With margin pressures, cost reductions and ongoing economic uncertainty on most corporate agendas, a company’s supply chain has become a key driver of growth. The relationship between the supply chain and senior finance leaders is more important than ever as C-suite executives work to build a cost-effective operating model.
Yet, in “Partnering for Performance: CFO and the Supply Chain,” a recent EY survey that looks at the impact on the business when the CFO and chief supply chain officers collaborate, only one-quarter of finance executives describe their relationship with their supply chain counterparts as a true business partnership. Worse, only 21 percent of supply leaders report that their CFO chiefly plays an enabling, collaborative partnership role.
These are troubling statistics considering the study also shows that collaborative relationships result in stronger profitability, a wider, more detailed view, and a better-performing business characterized by higher growth, more focused management decisions, greater visibility into risk and strategic alignment.
Here is a look at four key areas where the CFO has an opportunity to enhance performance through business partnering with the supply chain:
Create strategic alignment
EY’s study shows that companies with strong finance and supply chain relationships report much stronger alignment between the supply chain and broader business strategy. Further, companies with a business-partnering model often report better results than those with a traditional finance model in place.
With greater visibility across the organization, leadership can strengthen planning, align manufacturing capacity with demand and improve the efficiency and effectiveness of supply chain operations.
Study investment choices
Traditionally, CFOs and their teams oversee investment and resource allocation. Yet, the supply chain leader is in an ideal position to help guide capital investments to build the right capabilities that align with the growth strategy.
In a business partner model, these two functions collaborate and greater value is generated from capital investment decisions.
Take advantage of experience
The CFO’s perspective across an enterprise, combined with being in a position as a trusted adviser, enables the CFO to play a vital role in helping to standardize the language, measurement, tools and key performance indicators across an organization.
When working in sync with supply chain leaders, the CFO can be sure that together, the company is driving behaviors and business strategy while keeping costs and efficiency top of mind.
Be able to deal with risk
Managing risk is one of the biggest contributions CFOs can make to the supply chain, but within complex global companies where there are primary, secondary and tertiary suppliers, identifying these risks can be challenging. By becoming more engaged in the supply chain, business partner CFOs can look more deeply at exposures and assess whether they are being mitigated appropriately.
Seventy percent of CFOs surveyed say their relationship has become more collaborative over the past three years. This is encouraging because of the many benefits to organizations that have a business partnering culture, where there is a highly collaborative, enabling and supportive relationship between the CFO and supply chain leader.
To explore if business partnering is prevalent within your organization, ask yourself how collaborative your relationship is with the supply chain. Is finance perceived as a gatekeeper or a policeman? See if there’s room for additional business partnering within your organization that could improve your company’s performance and fuel growth. ●
Rob Dongoski is the Chicago Advisory Market Leader for EY with more than 20 years of experience helping clients streamline costs, optimize capital and improve growth. You can reach EY at (312) 879-2000. Visit www.ey.com/GL/en/Issues/Managing-finance to read “Partnering for Performance: CFO and the Supply Chain.”
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