Supply Chain Finance: A New Means to Support the Competitiveness and Resilience of Global Value Chains

Abstract

The emergence of integrative trade and global value chains (GVCs) over the past 20 years has changed the competitive landscape in international goods and services markets. Competition in many lines of businesses, particularly in the manufacturing sector, is now taking place more at a value chain level than at a company level. This development has increased the focus of large corporations on the efficiency with which goods, information and money flow within GVCs. Factors that characterize GVCs, such as geographic dispersion and a high number of participants, make it challenging to manage these three types of flows in a coordinated fashion. Yet, if a GVC is to become or remain competitive, it is important to continuously seek opportunities to optimize all of these flows.

GVC participants have placed a lot of emphasis over the past decade on improving the “physical supply chain”, that is the way goods are designed, procured, held in inventory and delivered. They have worked hard with their logistics partners to reduce costs, accelerate delivery times, better manage risk and automate information flows. As a result, the management of materials and final goods takes place very efficiently today, allowing GVC companies (and in particular large GVC buyers that occupy a central position within GVCs - which we will refer to in this paper as “GVC anchors”) to procure with relative ease from suppliers located in multiple and distant markets.

Keywords: Supply Chain Finance, global value chains, Todd Evans, Jean-Francois Lamoureux, EDC, Support the Competitiveness, Resilience of Global Value Chains

JEL Classification: Z00