About this Presentation
The concept of Working Capital Productivity (WCP) was developed while attempting to turnaround a Semiconductor manufacturing company facing a cash crunch in the year 2002. Once Cash was established as the constraint for the company, it was decided to ‘exploit the constraint’ by making only those products that returned cash highest in the quickest possible time.A metric was needed to rank the various products of the company. In the year 2002, solutions were available to exploit constraints of physical resources but none for exploiting cash constraint. Throughput accounting could not provide tools to benchmark individual products. The author was compelled to explore other knowledge areas, including operating and cash cycles, to develop a solution.Working Capital Productivity as a metric is the ratio of output to input. Output is the net of Sales minus fixed costs minus variable costs. Input is the money that stays invested in Raw materials, etc. When cash is confirmed to be the constraint while customer orders, manufacturing capacity, raw materials, etc., are in surplus, the working capital cycle (cash operating cycle) comes into focus. While traditional approaches suggest bringing cash into the cycle and to reduce receivables and lead time, etc., the approach presented here looks at the complete cycle and its productivity to rank the products based on the return on cash. Join Pradeep to explore this innovative approach and its potential impact on your company's performance.
What Will You Learn
To help you get the most value from this session, we’ve highlighted a few key points. These takeaways capture the main ideas and practical insights from the presentation, making it easier for you to review, reflect, and apply what you’ve learned.
Working capital productivity is a concept that was developed to help differentiate which products to run and which to drop when cash is not sufficient. It involves ranking and comparing products based on their cash flow and productivity.
The speaker introduced a model called the BQRST model which helps in evaluating improvement strategies and balancing different factors like reducing lead time, cost, altering payment terms etc.
The speaker also discussed how to apply this model at the company level, comparing one company with another in terms of their productivity and working capital.
Instructor(s)
Pradeep Kumar
Pradeep Kumar is a n Industrial Engineer from NITIE, he started his career on the shop-floor of Godrej & Boyce in 1979 and held positions of increasing responsibility with several leading organizations in India, such as Shriram Refrigeration, ITW Signode, Voltas, and Peerless Fabrikkerne India Ltd. In four of these units, he successfully led transformational change. Progressively leveraging these skills, he ventured into Management Consulting in 1999, where he employed innovative approaches to help SMEs improve productivity, cash-flows, and profitability. From 2009 to 2019, he taught Business Management at Nanchang University and Zhejiang Gongshang University, both in China. Drawing from deep domain experience in manufacturing, he designed several Executive Development Programs and delivered them in Hyderabad and Shanghai. Currently based in Hyderabad, he advises senior management as an Independent director and teaches MBA students as an adjunct faculty. He developed the concept of Working Capital Productivity in 2002 while exploring ways to turnaround a semiconductor manufacturing company facing a cash crunch.
Ms Alka Wadhwa
Alka Wadhwa is an experienced consultant and process improvement expert with over 24 years of expertise in the Theory of Constraints (TOC), Lean Six Sigma, and organizational performance optimization. She has successfully led projects in healthcare, financial services, and manufacturing, driving significant improvements such as a 67% boost in hospital operations and a 140% increase in outpatient visits.
Previously, Alka Wadhwa spent 17+ years at GE Global Research Center, where she led initiatives to enhance various GE businesses through advanced technologies, process redesign, and system optimization. Founder of Better Solutions Consulting, LLC, she specializes in using TOC, Six Sigma, and data analytics to streamline operations and build high-performance teams.
Her work has earned her multiple accolades, including the Empire State Award of Excellence in healthcare.
Dr Gary Wadhwa
Dr. Gary Wadhwa is a Board Certified Oral & Maxillofacial Surgeon with extensive experience in the field. He completed his Oral & Maxillofacial Surgery training at Montefiore Hospital, Albert Einstein College of Medicine in Bronx, NY, and has served as an Attending at prestigious institutions like St. Peters Hospitals, Ellis Hospital, and Beth Israel Hospital in NY. With a career spanning over two decades, he was the former CEO and President of a group specialty practice in NY from 1994 to 2015. Dr. Wadhwa holds an MBA from UT at Knoxville, TN, and has undergone additional training in System Dynamics at MIT, Health System Management at Harvard Business School, and Entrepreneurship and healthcare innovations at Columbia Business School. Committed to expanding access to Oral & Maxillofacial Surgery care, he is currently engaged in a meaningful project to provide healthcare services to underserved populations in inner city and rural areas through non-profit Community Health Centers.