EFFICIENCY
The company is a global leader in security solutions, known for its premium products. It operates with a high degree of local management, offering solutions tailored to the specific requirements of each market.
The organisation struggled with unsatisfactory levels of working capital, primarily due to high inventory levels and delays in customer payments. The company was looking for a short-term working capital reduction with lasting impact.
The capital efficiency project consisted of three phases: assessment, action definition, and plan & governance model. All phases included cooperation with the local teams to ensure both accurate analyses and local buy-in.
Inventory, accounts receivable, and accounts payable data was analysed and visualised for the local teams in workshops to find root causes of excessive working capital.
Interviews were conducted to understand processes and practices across functions, e.g. sales and operations. Using these findings and best practices in working capital management, hypotheses regarding focus areas were formulated.
With the focus areas in mind, cross-functional workshops were held to define appropriate actions.
For example, a new payment reminder process was established to reduce overdue payments, and raw material stocking policies were redefined based on segmentation on spend and demand variability to minimise stocking cost while ensuring sufficient service levels.
An action plan with specific actions was set for each region. The action plan included the action owner and the timeline for implementation to ensure local ownership.
Moreover, local capital efficiency core teams with associated governance models were set in each region to secure regular follow-ups. Finally, reduction targets were established through collaboration with the local teams.
Local teams committed to achieving 20-25% reductions through prioritised actions. On a high level, these actions encompassed process enhancements, redefined stocking policies, improved data transparency, and enhanced cross-functional communication.
Other than an action plan with local buy-in, a comprehensive working capital handbook to facilitate ongoing improvement across the organisation was provided.
Furthermore, multiple working capital-related dashboards were developed to enhance data visibility throughout the organisation.