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Net Working Capital
By using a net working capital (NWC) approach, we can reduce stock and release unnecessary capital in inventory, thus increasing the finances available for sustainable investments that can stimulate new business and increase enterprise value.
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Jan Lythcke-Jørgensen
Community Owners
Target the levels of capital end to end
Capital defines enterprise value and is normally managed by Finance only. In your business, however, capital is created by a sequence of commercial, operational and product-related decisions made by everybody else than Finance. Our approach is to build a bridge across the entire value chain, targeting the levels of capital end to end from a strategic business perspective and in an easily understandable language.
We use a net working capital approach to challenge our operating model from commercial, manufacturing and financial perspectives. By doing so, it is our experience that we can give a qualified answer to the question: What is the right amount of capital needed to efficiently run our business?
Using this framework will enable you to calculate optimal inventory levels and create a business foundation for managing where and how much to stock to manage:
- Delivery risk mitigation and service levels
- Stock policies and inventory management
- Product portfolio assessment
- Management, governance and KPI models
On top of this, you get a new set of metrics to manage decisions across functions in the organisation to find the optimal market contribution.
