Thursday 14th Dec 2017 - Logistics Manager

Why CFOs need to rethink approach to supply chain

A strong partnership between the CFO and supply chain leadership in leads to improved financial performance for the organisation. That’s one of the conclusions of a survey of 423 CFOs and heads of supply chain by consultants EY.

It found that among business partner respondents, 48 per cent report growth of more than five per cent in EBITDA in their company over the past year – only 22 per cent of those with a more traditional relationship reported that level of growth.

There is no doubt that during the recession CFOs regarded the supply chain as a place to find cost savings – but what this survey suggests is that there is now more recognition that it can be a source of competitive advantage.

Andrew Caveney of EY points out that through collaboration the CFO can “support the supply chain leadership in ensuring greater alignment with corporate strategy, better investment decisions, better risk management and improved supply chain insights through analytics capability”.

Some 83 per cent of finance business partners and 87 per cent of supply chain business partners agreed that data and analytics present CFOs with an opportunity to drive a more collaborative, business partnering relationship.

However, there is clearly some way to go. While there is evidence that relationships have become more collaborative, only 26 per cent of finance executives and 21 per cent of supply chain executives said that the CFO’s contribution to the supply chain was primarily based around an enabling, collaborative, business partnering role.

Significantly, CFOs and supply chain leaders were most likely to take a business partnering approach if they had been in their roles for less that five years. And that suggests that more organisations could benefit from re-evaluating the traditional relationship between finance and supply chain.