In manufacturing, efficiency and cash flow are everything. Yet too often, companies delay sourcing initiatives, thinking they’ll capture savings eventually. But here’s the hard truth: every month you wait, you are permanently losing cash.
Let’s say your strategic sourcing opportunity is $60 million annually. That’s $5 million per month in potential benefit to the P&L, assuming it all goes to the bottom line, and cash savings. If you delay by even one month, that’s $5 million in cash lost forever. Not deferred, not delayed—gone.
Now scale that out:
- 1-month delay = $5M lost
- 3-month delay = $15M lost
- 6-month delay = $30M lost
This isn’t just theory. In a capital-intensive industry like manufacturing, this lost cash could have funded automation upgrades, offset labor pressures, or helped buffer supply chain volatility. Instead, it quietly vanishes into operational inefficiency.
Yes, the earnings benefit may still show up later. However, cash is king, and manufacturers know the importance of liquidity in a world of fluctuating input costs, unpredictable lead times, and constant margin pressure.
So, when is the right time to start?
- When inflation is increasing input costs
- When capital budgets are under scrutiny
- When suppliers are consolidating, and leverage matters
- When supply chains are rife with uncertainty
- When you can’t afford to leave cost savings on the table
That time is now. Strategic sourcing isn’t just a cost-reduction play. It’s a working capital improvement—and the longer you wait, the smaller that improvement becomes. So, what are you waiting for?
Mr Brewer is 30-plus year veteran of strategic sourcing and supply chain transformations. His work has saved billions of dollars for organizations around the world. For more information reach out to Scott at scott.brewer@claudiaconsulting.com or visit Claudiaconsulting.com
