Working Capital Management in Supply Chains

An optimized working capital aims to activate tied capital, capital which is frozen in account receivables and payables as well as in inventories. Often the ability to deliver anytime is a top priority for firms so that the tied capital is not optimized which increases the potential of bankruptcy in economic recessions. The potential to release tied capital can only be mastered by a tight company-wide collaboration, including the finance purchasing, production, sales and accounting department. Furthermore a holistic approach taking the whole supply chain into consideration must be realized to achieve a superior working capital performance. We show how firms can benefit from an optimal working capital in order to turn their supply chains into gold veins.