Liquidity & Cash Management
Inventory Management & Controls
During times of economic uncertainty, companies are actively seeking best practices for reducing inventory holdings throughout their supply chain. In fact, according to a recent study, 54% of respondents indicated that reducing inventory is the top action that their companies have taken in response to the recession. For many companies inventory is the biggest factor affecting their working capital levels. Companies are experiencing long lead times and significant volatility in demand, creating a greater awareness on managing inventory. In a period where cash management is so critical, inventory management is an essential element of effective short and long-term planning.
Identifying and implementing the best practices tools to accomplish inventory management is critical. Companies are looking for practical solutions to free-up working capital while sustaining customer satisfaction objectives. Sixty two percent of companies responding to the survey reported customer demand had dropped over the past year. This increases the importance of focusing on inventory if a company wants to avoid a spike in write-offs resulting from a build-up of goods that cannot be sold. Findings in the study show that 91% of companies indicate that they are involved in reviewing opportunities for improving inventory performance through process change. Another 61% of respondents say they have made, or have been asked to make, inventory-related technology recommendations within the past six months.
MainStream’s operational expertise allows us to guide our clients through this critical process. We will provide you with experience in managing inventory throughout your supply chain to improve, customer service levels, forecast accuracies and to use technology to build models to better forecast demand, inventory segmentation, inventory optimization, inventory replenishment and extended inventory visibility.
Managing Working Capital
The credit crunch has forced financial professionals into unfamiliar territory. Roughly one third of large companies recently polled indicate that limited short-term credit availability has reduced capital spending, frozen or reduced hiring, necessitated layoffs, and forced cutbacks in inventory. In this environment, companies that are able to control working capital at an optimal level enable their organizations to survive and gain market share. Working capital management can act as a hedge against negative forces such as reduced access to capital and is critical in achieving operational excellence.
During economic downturns and when organizations are faced with unpredictable pressures, the ability to forecast cash flow, accounts receivable and inventory can be extremely difficult. Management needs to begin by reassessing the organization's working capital sources and needs, and then ask the following questions:
Do we have the expertise required to assess our current situation?
What are the optimal working capital levels?
How should it be financed?
Does the organization have the proper disciplines to manage the business thereafter?
What are the implications if we get it wrong?
MainStream can help your organization evaluate and identify opportunities that exist throughout your business. We know that even when you make a small change in working capital days it can have a significant impact on available cash.
Call MainStream today and let our professionals show you how much additional cash would be available to your company and demonstrate the net impact to your bottom line.
Rapid Cost Reduction
During times of economic uncertainties, companies typically have two fundamental choices; “hunker down” in a mode of survival or strengthen their strategic position. Experience shows that companies that outperformed their industries on the basis of return on invested capital (“ROIC”) adopted strategies to improve their position in the marketplace during challenging times. They adopted an “and” strategy not an “either/or” direction. They built sustainable value for their company and stakeholders, in part through implementing rapid cost reductions where their costs were not competitive. MainStream developed the “Rapid Cost Reduction” (RCR) program to give organizations a pragmatic process to quickly shed non-value added costs and thus allow for long-term operational excellence.
The MainStream RCR process begins with a diagnostically thorough assessment that quantifies opportunities and identifies risks. Immediately thereafter, the rapid cash creation phase begins by focusing on high-value targets first, working with the supply chain, rationalizing collateral spending and streamlining redundant or non-value added activities. The second phase focuses on shaping sustainable processes, developing operating advantages and implementing new metrics.
Our teams background in operational improvement with deep industry knowledge and experience and know where to look for improvements. We hit the ground running and our hands on approach drives short term results and long term value for company owners.