Heading into 2023, many businesses are implementing cash flow optimization into their practices. With a potential recession that will impact our economy, it is essential that supply chains spend and invest their profits wisely. It was reported in 2021 that roughly $163 billion worth of inventory was wasted. In a post-pandemic world, cash flow serves as the foundation of many supply chain operations. It is estimated that the supply chain management industry will reach a valuation of $8.95 billion by 2024. Businesses must stay on track with the rhythms of raw materials as they must avoid paying for resources that are sparse and not coming in as fast as money is going out. To maintain revenue supply chain leaders must prepare their operations.
Cash Flow Unpacked
So what is cash flow? Cash flow is the extra cash left over after a business has already paid for operating expenses along with expenditures. But how does a supply chain prepare for the unexpected with its cash flow? It all comes down to having a strong cash reserve that supply chain leaders can turn to in times of crisis. This can be simplified as cash flow management. Cash flow optimization helps businesses make sure they have enough capital to pay expenses and themselves.
Two big ways that businesses can optimize cash flow:
- Inventory Optimization & Monitoring
Monitoring your inventory is one of the top cash flow management strategies that can lead to a reduction in supply chain overspending. One big disruptor in cash flow is an unchecked inventory: warehouses chock full of expiring inventory with huge operational costs. Businesses can easily get a handle on their cash flow by checking up on their inventory. What are the benefits of inventory optimization with artificial intelligence? Optimization is easy with automation and AI, which can reduce expired inventory, alert on shortages/overages, and reduce overall shipping, storing, and other costs.
- Augmenting Data
Today with augmented AI, data and analytics can be easily tracked, compiled, and predicted to help maintain the overall structure of your supply chain. Businesses are able to ask direct questions to their data, uncovering insights they had not previously known. In 2020, the estimated value for out-of-stock items was roughly $1.14 trillion, while the overstock value came in at more than $625 billion. With the implementation of new technologies, automated analytics can reduce an overflow of materials and goods. All while maintaining stock which saves capital that can be allocated throughout the supply chain operation. This same technology can help drive faster business decision-making that will provide insights that will drive your supply chain toward full stability.
Are you interested in implementing augmented AI into your supply chain operations to optimize your cash flow? Click here to learn more!