The Cash- to - cash cycle (C2C):
The average number of days rqd o convert a dollar invested in product inventory into a dollar
collected from a customer is referred to as cash to cash performance. This cash to cash ratio has
the following formula:
o
C2C = inventory (days of supply) + Accounts Receivable (days) - Accounts Payable (days)
This metric is used to analyze or benchmark SC performance.
Universal comparison as it is a ratio
C2C cycle represent the time it takes between paying for raw materials and receiving payment
for the finished product
3 points to manage a C2c:
1.
Increase the av accounts payable
2.
Reduce cycle time and safety stock to reduce inventory of supply on average
3.
Lower your av accounts receivable
Time between spending your money and getting it back usually measured in days
An indicator of having a leaner and more efficient supply chain
C2C - DIO + DS) - DPO
DIO = days inventory outstanding
DSO = days sales outstanding
DPO = days payable outstanding
