In these times of economic uncertainty and global credit crunch, companies need to actively seek out best practices in how to move from working capital optimization theory to practical initiatives that will improve corporate financial performance while maintaining customer satisfaction.
Supply chain, procurement, and financial professionals have an opportunity to use working capital innovations to create a market advantage for their companies. Cash velocity can be a competitive differentiator and companies need to assess a variety of breakthroughs in working capital management to keep pace with their peers.
These challenges are also there in the discrete industry sector (automotive, aerospace and defense, industrial equipment etc) where significant inventory is tied up within the demand network (dealers, distributors, factories etc).
This inventory has accumulated for not only the finished goods, but also the spare parts. Given the recessionary conditions, it is critical for companies to focus on the aftermarket spare parts sector given the high margins that they get from spare parts sales. However, this profit margin can get eroded due to high levels of inventory.
There is a need for enhanced visibility into global inventory during order promising, order capture and execution. Dealers and their marketing organizations need to work closely with original equipment manufacturers to increase inventory turns and improve customer service levels.
