During their meeting in Seoul (South Korea) mid of November, the governments of the leading G20 industry nations agreed on new regulations to secure global capital standards. In future the so called Basel III rules will require banks to hold greater capital buffers to absorb potential losses.

For corporate financing this will mean that the banks will be more restrictive in lending money to businesses, especially in cases with high risks for the bank. Under the new rules, the mandatory reserve for tier 1 capital will rise from 4 percent to 4.5 percent by 2013 and reach 6 percent by 2019.

Companies should therefore be prepared and find ways to secure liquidity and reduce costs to sustain their corporate development already right now. Next to typical levers such as accounts receivables and accounts payable, especially logistics often offers great potential to set free working capital and reduce costs by lowering inventory levels, as in some industries logistics costs sum up to 10 percent of the company revenue.

The logistics experts from Barkawi Management Consultants have achieved great successes by optimizing planning and forecasting processes, reducing inventories by introducing smart supplier integration concepts such as Vendor Managed Inventory (VMI) or redesigning distribution networks and intra-logistics processes. Reduced freight costs by optimized route planning and improved utilization of transport capacity contribute furthermore to cost reduction.

The pdf-table on the right shows which effects on costs and assets Barkawi could achieve in several industries.

Barkawi recommends companies to have their Supply Chain Structure analyzed by an introductory Quick Scan in order to secure a target-oriented approach and to minimize implementation costs. This way, only the measures offering the greatest potential and most powerful levers will be applied.