Supply chain needs greater liquidity

Greater liquidity in the supply chain would improve overall business performance, according to the first Supply Chain Funding Index, which has been launched by Urica, the supply chain finance specialist, in conjunction with YouGov and economist Dr John Ashcroft.

The Supply Chain Funding Index is based on an algorithm that incorporates figures on the strength of a company’s supply chain, the length of time taken to receive payments from customers, and the length of time given to pay invoices. The index is on a scale from 0 to 10 where higher is better.

The first index calculated comes out at 6.6. Construction is the worst performing sector with a score of 6.0. Wholesale, Retail and Distribution has the best performance scoring 7.1. Manufacturing and engineering performed broadly in line with the average performance.

For this first index there were 783 small business respondents from trade associations across a range of sectors.

The report highlights the fact that 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.