Reduction of net working capital for a Finnish industrial company

Lari Stark 22.9.2021

Background: During its growth, the industrial company, which expanded rapidly abroad, had not harmonized its operational practices. As the standard line was not followed locally in the storage of products, the customer’s capital was committed to an uncontrollably growing product inventory. The customer wanted to quickly release the capital tied up in the warehouse to increase its return on capital.

Project: Spring designed and implemented a three-part program to reduce net working capital:

1. Defining new emergency stock levels by sales location. Spring analyzes millions of rows of inventory data and uses it to provide updated estimates of required inventory levels based on delivery time, order profiles, and product categories.

2. Order tracking to avoid excessive production. Spring created a tool for the customer that allowed them to monitor orders placed by sales locations and, if necessary, fulfill them from another sales location’s inventory to avoid unnecessary manufacturing.

3. Identification of slow-moving surplus inventory and targeted sales targets. Spring analyzes sales data and looks for products in stock that would have taken several years to sell at the current rate. The customer drew up a sales program for the products, which aimed at the planned sale of these products.

Outcome: The rapid decline in inventory during the quarter improved the company’s financial condition. Harmonized emergency stock levels helped the customer manage its stock more efficiently and avoid accumulating surplus stock.