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This textbook presents a coherent and robust structure for integrated risk management in the context of operations and finance. It explains how the operations-finance interface jointly optimizes material and financial flows under intricate risk exposures. The book covers financial flexibility, operational hedging, enterprise risk management (ERM), supply chain risk management (SCRM), integrated risk management (IRM), supply chain finance (SCF), and financial management of supply chain strategies. Both qualitative and quantitative approaches – including conceptualization, theory building, analytical modeling, and empirical research – are used to assess the value creation by integrating operations and finance.
“This book provides a comprehensive description of the interactions between finance and operations and of how managers can best make decisions in recognition of these effects.” John R. Birge, University of Chicago“Supply chain finance is an emerging area where innovations can unlock great values to complement the advances in information and physical flows of supply chain.” Hau L. Lee, Stanford University“This book provides an excellent overview of supply chain finance and its most recent advances.” Jan A. Van Mieghem, Northwestern University“This book is indispensable for advanced students as well as practitioners when looking for a pedagogical sound and scientific rigorous approach to Supply Chain Finance.” Ralf W. Seifert, IMD/EPFL“The book advances our knowledge on the interface between operations and finance and provides managerial guidelines for effective risk management in the supply chain.” Xiande Zhao, CEIBS

Inhaltsverzeichnis

Frontmatter

Chapter 1. Introduction to Operations–Finance Interface

This chapter presents concepts of OFI (operations–finance interface) and a framework of integrated risk management. First, we introduce a “closed-loop” view of resources by a cycle of material, financial, and information flows. Second, we synthesize various definitions on operations–finance interface to ensure consistency. Third, we present a risk management framework for multidimensional integration of operations–finance interfaces. Fourth, ten aspects are examined to specify the conditions under which firms should integrate operations and finance. Fifth, we examine the decision criteria for relationship analysis of operations and finance (complements or substitutes).
Lima Zhao, Arnd Huchzermeier

Chapter 2. Capital Structure and Financial Risk Management

This chapter emphasizes the link, between capital structure and financial risk management, that is central to matching the supply with demand of monetary flows. We start by investigating how capital structure theories are applied for approach choice of operations and finance (centralization or decentralization). Next, we link approach choice and relationship analysis in the context of integrated risk management. We then categorize the types of financial flexibility and describe the various financial instruments. Finally, we study the interaction between corporate investment and financial risk management.
Lima Zhao, Arnd Huchzermeier

Chapter 3. Supply Chain Risk Management

In this chapter, we introduce concepts and techniques of operational hedging in SCRM (supply chain risk management) that are used to match the supply with demand of material flows. First, we present a conceptual framework of supply chain risk management, after which we propose a classification of operational hedging based on our description of each operational strategy. We then examine representative analytical models of SCRM and give numerical examples. Finally, we discuss the empirical research on SCRM and provide some illustrative mini-cases.
Lima Zhao, Arnd Huchzermeier

Chapter 4. Integrated Risk Management in Multinational Corporations

This chapter synthesizes the conceptual framework and empirical investigation of IRM (integrated risk management). We start by comparing frameworks of IRM and ERM (enterprise risk management). Next, we discuss risk attitudes and objective formulations in quantitative optimization. Finally, we present various risk measures and classify risk management strategies according to their treatment of risk.
Lima Zhao, Arnd Huchzermeier

Chapter 5. Integrated Risk Management with Capacity Reshoring

In this chapter, we provide an analytical model of integrated risk management with capacity reshoring. First, we review the analytical models on integrated operations-finance risk management in global manufacturing. Second, we formulate a global supply chain model and propose an optimal integration of operational flexibility and financial hedging. Third, we study analytically and numerically the interactions between operations and finance. Furthermore, the main insights and suggested directions for future research are summarized.
Lima Zhao, Arnd Huchzermeier

Chapter 6. Supply Chain Finance

This chapter offers a theoretical framework for SCF (supply chain finance) and summarizes its applications. We start by proposing a framework for categorizing supply chain finance instruments and then discuss their underlying mechanisms. Next we explore the concept and empirical investigation of working capital management. Finally, we show how emerging conceptual, analytical, and empirical research has established the value—and a foundation for development—of supply chain finance.
Lima Zhao, Arnd Huchzermeier

Chapter 7. Managing Supplier Financial Risk with Pre-shipment Finance Instruments

In this chapter, we present a stylized model for managing supplier financial distress risk by two pre-shipment finance instruments: advance payment discount (APD) and buyer-backed purchase order finance (BPOF). We analyze the mechanisms of APD and BPOF, respectively. Next, we characterize the equilibria between APD and BPOF in both single-financing and dual-financing schemes. Moreover, we show numerically the effects of demand variability and the retailer’s internal capital level on the financing equilibrium and supply chain efficiency. We conclude with a brief summary and directions for future research.
Lima Zhao, Arnd Huchzermeier

Chapter 8. Research Overview of Operations-Finance Interface

In this chapter, we take a qualitative and quantitative approach to reviewing conceptual research on—as well as analytical models and empirical assessments of—the interactions between operations and finance. First, we take a quantitative approach to bibliometric analysis (Tang and Musa in Int J Prod Econ 133:25–34, 2011; Fahimnia et al. in Eur J Oper Res 247:1–15, 2015). In particular, we conduct citation and PageRank analyses to identify both frequently cited and high-impact papers. Moreover, we analyze a data set of 258 peer-reviewed journal articles (excluding conference papers) on the OFI (i.e., operations–finance interface) from 1958 to 2016. In this context, we summarize the conceptual, analytical, and empirical research of operations-finance interface. In addition, we identify eight research streams in the paper citation network and sketch the landscape of operations–finance interactions based on leading articles and recent advances in each stream. Thus we statistically characterize the maturity and potential of these streams of research before proposing directions and approaches for future explorations in this field.
Lima Zhao, Arnd Huchzermeier
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