Improving working capital through effective supply chain management

Filed in archive Research on June 22, 2009

Aberdeen Group has responded to companies' needs in today's uncertain environment regarding tight credit situation and released a report titled "Inventory Management: 3 Keys for freeing working capital". The report highlights that today is the right time for financial innovation in the supply chain area as cash velocity can be a key differentiator for improving working capital. and need for effective working capital management. A series of strategies have been proposed as best practice to achieve such goals in which a summary of them is presented below:





They authors also suggest some starting points in order to implement working capital strategies:

- Segment finished goods inventory based on the financial performance
- Focus on analytical way of setting inventory levels rather than using rule of thumb.
- Improve SKU forecasting methods
- Calculate financial impact of inventory decisions and link these two together