Working Capital Improvement

Issue

Having recently completed an initiative to increase working capital by capturing cash from Accounts Payable, a mining company sought to obtain additional benefits from its supply chain. Facing a very challenging market with declining commodity prices and margins, management needed to reduce costs without impairing operations. The company also had an excessive number of vendors providing similar products and services and an environment in which many of the contract service providers operated without the proper level of oversight.

Highland Approach

A detailed analysis concluded that immediate changes were needed in business practices and operating procedures. Accordingly, the team implemented and executed on a Vendor & Contract Management Strategy, which involved conducting a thorough review of all goods and services purchased by specific category and corresponding supplier and then focusing on the major contractors providing extensive and varied services at the major operating sites.

Actions Taken

• Consolidated suppliers within each category, negotiated higher discounts on this incremental business, increased the volume of vendor managed inventory, and introduced a purchasing card option to finance and settle the transaction.
• Reviewed contracts relative to the service deliverables, manpower and pricing requirements, enforced the content of the contract, restructured deliverables into identifiable and manageable components and deployed appropriate resources.
• Partnered with client teams to implement a System For Managing vendors and related contracts, as well as major on-site service contractors.