Working Capital Management Model Study Based On Supplier Relationships

Since the1990s,working capital management researches has showed significantgrowth,and entered an era of change.Affected by the business and financialintegration,the expanded business concept,the changes in concept of financialmanagement and the increased focus on the factors strategically affecting workingcapital management performance，the working capital management research shift tothe expanded business concept.,and its focus will turns to stakeholder perspective.Thesupplier is one of the most important outside stakeholders.With the development ofeconomic globalization and the growing competition in the supply chain,supplierrelationship gradually turns into the factor strategically affecting working capitalmanagement performance.It has important theoretical and practical significance toapply working capital management study from the supplier relationshipsperspective.With the use of theoretical analysis and case analysis method,this articlestudies the impact of supplier relationship on working capital management from theaspects of business process, suppliers’ commercial credit, and supply chain finance,and optimizes the working capital management model.From the perspective of the business process, this article theoretically analyzesthe impact of supplier relationships on corporate procurement cycle, businessprocess reengineering,it also analyzes the impact of sustained and stable supplierrelationship on procurement channel working capital management. It implements acase study on Lenovo Group Vendor Inventory Management (VIM) model,and putsforward suggestions for improvement:1) Strengthen information share with suppliersand improve the business processes;2) Focus on supply chain business processreengineering together with suppliers;3)Allocate procurement resources following theprinciple of importance and cost-effective.Select the appropriate supplierrelationships management strategy;4) Focus on working capital management increased risk brought by supply chain business process reengineering together withsuppliers.At the same time, summed up the specific programs.This article theoretically analyzes the impact of the suppliers’ credit onworking capital management,indicates that commercial credit affect the redistributionof funds between enterprises and suppliers,mitigates or aggravate contradictions ofthe unequal funds distribution between the two. It implements a case study onSuning.and puts forward suggestions for improvement:1) Use the commercial creditto improve working capital management performance with the consider of theinterests of suppliers, and expand the scale of operation;2) the use of commercialcredit should consider the interests of both supply and demand, and the sustainabledevelopment;3)Concern about the increased financial risk brought by the use ofcommercial credit.At the same time, summed up the specific programs.In the supply chain environment the use of supply chain finance can ease thecontradiction of uneven funds distribution between suppliers and enterprises. Thispaper studies the impact of supply chain finance on working capital management intwo model.Based on the theoretical analysis and case analysis,the article suggests thatcompanies should establish stable relationship with suppliers and promote thefinancing credit delivery to SMEs from the core enterprise and focus on coordinatingthe relationship between banks, third-party logistics companies and the supply chaincompanies in order to encourage enterprises to take advantage of financial products toimprove working capital management performance.At the same time, summed upthe specific programs.Overall, supplier relationships can improve working capital managementperformance through business processes, commercial credit, and supply chainfinance.In the same time,it should also focus on the financial risk identificationassessment and response caused by the innovative supplier cooperation model.