TOTRADE: OPTIMIZING PERFORMANCE THROUGH THE SUPPLY
CHAIN FINANCE NETWORK CASE STUDY SOLUTION
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SYNOPSIS
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In early 2022, the chairperson of Zhongguang Yiyun Supply Chain Management Co. Ltd. (Zhongguang),
Hui Xu, reviewed the six years of development the company had invested in its supply chain finance (SCF)
platform ToTrade. Zhongguang had successfully nurtured ToTrade as a supply chain management (SCM)
n
platform and had strengthened ToTrade’s SCF program and supply chain digitalization. The platform now
and collaborated with multiple banks and focal companies to provide integrated SCF services to over 1,000
tio
upstream and downstream small and medium enterprises (SMEs) in the industrial raw material supply chain
(mainly for petrochemical and plastic chemicals) in China’s Jiangsu, Zhejiang, and Shanghai Provinces.
lu
Xu realized that the site of competition in the Chinese SCF market had shifted from a single company’s
SCF capability to its integrated SCF network. Therefore, it was crucial for ToTrade to establish a robust
So
financial supply network in order to enhance the implementation and development of its SCF services. As
the volume of ToTrade’s SCF service increased, Xu faced key questions: How could ToTrade develop its
network to further support its SCF development? And how could the platform effectively evaluate its SCF
service performance to better guide this development?
OBJECTIVES
• Define SCF and its related capabilities.
• Explain and apply the SCF network framework to analyse different SCF programs.
The Case Solution Starts From page 5
,• Explain how the SCF capabilities can affect network characteristics.
• Identify SCF performance measurements and apply them to evaluate the performance of other SCF
programs.
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ASSIGNMENT QUESTIONS
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1. According to Gulati et al., network characteristics are measured by reach, richness, and receptivity.
Draw ToTrade’s SCF network structure and evaluate its reach, richness, and receptivity.
2. What were ToTrade’s major SCF capabilities? And how do these SCF capabilities affect its network
characteristics?
3. How does ToTrade evaluate its SCF service performance?
4. What suggestions would you provide for ToTrade’s future SCF efforts?
The Case Solution Starts From page 5
,ANALYSIS
1. According to Gulati et al., network characteristics are measured by reach, richness, and receptivity.
Draw ToTrade’s SCF network structure and evaluate its reach, richness, and receptivity.
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According to Gulati et al., reach refers to how wide-ranging and heterogeneous organization the network’s
connections are, richness refers to the combined value of the network’s resources, and receptivity refers to the
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network’s organizational capabilities and its quality ties with partners that facilitate the flow of network resources.
m
ToTrade’s network reach increased as diversified SCF stakeholders—such as banks, insurance companies,
and downstream SCF users—joined its network. Its network reach also increased due to the digitalization
of SCF, which provided wider interconnectivity and allowed more non-local qualified SMEs to use the
Sa
platform’s SCF service.
To improve the richness of its network, ToTrade made the most of its ability to integrate resources in SCF
and improved synergy by exploring potential value-creation opportunities within SCF.
n
As for receptivity, ToTrade enhanced mutual trust with banks through government endorsement and better
tio
lu
So
The Case Solution Starts From page 5
, EXHIBIT -1: TOTRADE’S SCF NETWORK STRUCTURE
Business resources Government
Upstream SME and SC information
suppliers Policy support and
SCF endorsement
Supply
SC information SCF risk control
ToTrade
IT and SCM SC information
Supply support
SCF Logistics services
SC information Capital
Business resources
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and SC information
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m
Sa
EXHIBIT -2: TOTRADE’S NETWORK CHARACTERISTICS
Network characteristic Network characteristic development activities
n
tio
Reach
lu
So
The Case Solution Starts From page 5
CHAIN FINANCE NETWORK CASE STUDY SOLUTION
e
pl
SYNOPSIS
m
Sa
In early 2022, the chairperson of Zhongguang Yiyun Supply Chain Management Co. Ltd. (Zhongguang),
Hui Xu, reviewed the six years of development the company had invested in its supply chain finance (SCF)
platform ToTrade. Zhongguang had successfully nurtured ToTrade as a supply chain management (SCM)
n
platform and had strengthened ToTrade’s SCF program and supply chain digitalization. The platform now
and collaborated with multiple banks and focal companies to provide integrated SCF services to over 1,000
tio
upstream and downstream small and medium enterprises (SMEs) in the industrial raw material supply chain
(mainly for petrochemical and plastic chemicals) in China’s Jiangsu, Zhejiang, and Shanghai Provinces.
lu
Xu realized that the site of competition in the Chinese SCF market had shifted from a single company’s
SCF capability to its integrated SCF network. Therefore, it was crucial for ToTrade to establish a robust
So
financial supply network in order to enhance the implementation and development of its SCF services. As
the volume of ToTrade’s SCF service increased, Xu faced key questions: How could ToTrade develop its
network to further support its SCF development? And how could the platform effectively evaluate its SCF
service performance to better guide this development?
OBJECTIVES
• Define SCF and its related capabilities.
• Explain and apply the SCF network framework to analyse different SCF programs.
The Case Solution Starts From page 5
,• Explain how the SCF capabilities can affect network characteristics.
• Identify SCF performance measurements and apply them to evaluate the performance of other SCF
programs.
e
pl
m
Sa
n
tio
lu
ASSIGNMENT QUESTIONS
So
1. According to Gulati et al., network characteristics are measured by reach, richness, and receptivity.
Draw ToTrade’s SCF network structure and evaluate its reach, richness, and receptivity.
2. What were ToTrade’s major SCF capabilities? And how do these SCF capabilities affect its network
characteristics?
3. How does ToTrade evaluate its SCF service performance?
4. What suggestions would you provide for ToTrade’s future SCF efforts?
The Case Solution Starts From page 5
,ANALYSIS
1. According to Gulati et al., network characteristics are measured by reach, richness, and receptivity.
Draw ToTrade’s SCF network structure and evaluate its reach, richness, and receptivity.
e
According to Gulati et al., reach refers to how wide-ranging and heterogeneous organization the network’s
connections are, richness refers to the combined value of the network’s resources, and receptivity refers to the
pl
network’s organizational capabilities and its quality ties with partners that facilitate the flow of network resources.
m
ToTrade’s network reach increased as diversified SCF stakeholders—such as banks, insurance companies,
and downstream SCF users—joined its network. Its network reach also increased due to the digitalization
of SCF, which provided wider interconnectivity and allowed more non-local qualified SMEs to use the
Sa
platform’s SCF service.
To improve the richness of its network, ToTrade made the most of its ability to integrate resources in SCF
and improved synergy by exploring potential value-creation opportunities within SCF.
n
As for receptivity, ToTrade enhanced mutual trust with banks through government endorsement and better
tio
lu
So
The Case Solution Starts From page 5
, EXHIBIT -1: TOTRADE’S SCF NETWORK STRUCTURE
Business resources Government
Upstream SME and SC information
suppliers Policy support and
SCF endorsement
Supply
SC information SCF risk control
ToTrade
IT and SCM SC information
Supply support
SCF Logistics services
SC information Capital
Business resources
e
and SC information
pl
m
Sa
EXHIBIT -2: TOTRADE’S NETWORK CHARACTERISTICS
Network characteristic Network characteristic development activities
n
tio
Reach
lu
So
The Case Solution Starts From page 5
