The Impact of Trade Credits in Nanostore Distribution
Name
Stimpson_Mogollon_project_TheImpactOfTradeCreditsInNanostoreDistribution.pdf
Description
Supply Chain Management capstone research project
Size
724.26 KB
Format
Adobe PDF
Checksum (MD5)
427a869269458eb4b03f6cbe701df24b
Author(s)
Mogollon Linares, Marcos
Stimpson, Blake
Date Issued
June 16, 2021
Abstract
In developing countries, small mom-and-pop grocery stores called nanostores are one of the main grocery market channels. Cash constraints are a severe issue that affects these small businesses, preventing them from buying enough inventory to meet client demand, and forcing them to reject orders from suppliers due to a lack of cash to pay the supplier on delivery. These cash constraints also impose challenges for the suppliers of these stores, by extending the duration of individual visits to nanostores as a result of cash handling, increasing product rejections and reducing the service level consumers experience. Our research explores the effects of relieving these cash constraints via trade credits, using historical data from the sponsor company and a variety of econometric techniques. Our analysis indicates that a supplier trade credit policy, where nanostores are granted short-term deferral for product payments, can significantly boost revenue and generate logistics cost savings. As a result, the return on investment of this policy is positive as early as the first month of implementation. In addition to the clear benefits for the business, this policy can help the traditional nanostore grocery channel remain competitive in developing countries.
Subjects
Supply Chain Strategy
Sustainability
Urban Logistics
Terms of Use
CC0 1.0 Universal
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