First, the study contributes to a deeper understanding of the SCF ecosystem phenomenon. What would be the future implications for the SCF ecosystem after the COVID-19 crisis? We set out to understand how the SCF ecosystem has responded to the uncertainties and challenges caused by the COVID-19 crisis. Our intent was to learn about what this SCF ecosystem looks like, which groups of actors are to be included and what roles these actors play in the SCF ecosystem. The group of actors of the SCF community has, according to our observation, revealed clear signs of an ecosystem. SCF offers benefits for both buyers and suppliers (Rogers et al., 2020).

Cross-case analysis: from data structures to a model

As a consequence new tasks at the intersection of finance and logistics/supply chain management open new business areas for banks as well as financial and logistics service providers. As the COVID-19 crisis imposes financial stress worldwide, managing cash and working capital (WC) through supply chain financing (SCF) became critical in surviving the situation (Basquill, 2020b). The interest in supply chain finance rose after the financial crisis when the bank loans declined considerably, as the need for better management and the optimisation of working capital became obvious.

They vary from self-centeredness on the one hand (trying to unilaterally extend the payment terms to the suppliers) to a more collaborative view on the other hand (trying to support the suppliers financially). These non-generic complementarities in the SCF ecosystem were necessary to ensure the flow of financial resources from drying up. Beyond a descriptive and conceptual presentation of the SCF ecosystem (Bals, 2019; Templar et al., 2020), our study shows evidence regarding its specifics. Overall, the COVID-19 crisis proved to be a watershed moment for the SCF ecosystem.

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Supply Chain Finance is defined as the use of financing and risk mitigation practices and techniques for optimizing the management of working capital and liquidity invested in supply chain processes. The complex dynamics present within the business service ecosystem underscore the impact SCF practices have on suppliers. These collaborations would enable buyers and suppliers to have logistics services combined with financial services. While fintechs saw an increase in demand for their services, banks first experienced reduced revenue in the cash transaction business.

Supply Chain Finance

• For instance, a few clients of a fintech called Greensill collapsed due to the COVID-19 crisis.
• One major trend is the increasing scope and popularity of fintech services.
• This NFT can be passed along the supply chain – from the buyer to the supplier and further to the sub-supplier and his suppliers.
• The bridge-financing they offered would facilitate exports through short-term financing until the liquidity returns from private sectors.
• For instance, as countries used lockdowns to suppress the virus’s spread, fiscal support measures were introduced to help businesses stay afloat.

The regulatory and governmental agency actors were trying to both control and help the financial SCA. Actors in the physical SC expanded their business field into finance. These financial players were actively involved in the management of personal protective equipment (PPE).

Buyers often reduced the size of the orders, in fact, when their suppliers had already produced them. On the other hand, they closely monitored suppliers for continuity of supply. On the one hand, some of them hid from suppliers pleading for payments.

Supply chain management based on uncertainty theory: a bibliometric analysis and future prospects

We have identified key A Contribution to the SCF Literature actors within the SCF ecosystem and interventions at different levels articulated in our within-case analyses. Our data covers the early months of this rather abrupt onset of the crisis with the lockdown measures, border closures, supply disruptions, demand shortfalls, and the like. They deliberately facilitated financing for suppliers exporting critical medical goods. For example, the EXIM bank was expanded to help buyers and suppliers with their trade transactions. We recorded how governments improved existing instruments to help buyers and suppliers.

This study attempts to delineate and define the not so obvious but diverse trading efficiencies, value enhancement enjoyed by the users of SCF and the enormous improvement in working capital accessibility and maximization afforded by SCF in the entire supply chain process. It has been widely noted and acclaimed as an essential aspect of supply chain management and trade finance. During economic downturns and times of tight credit proactively managing financials across the supply chain may be the only way some suppliers remain afloat. Practical implications -Coordinating financial management across the supply chain is a potential tool to align and improve the financial performance of collaborating firms. Scenarios are offered that illuminate potential supply chain improvements gained by collaborative management of cash-to-cash cycles and sharing WACC with trading partners.

Table 1.

For instance, they would generally use cash from the buyer to conduct dynamic discounting. A US-based fintech was cited by the Australian government for using AI to compute how much it can “squeeze” suppliers. There have been cases where the FSC actors played both ends against the middle. Mybank, a Chinese online bank part of Ant Group, rolled out a plan to help SMEs in rural China, offering financing through AI technologies that can be accessed from mobile phones. Alibaba offered on their online marketplace an innovative solution through which small buyers could also enjoy late payments (i.e., 60-day payment terms) that would have been reserved for large buyers with leverage.

Supply chain financing which runs parallel to the flow of goods and information, is common to all financing networks, and therefore it is important to understand its dimensions. In order to gather value from SCF solutions, competences on both Finance and Supply Chain Management are essential. Moreover, the funding limits of the SCF schemes themselves strongly affect the relevance of such strategies; strict limits will increase the relevance of having ‘alternative’ schemes available to onboard suppliers. Based on the analytical formulation of the benefits of three relevant SCF schemes (Reverse Factoring, Inventory Financing and Dynamic Discounting), the paper formalises a model that investigates the benefits that a buyer can achieve by onboarding suppliers onto these three schemes. Our findings also help companies re-examine their decision to adopt SCF. We make theoretical contributions to SCF literature by revealing the roles of different efficient and social factors influencing SCF adoption.

2. Patterns of activities

The actors in the SCF ecosystem are complementary value co-creators with different roles. In this way, the providers in the SCF ecosystem create mutual value among themselves in the sense of interlinked business models. The SCF ecosystem, at the center of the study, has some special features compared to other types of ecosystems. The SCF community is an example within the broader category of business ecosystems. They could kickstart an SCF framework and support commercial banks in developing new SCF solutions (World Bank, 2021).

• SCF solutions are usually supported by ICTs (Information and Communication Technologies), and can be based on early payments, trade process visibility, supply chain collaboration and enhanced information sharing with financial institutions.
• This can be seen as an attempt by supplier companies to stabilize their own financial situation through proactive approaches and technology use.
• In the case of reverse factoring, the buyers use their credit strength to ensure that suppliers have access to low-cost WC.
• The core of this financing chain is to create an optimization plan that can simultaneously control all supply chain financial processes.
• We made a few attempts to contact informants directly, but the tense COVID-19 situation did not allow this in the middle of the crisis.

Further, deep-tier financing is about funding suppliers beyond tier 1 by leveraging a downstream buyer’s credit rating. Another form of funding is inventory financing, enabling a company to have inventory held by a third party, removing it from the buying company’s balance sheet, yet ensuring adequate supply and risk management. Similarly, the combinations of different services seem to provide a win-win-win for the two service providers independently and for their customers.

For instance, fintechs offered new solutions to improve transparency and efficiency in business-to-business credit card transactions. To help suppliers, fintechs stepped in to support suppliers connect with buyers and funders. At the center of the model are buyers and suppliers with LSPs supporting their activities. The regulatory and governmental agency actors were also found to have become much more involved in the crisis.

How did the key actors in the SCF ecosystem behave during the COVID-19 crisis? From a buyer perspective, SCF provides an opportunity to finance suppliers on favorable terms increasing their business resilience. In addition to the movement of goods and services, we must consider the flow of finances. An inductive qualitative case study approach is applied to develop the grounded theoretical model that illustrates the SCF ecosystem’s behaviors as it responded to the crisis. A multitude of organizations have struggled to manage their cash flow and working capital to survive the crisis.

About this paper

The Federal Reserve in the US updated the term asset-backed securities loan facility (TALF) program from the economic crisis about ten years ago. For example, the Bank of England used quantitative easing to help stimulate lending by banks. S&P Global was particularly concerned whether larger buying companies were intentionally hiding problems by engaging in SCF, which could make it difficult to assess how much debt the buying company was carrying. Discouraging certain practices was also part of the equation as well.

The overreaching efforts of responses target buyers’ and suppliers’ financial rehabilitation via SCF practices. The buyers and suppliers together engage in the co-production of services. For instance, different corporate buyers adopted different practices toward their suppliers during the crisis. Extending the literature, we first identified the relevant actors in the SCF community and how they form a business service ecosystem. Our study confirms how SCF practices and solutions provide organizations and their SCs with liquidity. Blockchain technology can be used in the context of SCF ecosystems to improve inventory management and thus liquidity requirements in the supply chain.