QUIZ Flashcards
(5 cards)
Implied demand uncertainty is…
the resulting uncertainty for the supply chain given the portion of the demand the supply chain must handle and attributes the customer desires
Explain the trade dilemma and how a letter of credit can resolve it?
Trade dilemma is trusting a company to do as they say. L/C is initiated by the import and then issued by the importers bank to the exporter and their bank. This will make the bank the intermediary, taking on the risk of exporters not complying. When the exporter have fulfilled the L/C then the importer doesn’t have to worry about the risk from the exporter not being trustworthy.
What is the main difference between arm’s length finances and relationship finance mechanism?
Arm’s length finances - hard facts, use leasing, factoring,, purchase order financing.
Relathionship finance - contrats are based on soft information, advancepayment, loan guarntees.
How can warehouse receipt finance add value to the supply chain without linking buyer and supplier (SMEs- small medium enterprises) directly?
Bank offers SMEs the option to use warehouse receipts as collateral for a loan of certain portion of contract value. Although it did not link buyer and suppliers (SMEs) directly, it ensured that two links of the value chain buyer and SME) had access to the funds essential to continue operations.
