Holistic Supply Chain Management

There is a renewal of interest in the financial elements of supply chain management today. Businesses are using agile, cloud-based technology to optimize working capital and glean liquidity from improvements in supply chain activities.

Managers who were previously immersed in day-to-day operations are beginning to see their role in working capital management take on a new form. They are inspecting the different components of the cash conversion cycle and finding ways to free up cash in the supply chain — a responsibility once reserved for the CFO. Working capital management has its roots in the cash conversion cycle because in the supply chain, the more quickly a company can convert purchases from its suppliers to cash from sales, the more quickly it can use that money to finance other operations. This is particularly important in a volatile economy or tight credit market, where sources of external financing are not guaranteed.

In a rapidly changing global trade environment, organizations must use cash wisely while remaining open to investments that support long-term prosperity — in technology, people, and infrastructure. Today, companies are illustrating the importance of a holistic approach to working capital management, embracing new technology while adapting workflow to meet the demands of an agile, global supply chain.