Are your company’s cash reserves low?
Are there sufficient funds to tide over the COVID-19 crisis?
Most businesses, across sectors, are grappling with cash flow pressures, and CFOs are tapping all available options to ensure their companies don’t run out of cash. Procurement can help here.
The latest GEP BULLETIN, Preserving Cash and Working Capital: Rapid Procurement Levers to Support Finance in Times of Crisis, looks at how procurement can leverage suppliers to optimize cash flow quickly and come to mutually beneficial arrangements.
Why Read It:
A must-read for procurement leaders who need to offer financial quick wins and make a business impact.
"When will things be back to normal?"
"Will it be a ‘new normal’?"
"Do we have the cash to weather multiple months of zero revenue?"
The coronavirus pandemic has raised many uncertainties, but the last question is perhaps what most businesses need to address urgently.
As countries lock down, people stay home and factories down shutters, affecting all business activities, CFOs are identifying and tapping all available financial instruments, including credit lines, to ensure that their companies don’t run out of cash. In parallel, enterprises are asking all internal operations to cut costs via salary reductions, reduce headcounts and stop purchases in indirect spend categories such as travel, marketing, supplies, etc.
At times like this, procurement, which is responsible for 40-70% of a company’s cost structure, has the opportunity to help mitigate the economic impact of the coronavirus and create even more value for the business.
We outline suggestions on managing the business impact of the coronavirus and how procurement can best leverage suppliers during a downturn, based on what GEP has specifically implemented for its clients:
DO NOT LET A CRISIS GO TO WASTE: IMPROVE PROCUREMENT EFFICIENCY
Coronavirus and recession may go hand in hand. The key to success is a willingness to convert this crisis into a longer-term advantage for your company. A quick diagnostic to establish where to start would be helpful. Clear communication and transparency with your supply base will help as its success is linked to your success. In parallel, your procurement function should make sure that other internal functions, such as manufacturing or engineering, understand what is being discussed with the suppliers, and provide support as needed. Program-managing the actions on a weekly basis keeps improvements on track — and provides visibility for making mid-course corrections.
The coronavirus’s effects on global markets will pass eventually — and the key objective for both your company and its main suppliers should be to come out stronger and more competitive than ever before.
As the coronavirus crisis intensifies, managing your supply chain is going to get even more challenging. It may be worth finding a partner with deep experience in procurement and supply chain management to reinforce your capabilities and help you stay on course.
If you would like to have a conversation about how we can help, please reach out to our supply chain leadership.
Vice President, Consulting
John has over 15 years of strategy consulting experience managing several large-scale engagements with leading global clients.
At GEP, John is responsible for partnering with leading CPG and retail enterprises on strategy, supply chain and management initiatives. John is also the Chair of GEP’s Thought Leadership Council.