Supply chain management plays a crucial role in the results of a business, directly impacting the company's three main financial statements. This relationship is fundamental to generating value for shareholders, influencing aspects such as revenues, costs, capital employed and business risk, in addition to contributing to the organization's capacity for sustainable growth. Given this, it is essential that finance and supply chain act in an integrated manner, with coordinated and aligned decisions, thus ensuring efficiency and effectiveness in operations and business strategy. In this short article, we will discuss one aspect of this interaction, presenting a case study on the financing of logistics assets.
Instruments for Financing Logistics Assets: A Case Study
We recently faced a challenge in planning the storage capacity of a company in the consumer goods sector. The client needed to decide between different warehouse operating models, each with different levels of outsourcing and operational leverage. The option that proved to be most economically advantageous was the one with greater operational leverage and process automation; however, this alternative required a significant capital investment (CapEx) and ended up being rejected in favor of a more manual and less expensive operation.
This scenario led us to reflect on the possibilities of financing logistics assets, using financial instruments that could convert CapEx into operational expenses (OpEx). The company in question was growing rapidly and was operating at the limit of its storage capacity, using third-party warehouses to meet demand. Projections indicated that continuing this approach would be unsustainable, leading to high operating costs in the future.
The analyzes carried out revealed a set of alternatives for the company, as shown in Figure 1. The first alternative consisted of maintaining the status quo; the second considered the expansion of the capacity of its own warehouses through improvements in layout and the hiring of new third-party warehouses in closer locations; the third alternative envisaged the expansion of the existing warehouse with a manual operating model; and the fourth alternative included the expansion of the existing warehouse in an automated model. The evaluation of these options demonstrated the concept of operational leverage, in which capital investments (CapEx) can reduce operational expenses (OpEx), but at a greater risk, as variable costs are exchanged for fixed costs. The greater the investment, in this case, the greater the saving in relation to the status quo.
Figure 1: alternative storage models for the case presented
Although the fourth alternative, which presented the highest operational leverage, was positioned as the most advantageous in terms of net present value (NPV), its implementation faced obstacles due to the need for investment approval. However, there is the possibility of converting practically all CapEx into OpEx through financial instruments available on the market. Examples include sale-and-lease-back (SLB), long-term lease agreements for built-to-suit (BTS) properties, and securitization. In the SLB model, the company sells the equipment to an investor and, in return, pays rent. In the case of BTS, the investor builds the equipment according to the company's specifications, and payment can be made continuously over time. Securitization, in turn, allows the company's assets to be converted into tradable securities, facilitating the financing of operations.
Another strategy to be considered is the quotation of real estate assets, through the creation of logistical Real Estate Investment Funds (FIIs) for assets of significant value (above R$20 or 30 million) or through other forms of quotation, such as crowdfunding , governed by CVM Instruction 588, for lower value assets. Logistics FIIs have attracted the attention of individual investors, especially due to the low vacancy rate and the predominance of the national road network, which offers greater revenue predictability.
This case study illustrates how collaboration between finance and supply chain is essential, exemplifying the importance of synergy and information exchange between these areas for strategic decision-making, cost control, cash flow management and general performance analysis. .
References
- Supply Chain Digest (17/02/2022) – Six Ways Supply Chains Can Transform Packaging
