When resilience collides with working capital

Once resilience is no longer treated as a vague aspiration, a new constraint inevitably comes into focus: working capital.

This is the point where resilience stops being a general intent and becomes a set of concrete decisions. Inventory levels, payment terms, service commitments, and planning horizons are no longer abstract levers — they become visible exposures on the balance sheet.

For supply chain and operations leaders, this is often where progress slows, tensions rise, and otherwise sensible initiatives stall. Not because resilience is unimportant, but because its costs are no longer hypothetical.

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Working capital as the point of translation

Working capital is often described as a finance concern. In reality, it is the translation layer between operational ambition and financial reality.

Resilience decisions are made tangible through working capital because it captures, in one place:

• how much uncertainty the organisation is carrying,
• where risk is being absorbed in the supply chain, and
• which trade-offs leadership is willing to tolerate.

Inventory increases, for example, are rarely about stock alone. They represent choices about service protection, supplier reliability, planning confidence, and response time. Receivables and payables similarly reflect how risk and liquidity are distributed across the ecosystem.

When resilience initiatives move beyond slogans and into execution, working capital is where intent becomes exposure.

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Why finance pressure is inevitable — and useful

CFO scrutiny is often perceived as resistance to resilience. In practice, it is more accurately a response to open-ended commitment.

Finance teams become uncomfortable when resilience initiatives:

• lack clear boundaries,
• accumulate cost without review points, or
• rely on assumptions that cannot be tested.

This pressure is not inherently obstructive. It often exposes questions that have existed long before the current disruption:

• Who owns service promises, and how variable are they allowed to be?
• Who decides where inventory sits — and on what basis?
• What triggers a reassessment of buffers once conditions change?

When these questions remain unanswered, working capital becomes the default battleground rather than a shared decision lens.

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The short-term versus long-term dilemma

In volatile environments, short-term increases in working capital are often unavoidable.

Tariff uncertainty, geopolitical disruption, supplier fragility, or regulatory shifts can force organisations to stockpile, dual-source, or protect critical flows at speed. These responses are frequently rational and necessary.

The problem arises when short-term necessity becomes long-term habit.

Without explicit decision points, temporary measures harden into permanent structures. Inventory introduced to manage a specific risk remains long after the risk has passed. Expedited routes become standard. Emergency buffers become embedded assumptions.

Over time, resilience quietly turns into structural inefficiency — not because the original decision was wrong, but because it was never revisited.

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Where planning either helps or fails

This is where planning processes such as S&OP or IBP are meant to earn their place.

In many organisations, however, planning has drifted away from decision-making and towards explanation. Meetings focus on reconciling numbers, justifying variance, or defending assumptions — rather than choosing between real alternatives.

When planning becomes a reporting exercise, it allows resilience-related costs to accumulate without challenge. Inventory creep is rationalised. Trade-offs are deferred. Accountability diffuses.

When planning is treated as a decision discipline, something different happens:

• trade-offs between service, cost, and cash are made explicit,
• ownership of decisions is clarified,
• and temporary measures are revisited deliberately.

The value of planning lies not in forecast accuracy, but in creating a repeatable forum where resilience decisions are made — and unmade — consciously.

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Why structurally important changes struggle to get funded

Many resilience-enhancing initiatives are structurally important but financially awkward.

Improving upstream visibility, redesigning networks, changing sourcing strategies, or building planning capability often deliver value over multiple years. Their costs, however, are immediate and visible.

This creates a familiar dynamic for supply chain leaders:

• initiatives with clear year-one ROI progress easily,
• initiatives with longer payback struggle to survive governance,
• and short-term fixes crowd out long-term design.

Working capital becomes the language through which these proposals are tested — sometimes fairly, sometimes reductively.

The challenge is not to avoid this scrutiny, but to engage with it more deliberately.

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From constraint to leverage

Handled poorly, working capital becomes a blunt instrument: a reason to cut buffers indiscriminately, cancel initiatives, or retreat to local optimisation.

Handled well, it becomes a strategic lever.

It can be used to:

• prioritise where resilience truly matters,
• align operations, finance, and leadership around explicit trade-offs,
• and sequence short-term protection alongside long-term redesign.

In this sense, working capital is not opposed to resilience. It is the mechanism that forces clarity about what resilience the organisation can afford — and why.

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The role of the supply chain leader

For supply chain and operations leaders, this creates a demanding role.

You are often asked to:

• respond quickly to disruption,
• protect service and continuity,
• and justify decisions under financial scrutiny — sometimes with incomplete data.

The goal is not to eliminate tension between resilience and cash. That tension is inevitable.

The goal is to ensure that resilience decisions are owned, bounded, and revisited, rather than accumulating silently until they trigger blunt corrective action.

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Where this leads

Once working capital is recognised as the decision arena for resilience, the conversation changes.

It shifts from:

• “How do we reduce inventory?”
  to:
• “Which risks are we deliberately carrying, and at what cost?”

That shift is what separates reactive organisations from those that build resilience as a sustained capability rather than a series of emergency responses.

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