New Best Practice Report by APQC and Protiviti Reveals How Organizations Improve Processes in the Realm of Working Capital Management

General Mills, Owens-Illinois, and Zappos.com Noted for Best Practice Performance

(Houston, Texas – January 24, 2011) –  APQC, the leading benchmarking and best practices research organization, and its research partner Protiviti, a global business consulting and internal audit firm, released today a best practices report, “Improving Working Capital Management and Cash Flow Intelligence,”showcasing how  organizations have developed effective strategies and processes to reduce working capital requirements and optimize cash used to fund operations. The report illustrates how organizations drive improvement in receivables and payables processes and deploy innovations in supply chain finance and cash flow analytics.

The report is based on a study conducted by APQC, with insight on the findings provided by Protiviti, and identifies 14 key best practice findings. For example, such organizations:

  1. Align overall operational processes with stated strategic intent.
  2. Take a cross-functional approach to working capital accountability and ongoing improvement of receivables and payables processes.
  3. Use innovations in supply chain finance such as payables factoring and dynamic discounting, which support the paying organization’s working capital management strategy without harming key supplier relationships.
  4. Conduct real-time analysis of cash flow drivers to ensure reliable forecasts and optimize spare cash.
  5. Conduct transactions electronically whenever possible and work with vendors so they can do the same.

General Mills, Owens-Illinois, and Zappos.com are featured and distinguished for their exceptional performance and approaches around working capital management. The report contains data, case studies, and snapshots of successful practices such as:

  • General Mills’ integrated review process involves leaders from a number of functional areas. Each month, they review goals, metrics, forecasts, and overall progress in the drive to reduce the working capital requirement and boost overall return on invested capital.
  • Owens-Illinois applies Lean Six Sigma principles to flesh out the root causes of working capital-related inefficiencies, providing significant savings to the company.
  • Zappos.com’s change-management rigor, which includes the assignment of a full-time senior change management position, has helped all employees better understand how their individual roles and responsibilities influence working capital management.

According to Mary Driscoll, senior research fellow, financial management for APQC, the effort to raise liquidity during the recession delivered some astonishing lessons. "The most compelling lesson is that strong disciplines in working capital management lead to strong disciplines in operations—and that is what drives significant gains in resource productivity and, by extension, economic profit growth. Beyond that, after spending tremendous effort to raise cash levels—and learning what works and what doesn’t to drive meaningful gains in process performance—CFOs tell us it would be folly to let bad habits slide back in."

Protiviti is offering a complimentary download of the report at www.protiviti.com/workingcapitalmgmt.

“Coming out of the worst recession since World War II, companies are holding close to $4 trillion of cash on their balance sheets. Clearly, cash remains king to many CFOs and generating free cash flow is a top priority,” said Brad Rachmiel, a director with Protiviti. “In this study, leading companies share best practices they have implemented to manage their working capital and cash flow positions. In particular, a new perspective on working capital management is emerging, where senior management and their boards are viewing working capital management in more strategic and sustainable terms. By understanding and implementing leading practices identified in this report, organizations can transform their working capital programs from reactionary in tough times to a source of value in all times.”

Webinar to Explore Results

APQC and Protiviti will host a webinar on Wednesday, February 23 at Noon CST to delve into the report’s findings. To attend the complimentary event, please register online.

About APQC

APQC is a member-based nonprofit and one of the world’s leading proponents of knowledge management, benchmarking, and best practices business research. Working with more than 750 organizations worldwide in all industries, APQC provides organizations with the information they need to work smarter, faster, and with confidence. Visit www.apqc.org or call +1.713.681.4020 and learn how to make best practices your practices.

About Protiviti

Protiviti is a global business consulting and internal audit firm composed of experts specializing in risk, advisory, and transaction services. Protiviti helps solve problems in finance and transactions, operations, technology, litigation, governance, risk, and compliance for clients in the Americas, Asia-Pacific, Europe, and the Middle East. For information about Protiviti’s services, visit www.protiviti.com.

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