Cash Is King

CHAPTER 9Cash Leadership Office (CLO)

Thoroughly convinced that he needed to shake things up and put a greater focus on cash, Bob sat at his desk looking around his office. Mementos lined the shelves of his bookcase, reminding him of the journey he took to build the company. There is a picture of the first factory, a framed Euro from their expansion into Europe, and a crayon drawing of Bob on a forklift that his granddaughter gave him for Christmas.

For decades he chased increased sales while keeping an eye on expenses. But cash? As he sat there taking it all in, Bob recognized that cash had really been an afterthought. He knew that Carol thought about it. She sees the growing list of capital requirements, but … the rest of his executive team? Could he convene a meeting and discuss the importance of focusing on cash? “Is it really that simple?” he said aloud to himself. Do they even know what to do? And what about competing priorities?

Then it came into view in front of him. A photo of Bob presenting Jeremy a silver cup in recognition for driving 15% out of supply costs. Jeremy achieved the impressive results by finding a new supplier in Asia, but this also came with longer lead times and a less predictable schedule. Over the past two years they did save on the cost of the material, but their inventory grew. “Jeremy did what I asked him to do,” Bob thought. “So, if I tell everyone to prioritize cash, what other unintended consequences will pop up?”

The past few weeks have been ...