Reduced Trade Working Capital by $800 Million In Only Eight Months – Global Shipping Company
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Situation
- A global shipping company
- Negative development of working capital by $1 billion over the last several years
- New CFO was concerned by a lack of focus on working capital and cash
- High level of rebilling
- High level of overdue %
- Uncontrolled IT cost
- Negative image on the market due to low quality of billing
- No cash culture in the company
- No visibility of working capital or cash flow in the company
Actions Taken
- One week Group Assessment performed in order to set priorities and assess top down target set by Group Management.
- Full support to prioritized geographical areas through:
- Assessing local performance
- Developing local implementation plans through cross functional workshops
- Set local targets anchored by local management
- Hands on implementation support where needed
- Trained a central team to carry out local support
- Implemented incentive structure and aligned those with targets on different hierarchical levels
- Implemented a global monitoring system
- Communicated lessons learned and facilitated internal communication
Results
- Implemented working capital targets for each business units for the first time - built into annual budget
- Realized a $800 million improvement in working capital in only eight months
- Matrix showing trade-off between price discounts and payment terms was rolled out to procurement organization
- Corporate best practices were identified and communicated across business units