Implemented cash culture and achieved 35% reduction in tied up capital
About ViaCon Group
ViaCon was founded in 1986 in Sweden and has approximately 800 employees in 19 countries throughout Europe. ViaCon is a leading provider in the European market with a focus on production and technical sales of flexible corrugated steel structures and plastic pipes used to build Bridges & Culverts, GeoTechnical- and StormWater Solutions. ViaCon offers innovative, competitive and sustainable solutions.
In the spring of 2019, ViaCon was separated from the SafeRoad Group and by November the same year, the recently hired Group Executive Chairman, Stefan Nordström, was appointed as a new CEO. The company had struggled with stagnating performance in the past years, and the ambition to enter into a new growth phase was clear. With a new strategy, ViaCon needed to sustainably increase its capital efficiency and release cash for financing growth investments.
To ensure best practice in pursuing ViaCon’s many ambitious goals, they decided to engage Capacent and enroll in a working capital optimization program focusing on AP, AR and inventory. The target of the program was to reduce the operating working capital by 35% by the end of H1 2021.
“Improved capital efficiency requires better processes and routines to be sustainable, and for this you need someone from outside the company to look at operations with fresh eyes.”
Stefan Nordström, CEO ViaCon
The project aimed to identify and realize quick wins but at the same time have a long-term focus in order to reach sustainability at targeted working capital levels. The proposed approach was set to create awareness and understanding as well as establish a cash culture within the ViaCon Group. The work was divided into two phases:
Phase 1: Group wide assessment and pilots. The first phase consisted of a group wide assessment and pilots capturing all business areas and main working capital components. The pilot focused on the four largest countries in the group and an analytics center in Power BI was set up to follow the progress. During phase 1 an as-is analysis was done and future activities and potentials were set together with the organization to ensure local commitment and that the most relevant actions were prioritized.
Phase 2: Roll-out of working capital improvement. The implementation was initiated in the pilot countries and then rolled out throughout the group. The activities were carried out in close collaboration with the project members and involved people from all levels of the organization. The focus areas for each unit were tailored to their situation, the main activities included:
”One of the greatest benefits from the OPWC-project is the increased organizational understanding of the importance of working capital management and why it is a prioritized area. Each employee’s dedication and hands-on contribution to reaching the targets and maintaining the results will increase the chances of sustainable effects.”
Through a new Group Organization based on three Business Units and a Group-wide Operations function consolidating all 9 production sites (vs the former model of 34 different fully independent operational legal entities in 18 countries), a working capital-focused culture was institutionalized. Through a new reporting system, individuals were empowered to take fact-based decisions by having access to relevant data available at all levels.
The activities conducted throughout the program have so far resulted in a cash release above target level and with the remaining activities, the ViaCon Group are well on the way of reaching the final cash release target for H1 2021.
Main results by April 2021
Do you want to know more about how we can support your journey towards improving your working capital?
Erik Påhlson is Managing Director and Working Capital Lead at Capacent_x in Sweden. Book a meeting below to discuss how we can support your journey or request a free WCM benchmark analysis to compare yourself to your competitors.
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