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Top1. Introduction
In order to survive, companies today must face a changing world: changes in businesses, technologies, markets, customer consumption trends, asset acquisition and financing methods, etc. The globalization of trade, the shortening of system life cycles, the increase in customer requirements and the growth of product-services are all forcing companies to review their competitive strategy and rethink the organization of their supply chain. The concept of the supply chain refers to the flow of materials, information, payments, and services from raw material suppliers through manufacturers and warehouses to end consumers. It includes the organizations and processes that create value and deliver products, information and services to customers. Managing such a supply chain consists of designing, organizing, planning and coordinating, within a network of actors, all the activities of the supply chain.
In general, a physical flow necessarily induces a financial flow. However, the delivery or receipt of a product or service does not necessarily result in the immediate receipt or disbursement of money, which has a significant impact on the company's cash flow. In contrast, in the case of an upstream cash flow, the amount to be paid to an upstream partner will depend on the payment terms, which may include late penalties and/or discounts for early payments. These differences make managing upstream cash flows a crucial and distinct research topic.
But this payment process has been disrupted by the current outbreak of coronavirus disease 2019 (COVID-19) that the world is currently experiencing; involving more than 221 countries, more than 4 million deaths and an estimated 225 million people infected and continuing (COVID Live Update, 2021), the pandemic looms over us. With some businesses temporarily shutting down and many slowing down, the consequences of the pandemic are even more severe for the global economy than those following the great financial crisis of 2007-2008.
Many studies on supply chain optimization have mainly focused on the coordination of physical and financial elements (Shen, 2005). The authors, Buzacott and Zhang (2004), provide an interesting framework and quantify available cash as a function of assets and liabilities. In addition, they demonstrate the need for joint reflection on production and financing decisions. Huang and Hsu (2008) and Chung and Liao (2009) characterize the optimal order quantity of an economical order quantity model with late payments. Wuttke et al. (2013) present a model that correlates financial and operational flows under capital constraints.
To present how our paper advances the addressed field, we make a comparison in Table 1 with the paper done by authors Gupta and Dutta (2011) who studied the money flow problem in a supply chain where one of these partners receives money from downstream partners and pays these upstream partners. The purpose of this study was to schedule all payments taking into account the time limit for receiving the money. In the case of late payment, a penalty must be paid.
Table 1. Comparisons with Gupta and Dutta’s article
| Limitations of Gupta and Dutta’s work | Extensions of the present paper |
| They don’t consider the bank in their model. While the bank plays a very important role in financing working capital | To give flexibility to the model, we will add the bank as the third actor to finance the company. |
| They used a heuristic solving method which is a specialized solving method for a problem. It does not guarantee the quality of the point obtained. | We will employ a meta heuristic method, which is a generic heuristic that is likely to provide a sufficiently good solution to an optimization problem. |
| Their model does not take into consideration the current economic climate. | Our model will be the first to propose a solution to this financial crisis (COVID 19). |