55% of the respondents from a 2020 Gartner survey expect to have a highly resilient network in the next two to three years – a reaction to disruptions such as Brexit, the trade war and COVID-19. However, 58% of them also agree that more resilience also results in additional structural costs.
The level of dependency of business on supply chains has grown over the years. The changes happening around us have all brought up the need for replacing legacy practices with innovative ones; the kind that have disrupted already established systems and formed new ways to bring in efficiency and effectiveness, finance included.
The modern-day CFO has a very important responsibility when it comes to successfully integrating supply chains with the changes facing organizational success and growth. Positioned to identify the deficiencies in the supply chains, they can act in time and revamp supply chains to better serve the company. While they may not be perfectly placed to make these changes immediately or solely, they definitely hold the key to innovate for a better future.
With decisions made in vacuum and the failure to move its management out of silos, organizations choose to work with unexpected risks that hinder growth and innovation. Modern-day CFOs are equipped to operate with their fact-based view of the organization, use insights to offer solutions for core business problems and accelerate informed decision-making – optimizing supply chain costs.
Here is a look at the strategic shift that modern CFOs have adopted in order to manage their supply chains in a better manner that supports their companies and leads to overall success.
Making Use of Analytics
Supply chain disruptions and bottlenecks cost money, serious cash flow issues, and negatively impact the company. Analytics and Business Intelligence have immense potential to solve various supply chain issues. The modern CFO, with the best access to account receivables, manufacturing data and vendor records is rather well placed to combine all of these data streams for the purpose of effective analytics.
Generating more value
CFOs collaborating with supply chains, maximize the value created inside an organization, via study of the deficiencies that make up for the diminished functioning of supply chains. Making these choices alters the way most organizations interact with their supply chains and help bring in value-added benefits at a broader level. The CFO is again well placed to spearhead these changes because of his/her access to valuable data.
Business Partnering
Developing a partnership model of business function with the supply chains can offer business organizations some very tangible benefits. This is because this mode of specificity helps a CFO choose the right partners as supply chains and consequently decrease the number of firms, they would deal with. Not only can this bring down costs but would also hold for the increased efficiency of an organization.
Supply Chain reinvention
An improved management system can help a CFO essentially move certain parts of the supply chain in order to cut out the operating costs that come out of bypassing lengthy transportation logistics. Scenario planning is also helping CFOs successfully optimize supply chain in regard to the constantly changing demand forecasts of today’s markets, such an action would initiate valuable cost-cutting methods.
Enabling change in efficiency
Organizations want to optimize, to do more with less, to maximize return while minimizing effort. The nature of competition has fundamentally changed. So, established companies are responding and defending themselves accordingly. At the heart of this modern CFO drive, is the need to have greater transparency, to be able to see all the moving parts, and work them in organizational favor.
A study found that 48% of the organizations that enabled collaboration between CFOs and supply chain leaders reported earnings before interest, taxes, depreciation, and amortization (EBITDA) growth increases of more than 5% in their company over the past year, compared with just 22% of those with a more traditional relationship.
Ultimately, it is impossible to make changes without knowing what you have to change in the first place. The next-generation CFO is a change agent aligned to the supply chain, driving resiliency, agility and financial efficiency. They are capable of identifying ways to increase supply chain diversity, avoiding similar situations that lead to lost revenue and understanding the expenses that come with building supply chain resilience. Hence, traditional CFOs need to ramp up, and introduce changes in themselves/the system to drive value, growth, and success.