Artificial intelligence can improve cash flow for manufacturers

The U.S. manufacturing sector has been valued at roughly $2.4 trillion annually and accounts for 11 percent of the national gross domestic product (GDP). And every manufacturer spends a significant amount of money in different regions and warehouses to keep their businesses operating smoothly.

The idea that you manage your business for profitability but operate it for cash flow seems like a simple one, but the many moving parts compromise cash flow. This can be even more challenging for manufacturers, who must maintain inventory dispersed in multiple locations.

The answer to cash-flow issues lies in the power of artificial intelligence and analytics. By using existing data, AI can positively impact collections and improve the flow of cash in your business in multiple ways.

The most obvious is accounts payable. Normally, manufacturers rely on the invoice due date; when it passes, someone follows up. It is a reactive process. But AI can take the data the manufacturer already has and bring it together, to be more proactive.

AI-powered collections management uses data and machine learning to create a predictability measure of which customers will default or not pay. This allows a company to tune collection efforts, creating a more positive and proactive solution.

The system looks at payment history to make predictions. It can also enable custom collection actions depending on the customer or distributor. If a particular distributor requires specific paperwork for payment, the system ensures any follow up includes the proper documentation.

More personalized experiences increase the opportunity to collect in a timely manner. If a customer is frequently delinquent, reminders can begin earlier. There may be other customers who regularly miss their due date by a few days, so the system knows payment is expected soon. Patterns can help determine the right interventions, so you get paid faster.

Better inventory management also has a positive impact on cash flow. Leveraging AI and analytics, manufacturers can better predict demand and plan what to make, when, and manage overages and stock outs more efficiently.

Being more proactive with collections and inventory management means you raise the visibility of your working capital, so you can keep your business operating smoothly.

But these are not the only benefits of bringing AI and analytics into manufacturing. In my next post, I will discuss the significant savings AI can offer to manufacturer warranties and to enhance your cash flow.

Prasad Shyam is a Vice President, Insights & Data Global Practice at Capgemini. To learn more about how using data and analytics can improve business performance, contact him at prasad.shyam@capgemini.com.

Prasad Shyam

Expert in AI, Analytics, BI, Go to Market Strategies

Vice President – Insights & Data Global Practice, Capgemini
It is crucial to collaborate closely with your clients and truly understand their business challenges if you are to develop solutions to overcome those hurdles.
I am a Vice President within Capgemini’s Insights & Data practice. In this role, I connect with the business and technology leaders of Fortune 500 organizations to understand their business challenges and partner with them to develop solutions they need to succeed. I am focused on the manufacturing, automotive, pharmaceuticals, oil and gas, and energy and utilities sectors.
My business experience includes developing and delivering analytics and data-management service offerings for multiple industries. I also have extensive experience delivering program management, architecture, design-to-deliver, business intelligence, analytics, and performance-management solutions.
I have managed I&D projects in India, overseeing more than 9,000 analytics professionals over three years. I have also led smart-insights solutions and platform development, smart-asset-management projects, and a smart-procurement-management implementation.
Recent work includes
Providing thought leadership solutions for vital business problems to understand customer pain points, working closely with technology partners to develop positive outcomes
Driving analytics and data-management offerings across verticals with an extensive understanding of critical business drivers in global markets and industries.
Within every team structure I am a part of, I promote a collaborative and constructive approach. This is crucial to ensure team members work effectively in a matrix organization across a global enterprise.
And another thing…
Before joining Capgemini, I worked as a VP and Global Head for Business Intelligence and Analytics at IGATE. I was also a General Manager and Business Head for Analytics and Information Management at a renowned tech company.
I have been with Capgemini for over four years. I am currently based in Chicago, Illinois.