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patterns, and generate more precise forecasts than human analysis alone. Moreover, integrating AI with Enterprise Resource Planning systems can generate a real-time look at a company’s cash position which shortens reaction time and promotes agile financial management. Generative AI and predictive analytics can play out hundreds of scenarios from best-case to worst, assess potential impacts on cash flow and help a business prepare for different possible outcomes. With a centralized dynamic model, a company can now synthesize live data from all operational parts of the business—AR, AP, sales pipeline, billing and subscription platforms, payroll, tax payments and benefit expenses—which enables faster, more accurate decisions that lead to less risk, greater profits and a company with a strong and steady pulse. The underpinning of good cash flow management lies in a host of basic accounting practices and procedures. The basic, routine nature of these procedures makes them a perfect candidate for automation. Agentic AI provides not only a cost savings, but a greater efficiency and accuracy than human operation. Inventory control can affect cash-on-hand, and traditional, conventional thinking may no longer be fiscally healthy. Pre-Covid, just in time (JIT) inventory, was a cornerstone of modern lean manufacturing, but under stress, it created high levels of supply chain risk. Resilient companies adapt, make adjustments, look beyond a surface view of their supply chains, to fully understand the matrix of their suppliers’ suppliers, and keep the inventory necessary to keep processes uninterrupted. Then there’s the operational POV of cash flow seen through the nuts and bolts of how a company creates and delivers its products or services. Mark Clark, a clinical professor in the department of supply chain management in the Harbert College of Business, has
seen the hard lessons learned from the pandemic. “Manufacturing without diverse suppliers is risky in the best of time, but when things are shaky, backup matters. If you’re manufacturing vitamins made of five components being shipped from five different countries, and one of them suddenly has an issue or their costs skyrockets for some reason—if you haven’t planned for that contingency, it doesn’t matter that the other four components are ready to go, without the fifth you don’t have a vitamin you can sell. No product, no sales, bad cash flow.” In this world of global interconnectedness, it’s no wonder that a firm’s supply chains have an outsized effect on profitability. No matter the cause, if the product doesn’t arrive when you need it, where you need it, at a price you need it, your profit model and your cash flow change. “Superior performance,” says Harbert Eminent Scholar Glenn Richey, “depends on supply chain responsiveness—to the environment, to supply chain members, to stakeholders and to the consumer.” The last few years may have taught us some hard lessons about supply chain risk, but what about risk on the consumer side? In an uncertain economy— whether it’s born out of a pandemic, government policies, climate change or military conflict—your risks on the customer side regarding quality, price and service are significant and multifaceted. If customers are forced to tighten belts, they become more cautious with their spending, their expectations and behaviors shift—and new challenges arise for your business. The most immediate and apparent of which lies in pricing as customers under budgetary constraints become more price-sensitive and discerning in their purchases, comparing costs, chasing discounts and delaying non-essential purchases. All of which leads to pressure on your profit margins and potential decisions about offering promotions or even lowering prices to remain competitive. You can also expect your customers to more closely scrutinize your value proposition, feel a greater need to justify the price they pay for the quality, features and benefits they receive. And if they perceive a disconnect, it’s possible they could switch to a lower-cost alternative or
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Manufacturing without diverse suppliers is risky in the best of time, but when things are shaky, backup matters.”
44 HARBERT.AUBURN.EDU
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