On Supply Chain Performance and Efficiency under Purchase Order Financing together with Reverse Factoring Financing

Abstract

Nowadays, the small and medium-sized enterprises (SMEs) are frequently confronted with the difficulty of financing hard and financing expensive. This paper investigates a financing strategy called the purchase order financing together with reverse factoring financing strategy, which is able to fulfill the financing demands of SMEs at different stages. Numerical experiments are conducted in order to compare the supply chain performance and efficiency between this financing strategy and the purchase order financing models in decentralized and centralized decision-making situations, which concludes that models considering the reverse factoring financing, i.e., purchase order financing together with reverse factoring financing two-stage decision-making model and the global decision-making model, have better supply chain efficiency than the benchmark model that only considers the purchase order financing, and the choice between two candidates depends on the standard deviations and the retailer prices.