Supply Chain Funding Index (SCFI) shows need for greater liquidity

The first ever Supply Chain Funding Index (SCFI) has revealed that greater liquidity in the supply chain would improve overall business performance. The SCFI was launched by supply chain finance specialist Urica in conjunction with YouGov as well as Dr John Ashcroft, an economist.

The SCFI is generated from an algorithm that brings together figures on the strength opf a company’s supply chain as well as the length of time that it takes to receive payments from customers, and finally the length of time it takes to pay invoices. The SCFI index is on a scale of 0-10 with the best ratings at 10.

The first SCFI index is at 6.6 for the UK. The construction sector is the worst performing with a score of 6.0, while wholesale, retail and distribution is the best performer, scoring 7.1. Another sector of note is manufacturing and engineering that performed roughly average on the scale.

783 small businesses were used for the first SCFI. Trade associations supplied the contacts from a range of sectors.

Greater liquidity in the supply chain would improve overall business performance. Greater confidence in cash flow and liquidity levels, would result in higher levels of investment, more employment, and higher growth rates, said Ashcroft.

The report also found that business productivity would improve as a result of improvements in supply chain liquidity in construction, 31 per cent of firms said they would be able to recruit more staff, grow more quickly (28 per cent) and invest in plant and machinery (25 per cent). In manufacturing, the priority was to spend more on higher levels of investment 33 per cent, enabling (21 per cent) to grow more quickly. In the services sector growth and recruitment were most likely to be the beneficiaries.
 
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