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Working Capital

NEEDS-BASED RESULTS

 

Working Capital

SITUATION

Working capital had not been a focus for the leadership of a major mining company. Significant financial and operational opportunities were available with immediate effect.

DRIVER GOAL

  • Reduce working capital by 15% - 20% by year end.
  • Generate $65 million of working capital benefits that are rapid, visible and sustainable.

RESULT

Identified cash releases in the following areas:

  • AP & AR - $48.6 million
  • Inventory - $1.8 million
  • MRO - $4.1 million
CS-359 large

Case Study

Optimize Working Capital at a Major Mining Company

Issue

Working capital had not been a focus for the leadership and management of this major mining company. Consequently, significant financial and operational opportunities were available with immediate effect. The company lacked basic process, discipline and management practices typical of Accounts Payable, Accounts Receivable and Materials & Supplies. Additionally, the lack of readily available and accurate data and information was significant.

Highland Approach

Detailed analysis determined that the goal was attainable within a 30-week timeframe, although there were significant barriers to achieving success. The Highland Group concluded that key drivers for each function (Accounts Payable, Accounts Receivable and Materials & Supplies) required process modifications in order to maximize cash flow for the company.

Actions Taken

The Highland Group identified, developed and implemented processes, disciplines and management practices delivering the following results:

  • Reduced DSO by 7 days in Accounts Receivable.
  • Introduced methodology and metrics for tracking and measuring operational performance that supports corporate strategy.
  • Improved DPO from 24 to 32 in Accounts Payable.
  • Reduced inventory, contributing $10.8 million to cash conversion cycle.
  • Developed systems to manage MRO stock at major sites for the future.


Rapid and measurable financial results were realized through the implementation of process improvements across operations in the U.S. and Europe, achieving a combined working capital savings of $57 million (plus $5.2 million in interest and cash savings) in the midst of a major collapse in commodity prices.

Reduced working capital by

$57m

by implementing sustainable process changes in AP and AR

The Highland Group team worked with our key working capital stakeholders to design, develop and implement processes and procedures that have enabled us to reduce our working capital requirements.

Chief Financial Officer

Related Information

subject matter-based

Project Director

Working Capital

Hamid has over 20 years of experience as a management consultant. He has a wealth of experience in process and operational improvements, corporate strategic planning, development and deployment, global sourcing, supply chain management as well as working capital improvement experience (A/R, A/P, Contract & Vendor Management, Inventory, MRO/Materials & Supplies).

Senior Consultant

Supply Chain

Laurence has more than twenty years of industry and consulting experience in all areas of supply chain management – including inventory management and procurement – and in Total Working Capital management.

Project Leader

Financial Services

North America

Brandon is a senior project leader and consultant with more than 12 years of experience in helping financial services firms maximize revenue and control costs through continuous improvement. He specializes in implementing efficiency, service and quality process enhancements in Fortune 500 companies by utilizing Lean and Six Sigma principles.

Senior Consultant

Working Capital

North America

Joe is an innovative and versatile professional with over 25 years of solid experience building, growing and operating diverse, multi-faceted and geographically dispersed global high-growth organizations. He has an exceptional track record of managing projects that deliver credible and sustainable improvements in cash management, operations, service quality and cost.