In its latest study of working capital optimization, the Aberdeen Group examines how enterprises can shorten cash conversion cycles, improve order fulfillment, and increase return on working capital by taking a complete view of their supply chain.
"As companies focus more on internal strategies for driving working capital improvement, they should remember that working capital should be managed with a view of end-to-end supply chain process optimization," says Nari Viswanathan, vice president/principal analyst at Aberdeen.
The report, Working Capitalization Optimization: Increase Cash Flow in the New Economy, reveals that top companies are able to blend both supply chain management and financial management strategies in order to optimize their working capital. "On the supply chain management side, top companies are more likely to be trying to improve forecast accuracy and pursuing just-in-time capabilities. Also, top companies are more likely to be trying to optimize inventory routes, making better decisions on where and how much inventory to store," says Viswanathan." On the finance side, top companies are more likely than others to pursue a series of strategies that include improving the accuracy of operational budgets for such areas as transportation and raw materials, and improving overall cash management through better use of cash on hand and heightened returns on short-term investments."
Furthermore, Aberdeen's research found that 46 percent of top companies have cross-functional teams to lead working capital improvements.
Read Full Article
Enjoy curated articles directly to your inbox.