By: Dominic Doruem Nwagbaraocha
I was discussing this with a business owner in the manufacturing sector and his challenge was keeping operations running (working capital challenges), and I simply asked him to go lean.
Working capital represents short-term assets available to a business for meeting financial obligations such as payroll, creditors and suppliers. One accounting description is when net working capital equals current assets minus current liabilities. When this is a negative number, the business should be alert for near-term cash flow problems.
In a country like Nigeria, working capital one big challenge looking at our economy, at times like this you will see the benefits of lean management for improving liquidity and cash flow.
A lean manufacturer has a goal of reducing waste and unnecessary costs throughout the manufacturing process.
Reducing costs might not be enough to maintain positive cash flow for a manufacturer.
So, start by;
Looking at the picture below, opportunities for waste reduction would be in inventory and utilities, this will in turn increase working capital.
Take a finance course no matter your function it helps you in conversations on that table, you would make the right contributions and be looked at differently.
Dominic is a process & quality consultant with over 10 years’ experience leading various continuous improvement in world-class organizations. founder of Doruem Process Services and Co-Founder to Nodal Point Engineering, with core competence in manufacturing excellence and digital manufacturing.
You can reach him on LinkedIn here.