A Logistics Consultant to Minimise "Cash Out" to "Cash In" Minimising the cycle time from supplier payment to customer payment; the time from "cash out" to "cash in" (and if possible making it negative by ensuring that finished goods are paid for before suppliers are paid) is an extremely powerful vehicle for minimising working capital (and hence capital employed). As supply chains become increasingly global to reduce operating costs, the importance of minimising supply chain inventories has grown. Using a logistics consultant to strip out non-value-adding (NVA) activities to reduce throughput times can have three distinct types of advantage:
Firstly it minimises the cost of borrowings to fund working capital (reducing operating costs), but importantly working capital tied up in inventory in the organisation is reduced accordingly (reduction in capital employed) - the double whammy (if you like) from a ROCE perspective.
Thirdly however, from a lean manufacturing angle, reducing pipeline inventories systematically helps organisations to discover where the frailties in their supply chains really are and ultimately address the root causes. By doing so, the robustness of supply chain performance at increasingly faster throughput rates can sensibly be improved. On the other hand, if a structured approach to addressing supply chain weaknesses isn't used and say product quality non-conformances are discovered as products hit retail outlets in Europe and North America, then the cost impact of the goods throughout the entire supply chain from suppliers in say the Far East can be massive. Using a logistics consultant to help improve supply chain reliability will often facilitate substantial cost avoidance.