Trade credit linkages along the supply chain: evidence for the Italian textile sector

We examine the trade credit linkages among firms within a supply chain to reckon the effect of such linkages on the propagation of liquidity shocks from downstream to upstream firms. We choose a sample appropriate for this task, consisting of a large data set of Italian firms from the textile industry, a well known example of a comprehensive manufacturing cluster featuring a large number of small and specialized firms at each level of the supply chain. The results of the analysis indicate that the level of trade credit that firms provide to their suppliers is positively related to the level of trade credit granted to their clients: when the level of trade credit granted to clients divided by sales goes up by 1, the level of trade credit provided to suppliers divided by cost-of goods-sold goes up by an amount that varies between 0,22 and 0,52. Since all firms along the chain are linked by trade credit relationships, an increase in the level of trade credit granted by wholesalers generates a liquidity cascade throughout the chain. We designate the overall increase in the level of trade credit among all firms in the chain as a result of a unitary impulse in the level of trade credit granted by wholesalers as the multiplier effect of trade credit for the industry chain. We estimate such multiplier to vary between 1.28 and 2.04. We also investigate the effect of final demand on the level of trade credit sourced by firms at various levels of the chain and, in particular, whether such effect is amplified for firms further up in the chain as a result of liquidity propagation via trade credit linkages. We uncover evidence of such amplification when the links of liquidity transmission along the chain are individually modeled and estimated. An unitary increase in wholesalers’ sales is found to produce an effect on trade payables among firms at the top of the chain (i.e., Preparers and Spinners) that is more than twice as big as the corresponding effect among firms at the bottom of the chain (i.e., Wholesalers).

Learning and practising supply chain management strategies from a business simulation game: a comprehensive supply chain simulation

An Internet based supply chain simulation game (ISCS) is introduced and demonstrated in this paper. Different from other games and extended from the Beer Game, a comprehensive set of supply chain (SC) management strategies can be tested in the game, and these strategies can be evaluated and appraised based on the built-in Management Information System (MIS). The key functionalities of ISCS are designed to increase players SC awareness, facilitate understanding on various SC strategies and challenges, foster collaboration between partners, and improve problem solving skills. It is concluded that an ISCS can be used as an efficient and effective teaching tool as well as a research tool in operations research and management science. Problems and obstacles have been observed while engaging in the SC business scenario game. The actions proposed and implemented to solve these problems have resulted in improved SC performance.

Condition assessment of a 63-year old reinforced concrete structure exposed to the North Sea

This paper describes the condition of a reinforced concrete balustrade consisting of some 1000 individual beam elements all exposed similarly to the hostile marine environment of the North Sea at Arbroath, Scotland since 1943. A comparison is made of the condition of the original construction with the condition of repairs carried out in 1968 and in 1993. It is shown that the 1943 construction shows very little corrosion-induced cracking and little rust staining even though it does not appear to be of high construction quality. Only a very low percentage of the balustrade beams have been replaced. In contrast the beam installed in 1968 and later in 1993 show very considerable and large concrete cracks directly attributable to the corrosion of the longitudinal reinforcement, even though the concrete is of a higher quality and density. A detailed condition survey and statistics of crack sizes are presented in the paper. It is found that the higher corrosion resistance of the 1943 concrete is generally consistent with the concrete electrical resistivity measurements but the degree of corrosion of the reinforcing bars is inconsistent with chloride penetration measurements. The results are compared with the very few observations available in the literature for ageing concrete structures in marine environments. The results cast doubt on the conventional wisdom that chloride content at the reinforcement correlates well with reinforcement corrosion.