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Case Studies

Supply Chain & Operations

Order-to-Cash improvements for a leading, global pulp and paper company

A business unit at a leading global pulp and paper company was experiencing high and increasing net working capital. Applied Value combined 10 improvement initiatives into a detailed action plan that generated a cash release of 75 MSEK (10-15%).
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Situation

A business unit at a leading global pulp and paper company was experiencing high operating net-working capital that was trending upwards. In need of order-to-cash support, the business unit also wanted to investigate opportunities for increasing process speed. Initial analysis showed that the business unit had a positive net receivable to payables ratio and high finished goods inventory.

Approach

To understand the business unit’s order-to-cash cycle, Applied Value analyzed areas in the entire value chain from customer profitability, adherence to production cycles, stock levels, receivables benchmarks, and internal processes. Issues along the entire value chain were mapped to find the root cause for the increase in net working capital as well as opportunities to drive down the baseline.

Results

AV identified the root cause of rising working capital: a special agreement with one large customers and increasing receivables in three mills was at the root of the issue. To drive down the baseline, 10 key improvement initiatives were funneled into a detailed action plan. AV’s improvements amounted to savings of 75 MSEK (10-15%) of the business units net working capital.

75 MSEK million SEK

cash release

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