How Brilliant CFOs Use the Supply Chain to Drive Business Value

Author by James Allt-Graham

For most manufacturers, retailers and distributors the performance of the supply chain drives the significant costs impacting upon the performance of the business.

Despite this we regularly see examples of where finance and supply chain management could work more effectively together — in partnership, in order to drive additional value for the business. Leading Chief Financial Officers (CFOs) and finance teams do this well.

One of the difficulties in managing the supply chain is that to get an ‘end-to-end’ view of total costs and performance can be difficult. Where a business has multiple brands and/or business units and geographies this challenge gets larger.

Further, it is sometimes difficult to assess whether the level of cost incurred or planned is good or bad. What should be the benchmark? What internal / external drivers are impacting upon our costs? Is using last year as the baseline right for budgeting?

In addition, in recent years many businesses have built a substantial online business. For many this is a challenging business as the costs to manage and deliver often outweigh the incremental sales (especially where sales are below 10% of total sales). In these situations there is a much clearer requirement for the CFO and supply chain executive to work together to optimise performance.

What are some key questions that a CFO should consider?

Perhaps to provide some pointers you could ask yourself the following questions. Depending upon the answers there is possibly value at looking further:

What should you do next?
If the answer to any of these questions highlights a potential issue then it is important to engage with the head of supply chain and agree a process to address the issue. It may also indicate that there is an opportunity to partner more closely with supply chain / operations to leverage the knowledge and skills of the finance team to enable better decision making in the business.