The financial benefits of timely response are straightforward. Fast delivery translates to less inventory and reduced need for distribution facilities. Faster to customers means less working capital is required to support supply chain operations. Three aspects of financial sophistication are cash-to-cash conversion, dwell time minimization, and cash spin.
Cash-to-Cash Conversion
The time required to convert raw material or inventory purchases into sales revenue is referred to as cash-to-cash conversion. Cash conversion is generally related to inventory turn: The higher the inventory turn, the quicker the cash conversion. A goal of supply chain design is to reduce and control order receipt-to-delivery time in an effort to accelerate inventory turns.