The management of a supply chain is a much more complex activity than that traditionally associated with the purchasing management profile of a large company.
A supply chain manager cannot limit himself to selecting a supplier, negotiating prices and payment terms, but must oversee the logistical aspects of the supply, coordinating with any other activities necessary to ensure that the acquisition of the good or service fits seamlessly into the company's operational planning. He or she must also prepare any alternative plans that may need to be activated in the event of problems in the execution of the supply or delivery of the service.
The supply chain manager must therefore, in the end, manage the wide range of risks that may affect the supplier's performance; risks that may arise from his own difficulties or from more or less predictable external impediments (disruptions in logistics, shortages of raw materials or components, financial problems, ...). From a risk management perspective, financial instruments supporting supply chain management essentially serve to reduce the risks arising from potential financial shocks.
This 'reading' of supply chain finance is grounded in the observation that short-term liquidity management is the main factor in corporate crises, much more so than the inability to produce positive earnings results.
The management of working capital (inventory, receivables and short-term payables) is the fundamental test for business continuity, and the tools used for supply chain finance (factoring, confirming, dynamic discounting and others) are all focused on supporting the liquidity of companies, anticipating the transformation of trade receivables into cash.
Within the family of market solutions for supply chain finance, Polaris stands out, the digital platform created by the TXT Group to go beyond traditional solutions, combining the functions of system integration between the various players (client company, supplier companies and banks or other financial intermediaries) with an original marketplace contractual architecture, which favours the extension of these tools even to smaller supplier companies, which are then the most financially vulnerable.
Polaris reduces the financial risk associated with the supplier, through a mechanism that provides it with a source of liquidity supply independent of its creditworthiness, but also reduces the risk for the investor ensuring the liquidity of the supply chain finance programme. In fact, the supplier credit negotiation operated on Polaris is structured in such a way as to exclude any risk associated with the performance of the underlying commercial relationship, as a result of the active collaboration of the purchasing customer, and also to significantly reduce the risk of possible revocation of credit assignments realised on the platform, thanks to the original contractual structuring that supports the operation of Polaris.
Polaris is also an instrument that ensures stability over time for the acquiring company's supply chain finance programmes because it separates the operation of the programme from the financial support provided by individual banking partners. The latter may change over time, but the structure of the operation is not affected by any changes in the perimeter of the financial partners, just as any increase in the size of the operation does not impact its structure.
Polaris succeeds in providing stability, scalability, portability and efficiency to the supply chain finance programmes of large companies and is therefore, in itself, a factor in reducing the systemic risk that can impact supply chain management.