Reduced Trade Working Capital by $800Million – Global High-Technology Manufacturer
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Situation
- An $11 billion manufacturing company with subsidiaries in over 100 countries
- New CEO
- Needed cash to support its growth strategy
- They faced delivery problems and negative publicity
- Known in the market to be non-cash focused
- Management initiated a thorough benchmarking review, which showed the company was behind in working capital management, but ahead in profits
- Management made a decision to launch a global working capital project on a top 300 manager conference
Actions Taken
- A central team was trained to support local implementation
- Full support given to roughly 100 business units around the world
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- Assessed local performance
- Developed local implementation plans through cross functional workshops
- Set local targets anchored by local management
- Hands on implementation support given where needed
- Tailored support was given to sales companies and pure manufacturing companies where strict focus was placed on credit management, supply chain management and manufacturing control
- Implemented incentive structure and aligned those with targets on different hierarchical levels
- Implemented a global monitoring system
- Communicated different tools to facilitate broad understanding of working capital management
Results
- Implemented working capital targets of approximately 100 business units resulting in a 12 month rolling average reduction of working capital with $800 million
- Incentive structure was implemented on top management level supporting the targets set on local level
- Global monitoring tool was implemented as well as an internal bench marker