Decision Of SMEs Financing In The Supply Chain

With the rapid development of economy and the increasingly dynamic business operation environment, many enterprises, especially the small and medium sized enterprises (SMEs), mostly facing shortage of funds. However, many companies are difficult to obtain financing opportunities due to its size, assets, credit and other reasons. Supply chain management can help different companies to form strategic alliances, so, it is becoming a common form of strategic management. In this situation, how to deal with the problem of shortage of funds through the supply chain management has become a major problem faced by the industry and academia.The financing channels the supply chain enterprises to obtain can be divided into the supply chain of external financing and internal financing. The SMEs can get capital from bank is an important way from outside supply chain. But the fact it is hard to acquire the capital from bank. The reason is little assets and the low credit. The supply chain finance may is the way to solve the problem. The core enterprise’s guarantee can reduce the threshold for financing SME retailer. So, The SMEs obtain loan by the whole supply chain credit in this case. The SMEs can get financing from the core enterprise which is well funded. In order to improve the competitiveness, the core enterprise providing trade credit, that is delay payment for the SMEs. It can provide a theoretical reference for the operation of enterprises in practice. It analysis the core vendor how to make decision under the limit of achieving the best benefit for providing buy back guarantee or the delay payment. The bank decides the size of loan under the condition of considering risk. The retailer decides to finance and what is the best operation decision, in the case of gaining financing.First, the paper gives the credit line of bank financing model by the whole supply chain under the buy back guarantee by the core vendor. The buy back guarantee and credit line imply the bank considering the bankruptcy risk, and this makes the study have more important realistic meaning. Through the model analysis of the optimal decision of each participant, including the retailer, the vendor, the bank. The paper analyzes the influence of buy back price and credit line on decision making. In the internal supply chain financing, comparing the delay payment financing and bring in the buy-back contract with delay payment. Base on that, finding the buy-back contract can share the risk of financing and also encourage the retailer to order more quantity. It also realizes the supply chain best revenue by introducing buy back contracts under delay payment. Then, for a comparative analysis of the decision problem and two kinds of financing mode, it is concluded that for the whole supply chain, internal financing is better than external financing. Finally, a numerical example verifies the conclusion of the thesis.