Building a Working Capital Optimization Model for Vendor and Distributor Relationship Management
DOI:
https://doi.org/10.32628/IJSRCEKeywords:
Working Capital Optimization, dor Relationship Management, Distributor Relationship Management, Supply Chain Finance, Cash Conversion Cycle, Multi-Objective OptimizationAbstract
This paper develops a comprehensive working capital optimization model tailored for effective vendor and distributor relationship management. Recognizing the critical interplay between liquidity management and supply chain partnerships, the model integrates key financial variables—including inventory levels, payment terms, order frequency, and credit arrangements—with relational factors such as supplier reliability and distributor payment behavior. Using a multi-objective optimization framework supported by deterministic and stochastic analyses, the model balances minimizing working capital requirements with sustaining healthy business relationships. Empirical validation through a case study and simulations demonstrates significant improvements in cash conversion cycles and working capital efficiency, while sensitivity analysis highlights critical parameters influencing financial outcomes. The findings emphasize the value of a holistic approach that aligns financial optimization with relationship management, offering actionable insights for practitioners and a foundation for future research incorporating real-time analytics and behavioral metrics. This integrated framework advances both theoretical and practical understanding of supply chain finance and partnership dynamics in contemporary business environments.
Downloads
References
R. Ismail, "Working capital–An effective business management tool," International Journal of Humanities and Social science invention, vol. 6, no. 3, pp. 12-23, 2017.
S. O. Uremadu, B.-C. Egbide, and P. E. Enyi, "Working capital management, liquidity and corporate profitability among quoted firms in Nigeria: Evidence from the productive sector," International journal of academic research in accounting, finance and management sciences, vol. 2, no. 1, pp. 80-97, 2012.
M. Vuorikari, "Optimizing working capital management from processes perspective," 2012.
Z. Khalid, "Optimizing Back Office Operations," Best Practices to Maximize Profitability. Recuperado de: https://books. google. com. pe/books, 2010.
M. Boström, A. M. Jönsson, S. Lockie, A. P. Mol, and P. Oosterveer, "Sustainable and responsible supply chain governance: challenges and opportunities," Journal of Cleaner Production, vol. 107, pp. 1-7, 2015.
C. Reuter, K. Foerstl, E. Hartmann, and C. Blome, "Sustainable global supplier management: the role of dynamic capabilities in achieving competitive advantage," Journal of supply chain management, vol. 46, no. 2, pp. 45-63, 2010.
J. W. Kiarie, "The Influence of supplier relationship management practices on operational performance of large manufacturing organizations in Kenya," Strathmore University, 2017.
D. M. Lambert and M. A. Schwieterman, "Supplier relationship management as a macro business process," Supply chain management: an international journal, vol. 17, no. 3, pp. 337-352, 2012.
A. Gunasekaran, N. Subramanian, and S. Rahman, "Supply chain resilience: role of complexities and strategies," vol. 53, ed: Taylor & Francis, 2015, pp. 6809-6819.
D. Miocevic and B. Crnjak-Karanovic, "The mediating role of key supplier relationship management practices on supply chain orientation—The organizational buying effectiveness link," Industrial Marketing Management, vol. 41, no. 1, pp. 115-124, 2012.
J. D. Collins, W. J. Worthington, P. M. Reyes, and M. Romero, "Knowledge management, supply chain technologies, and firm performance," Management Research Review, vol. 33, no. 10, pp. 947-960, 2010.
A. Ambasht, "Real-Time Data Integration and Analytics: Empowering Data-Driven Decision Making," International Journal of Computer Trends and Technology, vol. 71, no. 7, pp. 8-14, 2023.
D. Yazdanfar and P. Öhman, "The impact of cash conversion cycle on firm profitability: An empirical study based on Swedish data," International Journal of Managerial Finance, vol. 10, no. 4, pp. 442-452, 2014.
H. Zaher and G. M. Illescas, "The Cash Conversion Cycle: A Systematic Literature Review," Economic and Social Development: Book of Proceedings, pp. 18-35, 2022.
A. Ashouri, S. S. Fux, M. J. Benz, and L. Guzzella, "Optimal design and operation of building services using mixed-integer linear programming techniques," Energy, vol. 59, pp. 365-376, 2013.
P. Tang, "Minimization of transportation costs using linear programming," Theoretical and Natural Science, vol. 25, pp. 226-231, 2023.
B. Naresho, "Impact of Supply Chain Collaboration on the Tanzanian Agricultural Supply Chain Performance: Roles of Partners’ Commitment and Transaction Cost Management," CQUniversity, 2023.
M. Ketokivi and J. T. Mahoney, "Transaction cost economics as a theory of supply chain efficiency," Production and Operations Management, vol. 29, no. 4, pp. 1011-1031, 2020.
R. M. Garfamy, "Supply management: A transaction cost economics framework," South East European Journal of Economics and Business (Online), vol. 7, no. 2, p. 139, 2012.
O. Williamson and T. Ghani, "Transaction cost economics and its uses in marketing," Journal of the Academy of Marketing Science, vol. 40, pp. 74-85, 2012.
F. I. Babalola, O. Oriji, G. O. Oladayo, O. Abitoye, and C. Daraojimba, "Integrating ethics and professionalism in accounting education for secondary school students," International Journal of Management & Entrepreneurship Research, vol. 5, no. 12, pp. 863-878, 2023.
O. O. Elumilade, I. A. Ogundeji, G. Ozoemenam, H. Omokhoa, and B. M. Omowole, "The role of data analytics in strengthening financial risk assessment and strategic decision-making," Iconic Research and Engineering Journals, vol. 6, no. 10, 2023.
S. Fanijo, U. Hanson, T. Akindahunsi, I. Abijo, and T. B. Dawotola, "Artificial intelligence-powered analysis of medical images for early detection of neurodegenerative diseases," World Journal of Advanced Research and Reviews, vol. 19, no. 2, pp. 1578-1587, 2023.
S. C. Friday, M. N. Ameyaw, and T. O. Jejeniwa, "Reviewing the Effectiveness of Corporate Governance Codes on Mitigating Financial Scandals," 2023.
S. C. Friday, C. I. Lawal, D. C. Ayodeji, and A. Sobowale, "Systematic Review of Blockchain Applications in Public Financial Management and International Aid Accountability," 2023.
D. C. Ayodeji, I. Oyeyipo, V. Attipoe, N. J. Isibor, and B. A. Mayienga, "Analyzing the challenges and opportunities of integrating cryptocurrencies into regulated financial markets," International Journal of Multidisciplinary Research and Growth Evaluation, vol. 4, no. 06, pp. 1190-1196, 2023.
O. R. Aziza, N. S. Uzougbo, and M. C. Ugwu, "Legal frameworks and the development of host communities in oil and gas regions: Balancing economic benefits and social equity," World Journal of Advanced Research and Reviews, vol. 19, no. 3, pp. 1582-1594, 2023.
T. T. Adewale, T. D. Olorunyomi, and T. N. Odonkor, "Big data-driven financial analysis: A new paradigm for strategic insights and decision-making," 2023.
F. E. ADIKWU, C. O. OZOBU, O. ODUJOBI, F. O. ONYEKWE, and E. O. NWULU, "Advances in EHS Compliance: A Conceptual Model for Standardizing Health, Safety, and Hygiene Programs Across Multinational Corporations," 2023.
E. O. Alonge, N. L. Eyo-Udo, B. C. Ubanadu, A. I. Daraojimba, E. D. Balogun, and K. O. Ogunsola, "Leveraging business intelligence for competitive advantage in the energy market: A conceptual framework," Energy Market Dynamics Journal, vol. 8, no. 2, pp. 22-36, 2023.
E. O. Alonge, N. L. Eyo-Udo, B. C. Ubanadu, A. I. Daraojimba, E. D. Balogun, and K. O. Ogunsola, "Real-time data analytics for enhancing supply chain efficiency," Journal of Supply Chain Management and Analytics, vol. 10, no. 1, pp. 49-60, 2023.
A. Abisoye, "Developing a Conceptual Framework for AI-Driven Curriculum Adaptation to Align with Emerging STEM Industry Demands," 2023.
I. O. Adekuajo, C. A. Udeh, A. A. Abdul, K. C. Ihemereze, O. C. Nnabugwu, and C. Daraojimba, "Crisis marketing in the FMCG sector: A review of strategies Nigerian brands employed during the covid-19 pandemic," International Journal of Management & Entrepreneurship Research, vol. 5, no. 12, pp. 952-977, 2023.
B. I. Adekunle, E. C. Chukwuma-Eke, E. D. Balogun, and K. O. Ogunsola, "Developing a digital operations dashboard for real-time financial compliance monitoring in multinational corporations," International Journal of Scientific Research in Computer Science, Engineering and Information Technology, vol. 9, no. 3, pp. 728-746, 2023.
J. P. Onoja and O. A. Ajala, "Innovative telecommunications strategies for bridging digital inequities: A framework for empowering underserved communities," GSC Advanced Research and Reviews, vol. 13, no. 01, pp. 210-217, 2022.
C. O. Ozobu, F. E. Adikwu, O. Odujobi, F. O. Onyekwe, and E. O. Nwulu, "A conceptual model for reducing occupational exposure risks in high-risk manufacturing and petrochemical industries through industrial hygiene practices," International Journal of Social Science Exceptional Research, vol. 1, no. 1, pp. 26-37, 2022.
M. D. Sikirat, "Comprehension Analysis of Traffic Signs by Drivers on Urban Roads in Ilorin, Kwara State," Kwara State University (Nigeria), 2022.
A. Abisoye, "AI Literacy in STEM Education: Policy Strategies for Preparing the Future Workforce," 2023.
H. Ninalowo, A. Oluyemi, O. Olowoyeye, and A. Ajayi, "A Case Series of Budd–Chiari Syndrome in Nigerian Patients: Diagnosis, Associations, Management, and Outcomes," Journal of Gastrointestinal and Abdominal Radiology, vol. 5, no. 01, pp. 058-062, 2022.
O. Ogunwole, E. C. Onukwulu, N. J. Sam-Bulya, M. O. Joel, and G. O. Achumie, "Optimizing automated pipelines for realtime data processing in digital media and e-commerce," International Journal of Multidisciplinary Research and Growth Evaluation, vol. 3, no. 1, pp. 112-120, 2022.
S. C. Friday, C. I. Lawal, D. C. Ayodeji, and A. Sobowale, "Strategic Model for Building Institutional Capacity in Financial Compliance and Internal Controls Across Fragile Economies," 2022.
O. Ilori, C. I. Lawal, S. C. Friday, N. J. Isibor, and E. C. Chukwuma-Eke, "Cybersecurity Auditing in the Digital Age: A Review of Methodologies and Regulatory Implications," 2022.
L. S. KOMI, E. C. CHIANUMBA, A. YEBOAH, D. O. FORKUO, and A. Y. MUSTAPHA, "A Conceptual Framework for Training Community Health Workers Through Virtual Public Health Education Modules," 2022.
S. D. Mustapha and B. Ibitoye, "Comprehension analysis of traffic signs by drivers on Urban Roads in Ilorin, Kwara State," Journal of Engineering Research and Reports, vol. 23, no. 6, pp. 53-63, 2022.
M. O. Kanu, I. N. Dienagha, W. N. Digitemie, E. Ogu, and P. I. Egbumokei, "Optimizing Oil Production through Agile Project Execution Frameworks in Complex Energy Sector Challenges," 2022.
M. O. Kanu, P. I. Egbumokei, E. Ogu, W. N. Digitemie, and I. N. Dienagha, "Low-Carbon Transition Models for Greenfield Gas Projects: A Roadmap for Emerging Energy Markets," 2022.
E. C. Chukwuma-Eke, O. Y. Ogunsola, and N. J. Isibor, "A conceptual framework for financial optimization and budget management in large-scale energy projects," International Journal of Multidisciplinary Research and Growth Evaluation, vol. 2, no. 1, pp. 823-834, 2022.
D. R. Ewim, S. S. Oyewobi, M. O. Dioha, C. E. Daraojimba, S. O. Oyakhire, and Z. Huan, "Exploring the perception of Nigerians towards nuclear power generation," African Journal of Science, Technology, Innovation and Development, vol. 14, no. 4, pp. 1059-1070, 2022.
M. T. Ayumu and T. C. Ohakawa, "Real Estate Portfolio Valuation Techniques to Unlock Funding for Affordable Housing in Africa," 2022.
F. I. Babalola, E. Kokogho, P. E. Odio, M. O. Adeyanju, and Z. Sikhakhane-Nwokediegwu, "Redefining Audit Quality: A Conceptual Framework for Assessing Audit Effectiveness in Modern Financial Markets," 2022.
O. A. Alabi, Z. O. Olonade, O. O. Omotoye, and A. S. Odebode, "Non-Financial rewards and employee performance in money deposit banks in Lagos State, Nigeria," ABUAD Journal of Social and Management Sciences, vol. 3, no. 1, pp. 58-77, 2022.
N. J. Isibor, C. P.-M. Ewim, A. I. Ibeh, E. M. Adaga, N. J. Sam-Bulya, and G. O. Achumie, "A Generalizable Social Media Utilization Framework for Entrepreneurs: Enhancing Digital Branding, Customer Engagement, and Growth," International Journal of Multidisciplinary Research and Growth Evaluation, vol. 2, no. 1, pp. 751-758, 2021.
A. S. Ogunmokun, E. D. Balogun, and K. O. Ogunsola, "A Conceptual Framework for AI-Driven Financial Risk Management and Corporate Governance Optimization," 2021.
A. K. Adeleke, T. O. Igunma, and Z. S. Nwokediegwu, "Developing nanoindentation and non-contact optical metrology techniques for precise material characterization in manufacturing," 2022.
D. Ajiga, L. Ayanponle, and C. Okatta, "AI-powered HR analytics: Transforming workforce optimization and decision-making," International Journal of Science and Research Archive, vol. 5, no. 2, pp. 338-346, 2022.
M. O. Kanu, E. Ogu, P. I. Egbumokei, W. N. Digitemie, and I. N. Dienagha, "Enhancing Asset Management in Gas Distribution Predictive Maintenance and Data-Driven Decision Making."
C. I. Lawal, S. C. Friday, D. C. Ayodeji, and A. Sobowale, "Strategic Framework for Transparent, Data-Driven Financial Decision-Making in Achieving Sustainable National Development Goals."
I. N. Dienagha, F. O. Onyeke, W. N. Digitemie, and M. Adekunle, "Strategic reviews of greenfield gas projects in Africa: Lessons learned for expanding regional energy infrastructure and security," 2021.
L. R. Isi, E. Ogu, P. I. Egbumokei, I. N. Dienagha, and W. N. Digitemie, "Advanced Application of Reservoir Simulation and DataFrac Analysis to Maximize Fracturing Efficiency and Formation Integrity," 2021.
E. O. Alonge, N. L. Eyo-Udo, B. CHIBUNNA, A. I. D. UBANADU, E. D. BALOGUN, and K. O. OGUNSOLA, "Digital Transformation in Retail Banking to Enhance Customer Experience and Profitability," ed, 2021.
E. O. Alonge, N. L. Eyo-Udo, B. C. Ubanadu, A. I. Daraojimba, E. D. Balogun, and K. O. Ogunsola, "Enhancing data security with machine learning: A study on fraud detection algorithms," Journal of Data Security and Fraud Prevention, vol. 7, no. 2, pp. 105-118, 2021.
M. T. AYUMU and T. C. OHAKAWA, "Optimizing Public-Private Partnerships (PPP) in Affordable Housing Through Fiscal Accountability Frameworks, Ghana in Focus," 2021.
O. R. Aziza, "Securities regulation, enforcement and market integration in the development of sub-Saharan Africa's capital markets," University of Oxford, 2021.
O. Oduola, F. Omole, K. Akinluwade, and A. Adetunji, "A comparative study of product development process using computer numerical control and rapid prototyping methods," British Journal of Applied Science & Technology, vol. 4, no. 30, p. 4291, 2014.
K. J. Akinluwade, F. Omole, D. Isadare, O. Adesina, and A. Adetunji, "Material selection for heat sinks in HPC microchip-based circuitries," British Journal of Applied Science & Technology, vol. 7, no. 1, p. 124, 2015.
I. Oyeyipo et al., "A Conceptual Framework for Transforming Corporate Finance Through Strategic Growth, Profitability, and Risk Optimization."
C. O. Ozobu, F. E. Adikwu, O. O. Cynthia, F. O. Onyeke, and E. O. Nwulu, "Advancing Occupational Safety with AI-Powered Monitoring Systems: A Conceptual Framework for Hazard Detection and Exposure Control."
N. J. Isibor, V. Attipoe, I. Oyeyipo, D. C. Ayodeji, and B. Apiyo, "Proposing Innovative Human Resource Policies for Enhancing Workplace Diversity and Inclusion."
Downloads
Published
Issue
Section
License
This work is licensed under a Creative Commons Attribution 4.0 International License.
https://creativecommons.org/licenses/by/4.0
