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Working Capital Optimization Becoming a Top Priority for Majority of Companies
Organizations leveraging both financial and supply chain strategies to aid WCO initiatives, Aberdeen finds; best-in-class companies gain four day advantage in days payable outstanding
New York — August 25, 2008 — Working capital optimization is a high priority for a majority of companies, and increasing numbers of organizations are looking to leverage both financial and supply chain strategies and technologies to aid these initiatives, according to a new research brief from Aberdeen Group.
Seventy-one percent of companies identify working capital optimization as a high priority, Aberdeen reported in a research brief based on a series of surveys conducted by Aberdeen on working capital optimization and supply chain finance.
The survey showed that 11 percent of companies faced supply chain disruptions in the past year due to lack of working capital, and 13 percent experienced disruptions due to suppliers' deteriorating financial situations.
Aberdeen said that the results of the research show that best-in-class companies in managing working capital metrics are able to obtain the following competitive advantages:
Aberdeen also found that best-in-class companies take proactive steps to integrate and automate their physical and financial supply chains to achieve end-to-end cost savings and process efficiencies.
"Today companies are increasing their already high focus on optimizing working capital, exploring both financial and supply chain strategies and technologies to aid in these initiatives," said Viktoriya Sadlovska, global trade and supply chain finance analyst at Aberdeen Group. "A strategic, forward-looking global corporation should think about its physical and financial supply chains holistically, integrating long-term end-to-end supply chain cost considerations with working capital concerns."
Seventy-one percent of companies identify working capital optimization as a high priority, Aberdeen reported in a research brief based on a series of surveys conducted by Aberdeen on working capital optimization and supply chain finance.
The survey showed that 11 percent of companies faced supply chain disruptions in the past year due to lack of working capital, and 13 percent experienced disruptions due to suppliers' deteriorating financial situations.
Aberdeen said that the results of the research show that best-in-class companies in managing working capital metrics are able to obtain the following competitive advantages:
- Four day advantage in days payable outstanding compared to average companies;
- 19 day advantage in days inventory outstanding versus average companies;
- 6.5 times as likely as peers to have decreased end-to-end financing costs in the supply chain in the past year; and,
- 5 percentage points higher return on working capital versus average companies.
Aberdeen also found that best-in-class companies take proactive steps to integrate and automate their physical and financial supply chains to achieve end-to-end cost savings and process efficiencies.
"Today companies are increasing their already high focus on optimizing working capital, exploring both financial and supply chain strategies and technologies to aid in these initiatives," said Viktoriya Sadlovska, global trade and supply chain finance analyst at Aberdeen Group. "A strategic, forward-looking global corporation should think about its physical and financial supply chains holistically, integrating long-term end-to-end supply chain cost considerations with working capital concerns."
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