infonet-economy

Purpose - Against the background of the scanty knowledge about inventory financing in supply chains, the goal of this article rests in a conceptual explanation of the relevance and the implications of alternative inventory financing by a logistics service provider (LSP).

Design/methodology/approach - First, based on a literature review, inventory-related conflicts of interest between actors in the supply chain are discussed. Second, a concept of inventory financing through an LSP is developed. Third, the concept introduced is illustrated by means of a numerical example.

Findings - The results of an illustrative example from Switzerland and a rough revenue and expenditure calculation highlight the effects that inventory financing through a logistics service provider might have for LSP. For the LSP profit depends mainly on the value and amount of the goods to be financed.

Practical implications - The results of this paper can be applied to logistics service providers. The model developed can accordingly be used to calculate the additional effects of inventory financing service.

Originality/value - This research offers initial insights into the importance of inventory financing from an LSP perspective. As activities in this field may offer additional profits and differentiation options, decision-makers at logistics service providers might want to estimate the potential resting in this expansion of their service catalogue.