Fact: Cash flow problems are fatal to business. The research firm CB Insights recently notes that 29% of startups fail due to insufficient cash flow. Cash flow problems are cited as the 2nd most common cause of business failures. If you are wondering about the 1st most common cause, it’s a lack of demand for products. The watch industry is no different, as the last few years demonstrated, the Swiss Watch industry was staggered by overly optimistic sales forecasts that saddled most companies with too much finished watch inventory that led to massive cash flow crises. As the outlook for watch sales is improving moving into late 2017, brands are learning from the mistakes of the past and seeking ways to address the issues that led to the precarious situation of recent years.
The FINS solution for the watch industry was designed to address the pain points of the watch industry specifically. As an end-to-end supply chain management, manufacturing and marketing solution, the FINS cloud-based ERP uniquely solves cash flow problems and eliminates costly non-turning inventory simultaneously.
As a watchmaker as well as manufacturer and service provider, Montrichard was well aware of the cash flow pitfalls that inaccurate sales forecasts and incomplete supply chain management can incur. For any company, it’s easy to fall in love with sales numbers. But sales figures only tell part of the story. more sophisticated profitability reports should include all costs down to the order level and also take into account secondary costs such as marketing and distribution. Without complete business data, sales numbers can be deceiving and often lead to inaccurate forecasting that results in overstock – an absolute cash flow killer.
FINS addresses the issue in two ways: inventory control and end-to-end supply chain analysis.
Inventory reduction is a key component of the FINS solution. By carefully analyzing current inventories, reviewing logistics and applying component standardization where possible, immediate reductions are realized. In fact, typical inventories can be immediately downsized and within 6 months can see reductions of up to 4x using the FINS lean inventory principles and optimizations.
Then, the FINS algorithm is applied on previous and current orders to calculate components consumptions based on sales data, replenishment times, and best sellers. Over the next few months, non-turning inventory is eliminated and logistics are streamlined. FINS constantly compiles and analyzes data to further optimize inventory, typically reducing from 6 months to as little as 1 month quantity of finished watches.
The effect of this reduction and optimization of inventory results in an incredible improvement in cash flow – freeing up to 70% that can be used for operations, marketing and business growth opportunities. Just imagine what your company could do with a two thirds increase in cash flow.
The FINS solution gives watch brands an immediate and significant step up on their competition that is helping them thrive in today’s uncertain market. It instantly boosts cash flow and eliminates the costly risks of overstock while creating lean operations and a flexible supply chain that can quickly respond to market demands. FINS enabled companies can better protect themselves from volatile market fluctuations and can proactively respond while others simply react.
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the FINS manufacturing software solution for the watch industry.