Working capital optimization

Targeted optimization of working capital in industrial companies

From material flow to cash flow

In times of slowed growth, new customs barriers and tense global supply chains, the ability to generate liquidity from your own operations is becoming a decisive competitive factor. Every additional percent of tied-up capital reduces the ability to act – every optimized percent creates scope for investment, innovation and stability.

At the same time, our project experience shows that the targeted release of liquidity is not an end in itself, but part of a balancing act between short-term financial flexibility and long-term performance. Measures to reduce inventories or receivables can conflict with other key performance indicators such as profitability, service level or delivery reliability. It is therefore crucial to embed the optimization of liquidity in a balanced, strategically coordinated management model that takes equal account of profitability, stability and growth. Many industrial companies still manage their liquidity primarily via payment terms or financing instruments. However, our projects repeatedly show that the real potential lies where value is created: in the internal value chain and the cross-company supply chain. Inventories, throughput times and material flows determine how much capital is tied up or released in the company.

Content of the white paper:

1. Components and objectives
2. Levers for optimizing working capital
   • Commitment management
   • Inventory management
   • Receivables management
   • Overarching success factors
3. Focus on inventory management: a framework for optimizing working capital
   • Order management: reduce complexity and increase forecast quality
   • Procurement logistics: synchronize material flows and shorten replenishment times
   • Production: reduce throughput times and avoid work in progress
   • Practical example: Process Mining
   • Distribution logistics: balancing stocks on the market and shortening delivery times
   • Overarching: transparency and synchronization as enablers
4. Project approach in working capital optimization
5. Summary