Strategic Integration of Finance and Logistics: Article Analysis

This report analyzes an article discussing the crucial relationship between finance and logistics, particularly within the context of supply chain management. The article emphasizes the importance of integrating financial considerations into logistics operations to reduce costs and improve efficiency. It explores how the Just-In-Time (JIT) system and the use of technology, such as Enterprise Resource Planning (ERP) and Customer Relationship Management (CRM) systems, can streamline processes and provide better control over inventory. The analysis highlights the significance of financial tools like budgeting, forecasting, and performance management, along with Activity-Based Costing (ABC) to make informed strategic decisions. The report also focuses on the role of vendor management systems in meeting customer demands and the importance of financial and logistics tools in strategic planning and cost reduction.

IT, Strategic and Financial Logistics
Article- Finance and Logistics: Across the Great Divide
About the article
The article is about the relationship of finance and logistics to make supply chain
smoother. The article focused on the ignorance of financial aspects in logistics by the
company while focusing on flow of product and information. This article is trying to
highlight the operational importance to rise company’s stock price with increased free
cash flow.
Assessment of article and key findings
 It is the JIT or Just In Time system that 3PL are preferring now a days to save cost
on logistics. It depends on the vendor’s ability to provide inventory on time to control
inventory expense with JIT.
 If logistics gives importance to finance, it will look after how much company has
spent on transportation and warehousing, where cost cutting is possible etc.
 On account of use of IT in integration of finance and logistics, it says lowering cost
and streamlining supply chain is possible with self-service billing and automatic
payment via internet.
 Information sharing in Vendor Management System to meet the demand of
customer within the timeframe.
 To do “What if” analysis of supply chain, a translation of financial data into
operational data is possible through Activity based costing and performance
management.
Feedback and Opinions
The use of ERP and CRM in operation will help to check on 80% of total logistics spend
on network of factories and distribution centres to save the rest 20% of cost for strategic
planning. Apart from the basic needs of financial measures like general ledger,
accounts payable and receivable and fixed assets, now onwards the companies will

need four more tools which are- Budgeting and forecasting, project accounting, ABC
and performance management. This will help in doing Economic Value analysis and
Logistics Value analysis to have better supply chain.
How is related to topic?
This article talked about all the 3 areas relevance in contemporary logistics. At first, it
tried to establish the relationship of finance with the supply chain network. Later on how
with use of IT tools both can be integrated so that cost of logistics will come down. It
introduced the use of financial and IT tools for carrying strategic planning for logistics.
References
Bowman, R. J. (2000). Finance and Logistics: Across the Great Divide. Supply chain brain.