Crises do not need to be negative. They can be a positive driver for change. COVID-19 accelerated digital transformation initiatives both during and after the pandemic. C-level executives were pleasantly surprised by how quickly their organizations implemented digital solutions and adapted to new ways of working. These learnings have driven even more ambitious digital transformation initiatives.
In the same way, inflationary pressure can act as a catalyst for digital solutions that can help manufacturers free up cash that is trapped in the process and enable better cash flow management techniques.
One of the digital solutions that can be used is automation. For example, many manufacturers still deliver solutions based on an Engineering-to-Order (ETO) process. Customers request a quotation for a solution that requires engineering resources to analyse and design before a quotation can be provided. Engineers need to be involved again to provide a manufacturing Bill of Materials (mBOM) and support the manufacturing, delivery and installation of the solution, not to mention any support required in the future.
As can be seen, this is a resource-intensive, manual process that takes a relatively long time and is prone to errors and miscommunication. The risk of delivering a solution that does not meet customer requirements is real. But, from a cash flow perspective, expensive resources taking a long time to both quote and deliver solutions not only delays the in-flow of new cash, but also leads to high acquisition costs, which is also a type of trapped cash. These cash flow issues are only exacerbated if the wrong solution is delivered to the customer!