|dc.description.abstract||Since reform and opening up of China, Taiwanese enterprises have set up factories and branches in mainland China because of advantage of better geographical location, lower labor costs, and similar language and culture. Manufacturing industries are booming in China and with that the number of businesses and industries to support those are growing very fast. This supply chain infrastructure is dependent on many large international and Taiwanesefirms.
Due to competitive environment in China and the decrease demand from international market, Taiwanese enterprises are forced to accept orders with unfavorable terms and conditions such as: longer accounts receivables of payment, increased rate of inventory, etc. In addition, new government policies and regulations for production safety and environmental protection at factories, has caused production volume to decrease and lowered profit margins. According to the public statistics of the China Statistics Bureau, the balance of accounts receivable of industrial enterprises in 2017 amounts to RMB¥13.48 trillion, an increase of 8.5% compared with 2016 and we are forecasting an increasing trend in the years ahead which will cause a greater financial burden on all companies, whether they are large or small and medium sized enterprises (SMEs). Due to information asymmetry between the supply and demand sides, financing difficulties in SMEs have made profitable operations even more challenging. Therefore, this study analyzes how Enterprise Resource Planning (ERP) system management of supply chain in finance theory can be applied to effectively improve order finance management.
In this essay, we use a supplier case study to illustrate this topic by using risk management to manage and control business activities. Through the application of informatization in the supply chain, it can benefit weaker but otherwise capable firms who face financial difficulties in this changing business environment. Furthermore, it reduces the cost of the overall supply chain and further improves the overall supply chain system.
From the analysis of the case, order financing management implementation planning not only strengthened the supplier′s economic stability, it assists the banks in reducing risk through effective order supervision. In addition, it also assisted suppliers with better cash flow to avoid material shortages, and improved purchase bargaining power for the firm. In summary, effective use of ERP for financial planning enables SMEs to compete and prosper in the increasingly challenging business climate in China.||en_US|