Supply Chain Optimization - Hidden Opportunities to Increase Cash Flows and Working Capital
November 29, 2011
A company’s supply chain represents an untapped opportunity to realize increased short and long-term cash flows and cost savings. However, inefficient supply chain processes clearly have a significant effect on a company’s cash position. For example:
The lack of a dynamic inventory planning capability can result in 10 - 15 per cent excess inventory buildup.
Ineffective expediting techniques can degrade supplier on-time delivery by 5 per cent or more.
The failure to benchmark freight rates and monitor the use of lowest-cost carriers can increase freight costs by 6 - 7 per cent.
Each of these broken processes represents cash ‘leaking’ out of a company’s operations, cumulative impact of which can drain its competitiveness and profitability. This paper shares insights from Genpact supply chain leaders on how companies can implement effective end-to-end supply chain processes and free up working capital and cash and push for sustained growth.
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