Using data to optimize Net Working Capital

In the current economic climate, every company is looking for ways to improve its operational and financial efficiency. An obvious place to look is reducing the cash tied up in Net Working Capital (NWC).

In a recent client project, we helped a multinational pharmaceutical company build a structured process and tool to pursue NWC optimization opportunities. The project unlocked MEUR 27 in just six months.

Learn about key ways to accelerating and coordinating NWC optimization initiatives in our white paper below.

More cash tied to NWC on average
in Danish companies relative to North American companies
Bn Euro can be freed in NWC
by optimizing NWC performance of Nordic listed companies
decline of ‘Revenue-CAPEX’ ratio
as companies have reduced investment to improve free cash flow

Why do I need data to optimize Net Working Capital?

Using data to mobilize and support first steps in each function

There are a lot of opportunities to optimize your receivables, payables and inventory. But this requires all levels of the organization to work in a structured and coordinated way.

Each external relationship and each element of inventory needs to be reviewed and streamlined. Having the transparency and ability to drill down in the detail is key to:

  • Discovering performance
  • Diagnosing and prioritizing areas driving performance
  • Tracking impact on actions taken

Use data to unlock two big opportunities within your organization

There are many reasons for optimizing your Net Working Capital but there are 2 specific opportunities, which we have experienced, brings great value to the business:

1) Structural change in the business model to reduce inventory needs

2) Increased coordination across functions and the value chain

Capturing these opportunities requires faster and better aligned decision-making, collaboration and tracking of progress. Central to making this possible is creating a shared set of measures, data and decision-making tools. Based on our recent client work, we have outlined some key ways to get started, and enablers to win in this game.

"Most programs I have been involved in have been able to work with individual functions but struggled to make structural changes. Procurement can easily buy into changing supplier terms, Sales can easily focus on changing customer terms. But when you want to change inventory levels, everyone starts pulling in different directions."
CFO
Office Supplies industry

Download the white paper
”Cash is King | Using data to unlock your capital and resources”
Learn more about how to use decision-making tools to unlock cash and new business opportunities in your organization.

Data and BI tools are key to accelerating and coordinating NWC optimization initiatives. Based on our recent client work, we have outlined some key ways to get started, and enablers to win.

Fill in your details to receive the white paper.

Get in touch

Whether you need help getting started optimizing your Net Working Capital or you have questions about the opportunities, don't hesitate to reach out to our consultants.
Henrik Søgaard
Senior Consultant
Check out how we supported LEO Pharma in optimizing their cash utilization by making Net Working Capital a performance parameter
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