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.
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:
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.