Channel Financing: The Transformational Paradigm in Supply Chain Management

Channel financing (CF) has emerged as a transformational paradigm in supply chain management. It is an effective tool for managing the interdependencies between the physical and the financial supply chains. It is also a win-win proposition for all the supply chain partners. In this paper, 6 dimensions of CF have been identified. Organizational study has been carried out in 60 Indian companies to find out the challenges faced by them in CF and determine desirable solutions. Perceptual study has been carried out with 300 CF experts to identify and examine the desirable characteristics of CF information technology (IT) platform. It comes out that visibility of entire supply chain financial information; channel collaborations; and leveraging external expertise for financial risk sharing are the cornerstone of value creation. Furthermore, integrated CF IT platform provides better security for financial information exchange as well as better data consistency for process integration over singular optimization.