People may not automatically think of supply chain financing as a tool for compressing lead times, but it can play an important role. For example, merchandisers buying apparel for next year's fashion typically struggle with long lead times, which force them into a one-time buy-making their best guess at forecasting which styles and colors will be hot next year before they have sold even a single garment within that season. How valuable would it be if those lead times were shortened to the point where the buyer could place a smaller order up front, see what was selling well, and then place orders only for what is actually being consumed? Wouldn't that be sweet?

Moving from that one-time-buy to a short-lifecycle product may require a number of coordinated approaches, such as designing with common materials. It also may require dramatically shortening the lead times, and supply chain financing can help with that. It is quite common for suppliers in the supply chain to have limited access to capital to purchase the raw materials they need ahead of time. This slows downs the whole process as they wait until they have the funds. Receivables financing can help them get those funds earlier. Even better is getting in-transit or pre-shipment financing based on firm orders received or some other pre-shipment milestone. When suppliers have access to these types of financing, they don't have to wait until they have been paid before buying more raw materials, hence compressing lead times (provided they have a firm order in hand). But suppliers do not always have access to this type of financing at affordable rates.

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