Research On The Working Capital Management Of Dairy Industry Based On The Supply Chain

Working capital is the most liquid found in the enterprise and it is used in all aspects of the production and operation activities to make sure the smooth running of the enterprise. With the increasingly fierce market competition, working capital management is gradually becoming the focus of corporate financial management. The development of working capital management has gradually changed from individual asset management to the systematic working capital management. Working capital management has gradually combined with the supply chain management theory, the channel theory and the value chain theory. Among them, the combination of the supply chain management and working capital management makes the focus of working capital management change from "funds" to "operation" and from "finance" to "business". Working capital management based on the supply chain requires the enterprises to explore ways to optimize the supply chain structure and handle the relationships between the various enterprises in the supply chain, and thus to enhance the working capital management performance radically.The dairy industry is not only a special industry of China’s food manufacturing industry, but also a controversial industry related to residents’ daily life. The supply chain of the dairy industry is special. The application of cold chain management system in production, the importance of raw milk procurement strategy in the supply chain, the interest conflict between the dairy processing enterprises and dairy farmers and the vertically integrated of the supply chain in dairy industry have raised new requirement for its working capital management.This paper is based on the theory of supply chain management, working capital management and the combination of the two theories. It find an innovative way to introduce the business strategy to the working capital management analysis framework based on supply chain of the dairy industry and summarized characteristics of the supply chain and the current situation of working capital management in dairy industry. First it analyses the overall influence of the corporate strategy. Then it analyzes the influence of raw material procurement strategy, product strategy, distribution strategy on the working capital management in procurement, production and marketing channels combined with other factors in the supply chain. Then it selected Bright Dairy as a case, compared its working capital turnover period of the business activities in its three channels with the average of the A-share listed companies in dairy industry, and analyzed the characteristics and deficiencies of its working capital management based on the supply chain from the aspect of corporate strategy and three channels of procurement, production and marketing and made some recommendations in the end. The features of working capital management based on supply chain in Bright Dairy are mainly reflected in the following aspects:In terms of business strategy, developing a clear business strategy according to its own condition, and making some adjustments in the ways of its working capital management in all aspects of the supply chain. In terms of purchasing channels, enhancing the construction of raw milk base and using imported raw milk for the high-end products, establishing good relationships with suppliers, using the information technology to enhance procurement management. In terms of the production channel, its working capital management performance is good. Bright Dairy is particularly paying attention to the R & D investment, making the product innovation, bringing in advanced production technology, improving productivity and accelerating product turnover. In terms of marketing channels, its working capital management performance needs to improve. Bright Dairy should pay more attention to strengthening customer relationship management, speeding up the layout throughout the country on the basis of the diversified distribution channels, developing a reasonable credit policy of the receivables. Finally, it gave some advice for dairy processing enterprises in the working capital management based on the supply chain according to the case study of Bright Dairy.There are two aspects of innovation in this paper. Firstly, it carries out a study on the influence of the corporate strategy on working capital management based on the supply chain from aspects of the whole view and three channels, makes a design of the analytical framework for dairy industry. Secondly, it analyses the characteristics and business models of the supply chain in dairy industry and applies the working capital management analytical framework based on the supply chain to Bright Dairy, summaries its management measures and improvement measures and makes some recommendations for dairy processing enterprises in China.