[{"data":1,"prerenderedAt":4},["ShallowReactive",2],{"article-body-1-7-trillion-in-the-wrong-place":3},"\n[The Hackett Group's 2025 Working Capital Survey](https://www.thehackettgroup.com/2025-working-capital-survey-payables-rebound-receivables-inventory-lag/)\nput a figure on the cash sitting where it should not: $1.7 trillion\nin excess working capital across the top 1,000 US public\nnonfinancial companies, roughly 11% of their aggregate revenue. Days\ninventory outstanding reached 68.9 days, the survey's highest\nreading in a decade, as buffers built for disruption became\npermanent furniture.\n\nNumbers that size invite strategic explanations. Supply chain\nuncertainty, geopolitical hedging, the cost of resilience. The\nexplanations are real and insufficient. Walk into any large company\nand ask where, specifically, the excess lives, and it dissolves\ninto something much less grand: parameters.\n\n## The anatomy of trapped cash\n\nWorking capital is governed, in operational fact, by an enormous\npopulation of settings scattered across systems:\n\n- **Safety stock levels** set during an ERP implementation by a\n  consultant who has since changed firms, for demand patterns that\n  have since changed shape.\n- **Reorder points and lot sizes** tuned for a supplier lead time\n  that improved two years ago, still buying as if it had not.\n- **Payment terms** defaulted from templates: paying this supplier\n  in 30 days because the template said 30, while a peer negotiates\n  60 for the same commodity.\n- **Customer credit terms and limits** inherited from a tier\n  assignment made when the customer was a different size and risk.\n- **Invoice and collection timing rules** that add days of DSO in\n  batch schedules nobody has questioned since go-live.\n\nEach parameter was a decision once. Then the decider moved on, the\ncontext moved on, and the number stayed, exerting its small daily\npull on cash. None is individually material, which is precisely why\nnone gets revisited. Together they are the $1.7 trillion.\n\n## Why initiatives keep losing to parameters\n\nThe standard corporate response is the working capital initiative:\na quarter of task-force attention, a consulting deck, a one-time\nharvest, and a slow relapse as the parameters resume drifting. The\npattern repeats because the initiative model mismatches the problem\nin two ways. The parameters outnumber the initiative. No\ntask force revisits fifty thousand settings. And the parameters\noutlast it. Whatever is fixed in Q2 begins drifting in Q3, because\nthe force that set the drift in motion (changing demand, lead times\nand rates meeting static settings) never stops.\n\n> A one-time optimisation of a continuously drifting system is a\n> photograph of a river.\n\n## Parameters as owned, monitored decisions\n\nThe durable version treats every material parameter the way a good\noperation treats any recurring decision:\n\n1. **Detect the drift continuously.** For each parameter, monitor\n   the gap between the setting and what current data supports: the\n   safety stock against actual demand variability and observed\n   lead times, the terms against the negotiated benchmark for that\n   category, the credit limit against the customer's current\n   profile. Parameter estimation drift is a solved statistical\n   problem; it just needs running against the live population.\n2. **Route exceptions to named owners.** Not fifty thousand\n   alerts: the ranked few hundred where the gap is worth money,\n   each carrying the cash impact, the recommended new value and\n   the evidence, addressed to the person entitled to change it.\n3. **Score the changes.** Each accepted recommendation is tracked\n   for realised cash effect, so the programme compounds credibility\n   the way the initiative model never could, and the release\n   becomes measurable instead of anecdotal.\n\nRun this way, working capital stops being an annual campaign and\nbecomes what it always actually was: a large portfolio of small\npredictions and decisions, continuously refreshed. The trillion\ndoes not come back in a quarter. It comes back the way it left,\nparameter by parameter, except this time on purpose.\n\n*The cash left through a thousand small decisions. It returns the\nsame way, or not at all.*\n\nA place to start this quarter: pick your fifty largest safety\nstocks and ask when each was last revisited against current demand\nand lead times. The answer is usually the business case by itself.\nProphesee's Operations module runs that check continuously, across\nthe whole population. [Find your trapped parameters](/contact).\n",1786833835742]