exclude or even hurt the very links we set out to strengthen. This is equally important but perhaps less appealing and probably more difficult.
So what has such analysis to do with the perspective that I hope to bring to my new community? Research is only as strong as its theories and, paraphrasing Professor Karl Weick, theory is not the endgame but theorising is.
The essence of this claim means that the process of building theory resides in a community of people interested in understanding, explaining and developing a field. I hope to take an active part in this dialogue and contribute to the theorisation of a field that is exploding with new practical solutions but lack the precise tools to analyse the pros and cons of these solutions.