Ways Out of the Working Capital Trap [electronic resource] : Empowering Self-Financing Growth Through Modern Supply Management /
Hofmann, Erik.author.
Maucher, Daniel.author.
Piesker, Sabrina.author.
Richter, Philipp.author.
Especially in times of an economic boom following a crisis, companies have to deal with the phenomenon of the "working capital trap," which signifies a company's increasing need for financial liquidity in times of hindered access to debt capital, caused by the increasingly restrictive credit approval processes of financial institutions. As a consequence of cost savings, this situation is often reinforced by a low level of inventory. This book takes up the problem and shows ways of escaping the "trap" by identifying and strengthening in-house financing potential. First, different operating ratios will be introduced. These refer to the amount of capital committed to the flow of goods and to the amount of in-house financing possible. Subsequently, methods for consolidating in-house financing that are affected by procurement processes will be presented from the company's and the supply chain's perspective. From a company's perspective, the methods for consolidating the amount of in-house financing over the following topics: •             The Management of Payment Terms •             Inventory Management •             Product Group and Supplier Management From the supply chain's perspective, the following methods for extending the possible amount of in-house financing will be discussed: •             Finance-Oriented Supply Chain Sourcing •             Supply Chain-Oriented Supplier Financing •             Collaborative Cash-to-Cash Management •             Collaborative Cash Pooling and Netting •             Supply Chain Financing Platforms The conceptual models will be clarified using a practical example from the automobile industry. Finally, the "Procurement Value Added" (PVA©) approach will be presented, a concept that measures the contribution of procurement to the company's success.
Description based upon print version of record.
Includes bibliographical references.
Call for Action: From Financial and Economic Crisis to Working Capital Trap -- Determination of the Internal Financing Power of Corporate Growth via the Self-Financeable Growth Rate -- Strengthening Internal Financing Power using Cash-to-cash Cycle Optimization -- Measures for Strengthening Internal Financing Power from a Corporate Viewpoint -- Measures for Strengthening Internal Financing Power from a Supply Chain Viewpoint -- Case Study: Increasing Internal Financing Power of a Supplier in the Automotive Industry -- Measuring Procurement Contribution to Corporate Performance using the "Procurement Value Added" -- Conclusion -- Summary -- Outlook -- Literature.
Especially in times of an economic boom following a crisis, companies have to deal with the phenomenon of the "working capital trap," which signifies a company's increasing need for financial liquidity in times of hindered access to debt capital, caused by the increasingly restrictive credit approval processes of financial institutions. As a consequence of cost savings, this situation is often reinforced by a low level of inventory. This book takes up the problem and shows ways of escaping the "trap" by identifying and strengthening in-house financing potential. First, different operating ratios will be introduced. These refer to the amount of capital committed to the flow of goods and to the amount of in-house financing possible. Subsequently, methods for consolidating in-house financing that are affected by procurement processes will be presented from the company's and the supply chain's perspective. From a company's perspective, the methods for consolidating the amount of in-house financing over the following topics: •             The Management of Payment Terms •             Inventory Management •             Product Group and Supplier Management From the supply chain's perspective, the following methods for extending the possible amount of in-house financing will be discussed: •             Finance-Oriented Supply Chain Sourcing •             Supply Chain-Oriented Supplier Financing •             Collaborative Cash-to-Cash Management •             Collaborative Cash Pooling and Netting •             Supply Chain Financing Platforms The conceptual models will be clarified using a practical example from the automobile industry. Finally, the "Procurement Value Added" (PVA©) approach will be presented, a concept that measures the contribution of procurement to the company's success.
Production management.
Organization.
Planning.
Operations Management.
Organization.