Explain what is meant by the statement, “Align your financial supply chain with your trade supply chain

Supply chain has been considered as one of the most important aspects in a business today and the it is considered as a system which involve the organization, activities, information, etc. related in the process of delivering a product or a service from the supplier to the consumer or client. The relation between supply chain and finance is inversely proportion because if there is an issue in the supply chain then the finance gets affected and the organization may incur financial loss. If we look at the statement it states that we need to align our financial supply chain with the trade supply chain which is actually true, as mentioned that they are related.

If we look at the supply chain perspective we will see that excess inventory is considered as buffer and also a cushion if the supply and demand expectation changes. But if we look at it from the financial perspective we will observe that excess inventory refers to high cost to the organization, working capital getting reduced and also a negative impact on the profit margin of the organization. Therefore the organizations need to Align their financial supply chain with their trade supply chain.

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