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Project Scheduling in the Financial Management of Supply Chains<excerpts>
Author:Durukan Kalyoncu, Guldane
Also, since CCC is the time passed from cash outflow to cash inflow, it measures how long the firm needs outside financing. Thus many scholars <Farris and Hutchison <2002>, Soenen <1993>, Binti Mohamad and Binti Mohd Saad <2010>> stated that the shorter CCC the better the company finances are. However, there are some complications regarding the Cash Conversion Cycle metric approach in financial management of supply chains. Even though supply chain partners put considerable efforts to have control over the stream of cash inflow by managing payment terms, these cash inflows are mostly probabilistic due to unpredictable conditions of the downstream players. On the other hand cash outflows to the upper layers of the chain is deterministic; however this depends on the cash available at the time. Figure 2 depicts the "downstream" and "upstream" supply chain partners.
UpstreamPartnersDownstream PartnersVendor ManufacturerDistributorRetailerCustomer. Supply Chain Levels As seen from the Gupta and Dutta’s study <2011>, the early payment of the debts result in the lowest cash outflow at the current period, yet it does not necessarily result in the lowest present value of the cash outflow. Thus managing cash flows in an efficient way is not an easy task taking into account the probabilistic inflows in addition to the tradeoffs between prompt payment of the debt, which reduces the amount to be paid, and late payment, which increases the interest earned on cash deposits. Those financial considerations become even more complicated for supply chains with long Lead Times. So Lead Time reduction has a huge strategic importance for successful operation of those chains. Nevertheless, managing Lead Time, which is mostly deterministic, is not an easy task either because it affects the cash flow stream in direct or indirect ways. Indirectly, Lead Time reduction affec