On Track To Reduce Trade Working Capital
by €250 Million – Leading North European
Utility Company
 

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Situation

  • A €5 billion North European utility company with operations in multiple countries
  • Negative development of working capital over several years
  • CEO was concerned by a lack of focus on and visibility of cash and working capital in the company
  • The company was gearing up for a substantial investment program in the near future and needed to release internal cash to finance parts of it

Actions Taken

  • Six-week Group Assessment and QuickStrikeSM phase to assess potential, set local targets anchored by management, prioritize improvement areas (Ten work streams selected covering all working capital items) and develop detailed implementation plans
  • Six months hands-on support during implementation of new ways of working
  • Example of support:
    • Support group management and overall project throughout the change process, as well as each workstream leader
    • Hands on support to improve credit management in three out of four business areas
    • Detailed analysis handed over to Head of Procurement on how to improve terms with suppliers
  • Implemented incentive structure and aligned those with targets on different hierarchical levels
  • Implemented a global monitoring system
  • Communicated lessons learned and facilitated internal communication

Results

  • Implemented working capital targets for each of its business areas for the first time in its history, and linked the targets to the incentive scheme as well as the annual budget
  • Implemented a global monthly monitoring and follow-up process for working capital
  • Realized a substantial part of the targets on overdue receivables during our presence
  • The realization of the remaining potential is well on its way, and will be realized in the second half of 2008 and 2009 as the critical processes change