High Performing CFO
CFO and the supply chain
Partnering for performance
The CFO and the supply chain need each other more than ever.
At the height of the financial crisis, when cost reduction leapt to the top of the corporate agenda, supply chains were one of the first places that CFOs turned to for savings. Cost efficiency has since remained high on the corporate agenda but as companies get used to navigating ongoing economic uncertainty, the supply chain has taken on a new strategic significance.
It is essential to have a supply chain strategy that is aligned with the broader corporate and financial goals of the business. Efficiency is also paramount, to be able to respond to new market growth opportunities. As companies work to strike this balance, the supply chain leader’s role has become more prominent, and they now often sit on executive boards as peers to the CFO.
The CFO and the supply chain - find out more
The CFO and the supply chain - find out more. [See a transcript of this video]
Leading CFOs’ contribution also now goes far beyond the traditional finance remit to encompass a strong strategic and commercial focus. To do this effectively, CFOs are collaborating closely with other internal functions – not just from a monitoring, reporting and risk management perspective, but also as supporters and enablers of performance.
CFOs and supply chain leaders are increasingly working together to understand, analyze and address supply chain issues. In companies where a business-partnering model is established, CFOs are drawing on their unique, fact-based view of the organization to solve business problems and provide insight to deliver informed decision-making.
Together, CFOs and supply chain leaders are creating alignment between strategy, finance, tax and operations, unlocking hidden value within the organization and strengthening financial performance.
Business partners are in the minority, but collaboration is growing
Our findings are based on a survey of 423 CFOs and heads of supply chain globally, and a series of in-depth interviews with CFOs, heads of supply chain and EY professionals.
Only 26% of finance executives and 21% of supply chain executives say that the CFO’s contribution to the supply chain is based around an enabling, collaborative, business-partnering role. However, 70% of CFOs and 63% of supply chain leaders say that their relationship has become more collaborative over the past three years.
The US, South Korea and Singapore take the lead
From country to country, there are significant differences in the proportion of supply chain leaders and CFOs with a business-partnering relationship in place. While the US, South Korea and Singapore top the list, Western Europe makes up the tail, with all respondents from France, Germany, Italy and Spain continuing to operate around a more traditional model. In the UK, however, business partnering is well established.
The business-partnering model relates to growth and strong financial performance
Companies with evidence of strong business partnering between the CFO and the supply chain leaders report better results than those with a traditional finance model in place. They are more likely to report closer alignment between finance and the supply chain functions, and a mutual understanding of risks and opportunities. Business partnering models have a stronger association with growth.
Among business partner respondents, 48% report 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.
Analytics can be a powerful tool to drive a stronger business partnering relationship
Asked whether data and analytics present CFOs with a significant opportunity to drive a more collaborative, business partnering relationship with the supply chain, an overwhelming 85% of business partners agree. Robust information and insight are central to any business partnering relationship. CFOs’ access to financial information from across the business allows them to create a credible single version of the truth to drive decisions and performance measurement.
Four opportunities to business partner
We identify four focus areas where the CFO has an opportunity to enhance performance through business partnering with the supply chain:
- Creating consistency across the supply chain, the business and corporate strategy
- Supporting and challenging investment choices
- Monitoring and enhancing performance
- Managing risk and business continuity