Reduce Working Capital by $2.5m

Outline
Developing the appropriate monitoring process cuts $2.5m+ from capital tied up in importing in an African country and increases product availability and freshness
Status – finished

The project – to control the amount of working capital tied up in the actual import process measured from arrival in a port in Angola to available for sale in a depot. The starting point in Dec 2003 was the discovery that we had 350-450 containers worth $8.75m-$11.25m of stock that was in the country but not available for sale.

The issues

• Imports management were not financially literate
• documentation was not always complete

The solution
This was  two part

• develop a simple methodology to split the containers between the three stages and then focus on the key issue in each one:-
  i.      arrived – key issue is do we have all the docs to clear customs
  ii.      in customs – Key issue is maintain pressure on clearance agents
  iii.      cleared but still in port – key issue is to remove the contains before they could get lost in the 1000 container stacks - organise transport to remove

• Clean up the process
  i.      prior to shipment to be much clearer with our suppliers on the documentation needed to clear customs easily
  ii.      Work with customs to get them to accept that we always supplied complete clean documentation and could be allowed to pre clear ie take directly from the ship to depot.

Result
Dec 2004 the containers averaged 250-300 in the ports, There had been a drop 100-150 containers saving $.2.5M-3.75m of working capital.
At the same time, product availability and freshness were improved and the company image with Customs for accuracy etc was enhanced.