Every organization has components, commodities, and even finished products on stock. With these, they ride waves of high demand or supplier constraints. Inventories such as these constitute a huge management task, with ambiguous variables and high stakes. In fact, the effort needed to succeed in managing inventory is often so high, so specialized, that many larger companies seek external help. This is where inventory optimization companies come in.
Marcus Ketter, CFO of the MDAX-listed GEA group, has had a successful start to his year. Within two years of targeting working capital, he cut down the GEA group’s working capital to sales ratio by almost two-thirds. Reducing net working capital from 906m EUR to 367m EUR has given them the flexibility they needed to move forward with the trust of the financial markets. Being named CFO of the month by the Finance Magazin is only the beginning – eleven months more of similarly impressive work could bring higher accolades and even more.
In our ongoing series, we are tackling the topic of working capital management from different perspectives. Today, I am chatting with Elena Bail who I have worked closely with for several years. She is a Senior Manager at EY with more than 20 years of experience in working capital management.
Sustainable working capital management is not only about improving processes, having shiny-looking KPI reports in place, and fine-tuning your balance sheet. Working capital management is a cross-departmental discipline that poses particular challenges within your company’s organizational setup. Today, we want to take you through some ideas on how to establish working capital management as a foundation of your organization.
If you’re seeking continuous improvement for your supply chain, your inventory management is a key area. We already looked at some basic steps for optimizing your inventory management. This week we’re focusing on business processes and the role they can play in this.
Optimizing your inventory isn’t just about making your balance sheet look better, or seeing your liquidity improve. If you streamline and readjust your approach to inventory, you’re going to see it start working for you.
Few anticipated the apocalypse that 2020 has so far been, and fewer still prepared for it. As the numbers of cases rise again, we aren’t suggesting building a bunker or panic-buying the pasta aisle again. Instead, we want to talk about liquidity, and how an effective approach to working capital management will help you navigate and emerge strengthened from the crisis. If you want to improve your business’ liquidity and sail smoothly over this second wave, then here are four simple measures to help free up your working capital.
In the last few months, we have seen how important liquidity is: as the COVID-19 crisis hit, a threat to the survival of many companies surfaced within the first few weeks. More than ever, this shows the importance of working capital management as an existential element to the financial health of your business. This article kicks off our series on working capital management. In the next weeks, we will take a deep dive into working capital management and its most important aspects. This week: the impact of economic downturn on working capital management.