The Oil Spill Strain on Financial Supply Chain

The Oil Spill Strain on Financial Supply Chain

Posted by Pete Loughlin in Dynamic Discounting, Financial Supply Chain Management, Purchase to Pay, The Rest 09 May 2010

Purchase to Pay, P2P and Dynamic DiscountingIn a thought provoking and incisive article by Tracy Bramlet, she describes in some detail the adverse effects on the financial supply chain following the disastrous explosion that sunk the Deepwater Horizon rig, killed 11 workers that initiated the current spill that is pumping 200,000 gallons of oil a day into the Gulf of Mexico.

As she writes, it will be the regional firms, small businesses and individuals who make their living from the Gulf Coast’s seafood industry who will bear the brunt .  The fisherman, shrimpers and their families. These are the ones who will find it necessary to extend DPOs while trying to shorten DSOs in a bid to help keep their heads above water.  And with far too many of their suppliers and/or buyers in the same situation, relief from within their own supply chain is unlikely.  So these will be the ones who will struggle to get or pay a premium for credit.  These, unfortunately, are the ones for whom the crisis on the Gulf Coast may not just strain their physical supply chain but might just cause a full break in their financial one as well.

Today, we see enough business and economic reasons to see the sense in adopting 21st century financial supply chain methods like dynamic discounting. And now we are increasingly being made aware of the impact of natural, as well as man made, environmental disasters on our financial supply chains. In order to adapt, we need agility. Old ways of working just won’t do and with the technology and techniques at out disposal in 2010, we have  fewer and fewer excuses to blame acts of God on our ability to manage business.

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