Beckway Insights: Optimizing Working Capital

𝗧𝗵𝗲 𝗖𝗿𝗶𝘁𝗶𝗰𝗮𝗹 𝗥𝗼𝗹𝗲 𝗼𝗳 𝗜𝗻𝘃𝗲𝗻𝘁𝗼𝗿𝘆 𝗠𝗮𝗻𝗮𝗴𝗲𝗺𝗲𝗻𝘁

In today’s economic climate, an intense focus on working capital—particularly inventory management—is more crucial than ever. By ensuring right-sized inventory, businesses can improve their cash-to-cash cycle, minimize cash tied up in stock, and mitigate the skyrocketing costs of borrowing. Key performance indicators (KPIs) such as Cost of Goods Sold (COGS), Inventory Turns, and Days of Supply Inventory (DSI) are essential metrics for managing this vital aspect of working capital.

A robust Sales, Inventory, and Operations Planning (SIOP) process, with a dedicated effort to align supply and demand, is a proven methodology not only to enhance customer service but also to drive actions that reduce working capital tied up in inventory.

Once a balanced Supply/Demand Plan is achieved through SIOP, the focus shifts to execution (Sales and Operations Execution, or SOE). Many businesses rely on Material Requirements Planning (MRP) systems, where setting the correct planning parameters is crucial for right-sizing inventory. Key MRP parameters, including safety stock levels, reorder points, lead times, and min/max settings, are vital for ensuring inventory levels are optimized to maximize working capital.

Discover how Beckway can assist in improving your working capital through SIOP implementation and enhancement or by refining execution methodologies. For more information, please contact Beckway’s IBP practice lead, Dale Gulick, and visit our website: https://lnkd.in/ezDUQNsX