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Global Sourcing Approach to Improve Cash Flow of Agribusiness Companies in Brazil

Author

Listed:
  • Ricardo Hamad

    (Transportation Engineering Department, Polytechnic School, University of São Paulo, São Paulo, 05508-900 Brazil)

  • Nicolau Dionísio Fares Gualda

    (Transportation Engineering Department, Polytechnic School, University of São Paulo, São Paulo, 05508-900 Brazil)

Abstract

We developed a multiechelon location-inventory modeling approach and applied it to redesign the global network of four large transnational agricultural companies operating in Brazil. The results show that tax planning is the most significant factor in minimizing the operating cash outflow and that inventory carrying costs play a more important role than transfer freight, handling, and fixed costs. Distribution centers and production plants in countries within the Mercosur are excellent targets for cash outflow reduction and service level improvement. Furthermore, contrary to common sense, reducing operating costs can sometimes increase cash outflow in companies with large volumes of tax credit in Brazil. Our methodology generated processes that helped one company reduce its logistic cash outflow by 49 percent and its logistics costs by $10 million.

Suggested Citation

  • Ricardo Hamad & Nicolau Dionísio Fares Gualda, 2014. "Global Sourcing Approach to Improve Cash Flow of Agribusiness Companies in Brazil," Interfaces, INFORMS, vol. 44(3), pages 317-328, June.
    • Handle: RePEc:inm:orinte:v:44:y:2014:i:3:p:317-328
    DOI: 10.1287/inte.2013.0720
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    References listed on IDEAS

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