Does your ERP still devour your working capital?

A well-stocked order book with well-stocked capacities in the factory, yet hindrance to innovation and growth due to working capital and cash flow.

~ Trends ~

Trends within the industry expose practical weakness of ERP systems with ironic financial consequences regarding working capital and cash flow. Which actually hinders growth & innovation.

Growth and/or innovation are essential to remain competitive, increase customer value and also allow the company to differentiate itself from the competition. Lean Production Control and Paragonic focus precisely on optimising working capital and cash flow.

Some trends that make this challenge complex:

• Increasing scale leads to larger flexible and (semi-)autonomous production floors, but also to more complexity.

• The order portfolio has a growing number of more customer-specific products in smaller series. Shift towards High Mix Low Volume.

• Supply chain flexibility: ability to respond flexibly to increasing demand (move Rate) while maintaining quality.

~ Impact ~

Without additional measures, it will also impact delivery reliability and product quality. Which will also impact inventory, work in progress, complexity on the shop floor and communication to get a grip on it.

This all feels very dynamic, the customer-centric agility and being constantly busy, but in reality, meanwhile, working capital increases and where the cash cycle (from purchasing to sales) is negatively affected.

~ Werkkapitaal en Cashflow denkwijze ~

The answer is to explicitly look at the process flow per order and control it in a different way and offload the ERP. By regulating the release of orders, explicitly controlling the order of products/orders per workstation and taking into account the (changing) bottleneck and principles of the (semi-)automatic workstations, it is definitely possible to benefit. There are a number of resounding benefits due to the reduction in waiting time and thus throughput time created by this way of working:

1. Capacity efficiency critical resources (bottleneck)

2. Lead time reduction (up to 70% from experience)

3. Faster delivery of orders

4. Invoicing and getting paid earlier

5. Lower (intermediate) stock levels

6. More peace of mind and flexibility to jump in on S&OP or that one rush order

7. More output with the same number

Proper use of smart systems, linked to ERP, has a positive effect on the company's working capital and cash flow. Designed specifically for an increasingly automated environment, LPC-MES is the ideal solution for companies striving for efficient and flexible production.

Increasing productivity, quality, flexibility and cost savings are exactly what drives Koen Raukema and Jeroen Diepstraten, through sound business analysis, implementing business innovation and deploying LPC-MES tangible benefits for the industry can be achieved.

#koenraukema #jeroendiepstraten #lpc #paragonic #industry #industry5,0 #smartmanufacturing #cashflow #workingcapacital #digitalfactory #smart #bo