WORKING CAPITAL tends to pose major challenges with steel businesses involved in manufacturing, fabrication and building. Many businesses require inventory and free cash to meet demanding customer requirements. In the quest to meet these requirements and expectations, working capital is over extended. This often results in cash ow pressure and pro t leakage. Investing in the right type and amount of inventory where possible; ensuring the range and scale works for your business will help reduce working capital. In addition ensuring cash is optimised and working for your business – valued by your customers with the right investments in people, processes, inventory and equipment.
The Steel Efficiency Review® process recommends operations and productions teams to make what the customer wants when they want it, as specified. WORKING CAPITAL when not managed effectively can cost steel businesses’ money, time and opportunities to win new work. These costs can amount to a considerable sum over time. With over 1000+ Steel Efficiency Review® consultations completed, we have found if you could reduce WORKING CAPITAL the savings would be straight back on your bottom line improving the profit in your business.
Our SER® consultants have recommended the following 3 key solutions to help reduce WORKING CAPITAL:
1. LAYOUT AND FLOW IMPROVEMENTS TO ELIMINATE BOTTLENECKS. Look at the warehouse layout and by balancing the production processes to ensure that work in progress does not build up between production lines. It is not important to run every machine as fast as it can be run, at the end of the day we only need to make things as quickly as the customer wants them, no faster. “Kanban” systems can be used to help ensure that we balance our processes and prevent the build up of inventory – reducing working capital.
2. ABILITY TO SOURCE HIGH QUALITY RAW MATERIALS (SEMI-FINISHED). By making end products with semi-finished feedstock, working capital can be reduced significantly. This will allow steel businesses involved in manufacturing, fabrication and building to remove the main cause of excess inventory. Working with high quality semi-finished material will enable stock to be produced quickly – removing non-value added processes. This requires trust in customer requirement and correct forecasting.
3. OPTIMISATION OF FEED MATERIAL. Investing in smaller material deliveries and quicker lead times where possible enables processing to be managed efficiently. In addition to this, creating optimal coil sizes, pack sizes and packaging will greatly reduce the waste of inappropriate processing patterns.
As a supplier of steel and aluminium products, we must continue to strive to find a better way with our customers. The Steel Efficiency Review® aims to provide recommendations to change and improve our customer’s business and at the same time our product and service offer.
Download our State of Market Reports for our insights and learnings after completing 1,011 Steel Efficiency Review® consultations on businesses of all shapes and sizes across Australia. To register for your own FREE Steel Efficiency Review® click here.