Reducing cash-to-cash cycle time by just 1 day can increase working capital by up to 2%.
Watch and listen to this webinar to learn how your supply chain team can free up cash to fund business growth by shortening your cash-to-cash cycle time.
Key discussion points:
> Developing a cash-first culture in supply chain
> Identifying cash-to-cash cycle time reduction opportunities
> Creating processes to manage plans that release working capital
> Enabling ongoing best practice education for supply chain teams
Learn about a new, 3-dimensional end-to-end approach that will help you expertly target your areas of greatest opportunity and create a realistic plan optimized for execution.
A New Approach to Reducing Cash-to-Cash Cycle Time
1. A New Approach to Reducing Cash-to-Cash Cycle Time
The Value of Reducing Cash-to-Cash Cycle Time
Webinar, June 19, 2018
PRE SE NTE D BY
Blueprint 360
2. Steve Tracey
Executive Director
Center for Supply Chain Research™
Penn State Smeal College of Business
Steve Tracey is the executive director for the
Center for Supply Chain Research™
(CSCR™) and Penn State Executive
Programs. Prior to joining Penn State Smeal,
Steve was the Senior Vice President of
Global Supply Chain at Standard Textile
Company, the world’s largest marketer and
manufacturer of institutional textiles.
Alan Todd
CEO &
Founder
CorpU
Alan Todd, Founder and CEO of
CorpU, is regarded as one of the
world’s pre-eminent authorities on
strategy and leadership development.
A former Inc. Magazine/Ernst & Young
Entrepreneur of the Year, Todd’s
writing and commentary have
appeared in Forbes, Fortune, Fast
Company, and Wired, and his insights
are routinely solicited from Fortune
1000 companies like Walmart, Coca-
Cola, Boeing, and Johnson & Johnson.
Joe Krause
Director of Professional Services
& Senior Strategy Consultant
AchieveIt
As the Director of Professional Services and
senior in-house strategy consultant for
AchieveIt, Joe is responsible for empowering
AchieveIt customers to execute their plans.
With a consultative strategic planning
background, Joe has worked with customers
to execute over 1000 strategic, operational,
and project plans. Throughout his five year
tenure at AchieveIt, Joe has experienced
first-hand the pitfalls business professionals
experience during the execution phase of
their planning processes.
Meet the Speakers
3. A New Approach to Reducing Cash-to-Cash Cycle Time
The Value of Reducing Cash-to-Cash Cycle Time
Webinar, June 19, 2018
ALAN TODD
CEO & Founder, CorpU
4. How Do We Get to Shared Vision?
Leading Indicators
• Create a Sense of Urgency
• Build a Guiding Coalition
• Form Strategic Vision & Initiatives
• Enlist Volunteer Army
• Enable Action by Removing Barriers
6. Increased Clarity,
Enthusiasm, and
Commitment rub off
on others
Leads to Clarity,
Enthusiasm, and
Commitment
Peter Senge, named
“Strategist of the
Century”
Dialogue is the Fastest Path to Shared Vision
(dia-logos)
7. Connect people together in purpose built groups to:
Identify and Solve Complex Problems
Generate and Spread Ideas
Teach & Learn From each other and experts
Capture & Amplify New Knowledge
Predict & Prescribe Best Ways Forward
“It is through dialogue that we move people from vision to shared-vision”
Dialogue Networks
8. FROM
1-way Communication Structured Dialogue (at scale)
NETWORKS
ANALYTICS
TO
Jane Calais
Felipe Gonzáles
Larry Miller
●
●
●
Operations
Procurement
Finance
TOWN HALL MEETINGS
EMAIL
From Monologue to Dialogue
9. Leadership has
the plan. Roll-
out efforts
begin
Organization
effectively
executes the
Plan
Stakeholders
must
understand
the strategy
Understanding FocusCommitment Ability Motivation
Barrier 1: Understanding
Why? Why now?
Barrier 2: Buy-In
Should we? Can we?
Must be
committed to
the strategy
Barrier 3: Intentionality
What levers do I pull?
Must know the
right actions to
take
Ownership
Barrier 4: Capability
Performance measures?
Must be
capable of
taking action
Must be
motivated to
perform
Must be em-
powered to
make choices
Barrier 5: Empowerment
What freedom do I have?
Barrier 6: Motivation
How am I doing? WIIFM?
Measure Outcomes
10. A New Approach to Reducing Cash-to-Cash Cycle Time
The Value of Reducing Cash-to-Cash Cycle Time
Webinar, June 19, 2018
STE VE TRACE Y
Executive Director, Center for Supply Chain ResearchTM, Penn State University
2018 Center for Supply Chain ResearchTM. All Rights Reserved.
11. Working Capital and
Cash-to-Cash Cycle
Working capital—generally defined as the
difference between a firm’s current assets (cash,
account receivable, and inventories) and short-
term liabilities—presents a picture of the
operational liquidity of a business. Active working
capital management (WCM) can improve
liquidity, increase operating cash flow, and
enhance internal financing power. The key
instrument of WCM is the cash-to-cash cycle.
Source: BNP Paribas Fortis (2016); PKF (2017)
Foundation
12. What is the Cash to Cash Cycle?
The cash-to-cash
cycle, also referred to
as cash conversion
cycle (CCC), is
the time period
(measured in days)
between when a
business pays cash to
its suppliers for
inventory and
receives cash from its
customers for goods
sold.
“
”
Inventory
Days of inventory (DOI)
Raw
materials
Work in
progress
Finished
products
Cash
Your CompanySupplier Customer
CASH OUT
Days of Payables
Outstanding
(DPO)
CASH IN
Days Sales
Outstanding
(DSO)
Materials
purchased
and delivered
Payment
to
supplier
Payment
by
customer
Finished
goods sold
and delivered
Cash-to-cash cycle (days)
= DOI + DSO – DPO
Discerned from: AccountingTools (2017); BNP
Paribas Fortis (2016); CSense (2017); PKF (2017);
Wick (2013)
13. Managing CCC: The End-to-End Supply Chain View
Effective approaches to managing
CCC begin with analysis of the key
processes of the entire supply chain to
uncover the underlying causes of poor
CCC, focusing on the three primary
drivers of CCC.
Inventory
Accounts payable
Accounts receivable
1.
2.
3.
14. Key Supply Chain Levers to Improve CCC
14
Source: APQC (2016); BNP Paribas Fortis (2016), Brown (2017), Coyle et al. (2016), Lloyds Bank 2017, Wolf (2015)
Optimize Inventory Optimize Procure-to-Pay Cycle Optimize Order-to-Cash Cycle
• Automate invoicing processes
(speed and accuracy)
• Actively follow up outstanding
invoices and underlying reasons
• Be strategic with the range of
credit terms offered to different
customers
• Monitor contract compliance
to minimize payment made
earlier than agreed terms
• Streamline invoice
acceptance and payment
processes
• Rationalize supplier base for
greater leverage in contract
negotiations
• Reduce product design
complexity
• Manage supplier lead
time
• Adopt logistics techniques
e.g. JIT and VMI
• Eliminate unnecessary
channel intermediaries
• Improve sales forecast
and demand planning
A balancing act to carry enough
inventory to quickly respond to
customer demand while
simultaneously minimizing the
amount of cash tied up in
inventory and warehousing.
A balancing act to lengthen the time
taken to pay suppliers while taking into
consideration impacts on supplier’s cash
flow (supply disruption risks), level-of-
service agreement, and potential
discounts from early payment.
Management of supply chain time (order-
to-cash), reliability (order completion rate
and on-time delivery), and information
accuracy (invoice accuracy) that
determine when the customer begins
processing the shipment delivery for
payment.
15. Leveraging Change Management Tools to Develop
Cash Management Culture
ADKAR Phases of Change
(The Objectives)
Awareness
Desire
Knowledge
Ability
Reinforcement
Communications
Sponsorship
Roadmap
Coaching
Resistance
Management
Training
Change Management Tools
(The Means)CCC management is
a cross-functional
concern that extends
to external supply
chain collaborators
like suppliers,
customers, and third-
party logistics
providers. To gain
sustainable
improvements in CCC,
developing cash
management culture
is imperative.
“
”Source: Image created based on “Change
Management Toolkit” (www.slidebooks.com)
16. Remember
Effective cash-to-cash cycle time reduction approach should
start with a “tone at the top” directive from the board of
directors, CEO, and CFO.
Successful cash-to-cash cycle time improvement requires broad
engagement across procurement, sales, inventory
management, and finance functions, as well as external
collaboration with suppliers, customers, and 3PLs.
The accumulation and use of data are qualities of an effective
working capital management system. Centralizing and
standardizing financial transaction processing can enable
companies to draw meaningful insights from underlying data.
Source: Lloyds Bank (2017), Wolf (2015)
17. A New Approach to Reducing Cash-to-Cash Cycle Time
The Value of Reducing Cash-to-Cash Cycle Time
Webinar, June 19, 2018
JOE K RAUSE
Director of Professional Services, Senior Strategy Consultant, AchieveIt
18. Consider this…
Less than 10% of strategies
formulated are effectively executed.
70% of the time the real problem isn’t
bad strategy. It’s bad execution.
22. Blueprint 360
The Blueprint 360 solution helps companies improve performance by combining
expertise, best practices and technology through supply chain excellence.
Learn More: https://www.achieveit.com/blueprint-360/
23. Steve Tracey
Executive Director
Center for Supply Chain Research™
Penn State Smeal College of Business
sft1@psu.edu
(814) 865-0585
https://www.smeal.psu.edu/cscr
Alan Todd
CEO & Founder
CorpU
atodd@corpu.com
(212) 213-2828
https://www.corpu.com/
Joe Krause
Director of Professional Services
& Senior Strategy Consultant
AchieveIt
jkrause@achieveit.com
(800) 535-1559
https://www.achieveit.com/
Q&A with the Speakers Thank You!