First mistake: leaving WCM up to individual functions
One of the major challenges of WCM is that it is always caught in the area of conflict between different functions and company units. Procurement, sales, logistics and controlling: they all have an influence on working capital – and they all pursue different goals. The principal goal of sales is to maximize turnover and service quality, for instance, while procurement is mainly interested in guaranteeing production supplies and making savings, and logistics handles low warehouse stocks. If a company leaves WCM up to individual functions, conflicts of interest are inevitable. The unit which puts the most effort into working capital management will ultimately have the greatest influence on working capital. Avoid making this mistake by developing and implementing a binding cross-functional strategy for your company.