Home Successes Improving working capital through procurement efficiency

Structuring the finance function of a growing SME

Focus on a Belgian praline manufacturer

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Background

 

BY OPTIMIZING PROCUREMENT, THE CLIENT SECURED SUPPLIER RELIABILITY, REDUCED EXCESSED INVENTORY AND FREED UP WORKING CAPITAL, ACHIEVING A SIX-FOLD ROI.

 

A renowned Belgian praline manufacturer encountered significant challenges with its packaging material procurement and logistics, which is crucial for both product presentation and distribution.

The lack of formal supplier contracts led to:

  • no performance commitments from the supplier,
  • frequent late deliveries,
  • quality issues,
  • opaque pricing,
  • unpredictable cost increases.

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These inefficiencies disrupted the supply chain and tied up working capital by forcing the company to hold excess inventory, absorb unexpected costs, and operate with reduced financial flexibility.

This oversight in procurement strategy required urgent attention to optimize operations and financial health.

 

 

Procurement cash

Our Approach

Our consultant, Marcos Viale, was assigned to the client for a three-month, part-time mission to address critical deficiencies in their procurement processes.

 

His objective — to improve supplier reliability — formed part of a broader effort to optimize working capital by implementing a comprehensive source-to-pay process, covering every step from supplier selection to invoice management.

 

  • 1

    Establishing a Robust Procurement Framework

    Marcos led a strategic transformation of the procurement function by replacing informal agreements with structured, formal contracts.

     

    These new agreements incorporated Service Level Agreements (SLAs) and Key Performance Indicators (KPIs) to ensure accountability and transparency. This framework not only enhanced compliance but also improved operational efficiency and introduced penalties for underperformance, ensuring suppliers met the company’s expectations.

  • 2

    Unlocking Value Through Process Optimization

    The new procurement structure allowed for better management of expenditures, inventory, and cash flow.

     

    By holding suppliers accountable and streamlining operations, the client was able to free up additional cash and strengthen financial control — directly contributing to the organization’s working capital objectives.

  • 3

    Integrating Finance and Procurement for Greater Transparency

    Marcos also implemented integrated financial reporting between the procurement and finance departments.

     

    This improvement enhanced transparency, facilitated data-driven decision-making, and fostered a more collaborative relationship between both functions. Furthermore, sustainability practices were embedded into financial operations, aligning the company’s procurement activities with broader ESG objectives.

  • 4

    Building Capabilities and a Collaborative Culture

    To sustain the improvements, Marcos led a series of targeted training workshops aimed at increasing the maturity and autonomy of the procurement department.

     

    This initiative helped break down operational silos between procurement and finance, promoting a collaborative culture where financial insights drive smarter procurement decisions.

marcos

Results

By enforcing the structured contracts with clear KPIs and penalties for non-compliance, the client significantly reduced instances of late and substandard deliveries. This improvement in supplier reliability directly decreased the holding costs and unproductive inventory, thereby freeing up working capital and enhancing cash flow efficiency.

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The results were substantial and multifaceted:

  • Financial return: Achieved a six-fold return on investment through working capital optimization.

  • Team awareness: Elevated the financial acumen of the purchasing team, fostering a better understanding of financial impacts.

  • Procurement structuring: Reduced risks by formalizing supplier engagements, thereby strengthening business operations.

  • Ongoing education: Requested by the purchasing team, to keep them updated and strategically aligned.