Advertisement

Ways Out of the Working Capital Trap

Empowering Self-Financing Growth Through Modern Supply Management

  • Erik Hofmann
  • Daniel Maucher
  • Sabrina Piesker
  • Philipp Richter

Part of the Professional Supply Management book series (SUPPLY, volume 1)

Table of contents

  1. Front Matter
    Pages i-x
  2. Erik Hofmann, Daniel Maucher, Sabrina Piesker, Philipp Richter
    Pages 1-6
  3. Erik Hofmann, Daniel Maucher, Sabrina Piesker, Philipp Richter
    Pages 7-12
  4. Erik Hofmann, Daniel Maucher, Sabrina Piesker, Philipp Richter
    Pages 13-20
  5. Erik Hofmann, Daniel Maucher, Sabrina Piesker, Philipp Richter
    Pages 21-53
  6. Erik Hofmann, Daniel Maucher, Sabrina Piesker, Philipp Richter
    Pages 55-73
  7. Erik Hofmann, Daniel Maucher, Sabrina Piesker, Philipp Richter
    Pages 75-80
  8. Erik Hofmann, Daniel Maucher, Sabrina Piesker, Philipp Richter
    Pages 81-85
  9. Erik Hofmann, Daniel Maucher, Sabrina Piesker, Philipp Richter
    Pages 87-89
  10. Back Matter
    Pages 91-94

About this book

Introduction

Especially in times of an economic boom following a crisis, companies have to deal with the phenomenon of the "working capital trap," which signifies a company's increasing need for financial liquidity in times of hindered access to debt capital, caused by the increasingly restrictive credit approval processes of financial institutions. As a consequence of cost savings, this situation is often reinforced by a low level of inventory.

This book takes up the problem and shows ways of escaping the "trap" by identifying and strengthening in-house financing potential. First, different operating ratios will be introduced. These refer to the amount of capital committed to the flow of goods and to the amount of in-house financing possible. Subsequently, methods for consolidating in-house financing that are affected by procurement processes will be presented from the company's and the supply chain's perspective.

From a company's perspective, the methods for consolidating the amount of in-house financing over the following topics:

•             The Management of Payment Terms

•             Inventory Management

•             Product Group and Supplier Management

From the supply chain's perspective, the following methods for extending the possible amount of in-house financing will be discussed:

•             Finance-Oriented Supply Chain Sourcing

•             Supply Chain-Oriented Supplier Financing

•             Collaborative Cash-to-Cash Management

•             Collaborative Cash Pooling and Netting

•             Supply Chain Financing Platforms

The conceptual models will be clarified using a practical example from the automobile industry. Finally, the "Procurement Value Added" (PVA©) approach will be presented, a concept that measures the contribution of procurement to the company's success.

Keywords

in-house financing potential procurement purchasing vendor financing working capital

Authors and affiliations

  • Erik Hofmann
    • 1
  • Daniel Maucher
    • 2
  • Sabrina Piesker
    • 3
  • Philipp Richter
    • 4
  1. 1., Chair of Logistics Management (LOG-HSG)University of St.GallenSt. GallenSwitzerland
  2. 2.Kerkhoff Competence Center of Supply Cha, Lehrstuhl für LogistikmanagementUniversität St. GallenSt. GallenSwitzerland
  3. 3.Kerkhoff Consulting GmbHDüsseldorfGermany
  4. 4.Kerkhoff Consulting GmbHDüsseldorfGermany

Bibliographic information

  • DOI https://doi.org/10.1007/978-3-642-17271-7
  • Copyright Information Springer-Verlag Berlin Heidelberg 2011
  • Publisher Name Springer, Berlin, Heidelberg
  • eBook Packages Business and Economics
  • Print ISBN 978-3-642-17270-0
  • Online ISBN 978-3-642-17271-7
  • Buy this book on publisher's site