Partnering for performance: CFO and the supply chain
Interviews: Michalis Imellos
Michalis Imellos, CFO of Coca-Cola Hellenic, discusses the importance of enterprise resource planning (ERP) to create a single version of the truth and an effective business partnering relationship between finance and the supply chain.
How would you describe the nature of collaboration between finance and the supply chain at Coca-Cola Hellenic?
Business partnership is something that we have worked hard to establish between finance and the supply chain over the past couple of years. We have finance professionals who focus on this kind of role, both in the country organizations and the corporate organizations that support the supply chain, such as procurement.
We have focused on a number of areas with this business partnering relationship to help finance bring value to the supply chain. The first is around cost management, whether in logistics, procurement or manufacturing. We help with managing write-offs, provisions and other losses within the supply chain.
The second area is around working capital management. For example, we found that there was a direct influence on receivables because the level of service sometimes affects the payment and collection patterns. A third area is procurement, and this encompasses direct and indirect procurement. Finally, there is a need, from time to time, for finance to provide help with service level agreements.
We can assist with the kind of commitments the local organization enters into with customers. This includes helping them to manage the risk of any penalties or compensation that might be incurred if the supply chain was not able to fulfill the terms of its service level agreement.
How do you ensure a consistent set of data and single version of the truth across the organization?
We have implemented an enterprise resource planning (ERP) system across almost all of our 28 countries, which gives us a common platform and set of processes. This ensures that information is captured at the source when any transaction is booked and, assuming that the master data and maintenance is appropriate and is being done properly and thoroughly, then the whole organization does indeed see one version of the truth.
We have also agreed on a set of specific KPIs that all countries follow as a basis for monitoring supply chain performance. So there is a common language in the form of the KPIs we monitor to ensure service level agreements are met.
What do you consider the main barriers to effective business partnering between the finance and supply chain functions?
I would say that the main barriers are the “soft” elements to do with relationships and communication. Sometimes, there is a misguided perception of finance being the policeman who forces controls and tries to ensure that things are done in a certain way. Fortunately, this view is starting to become increasingly rare, as people realize the value they get from finance and the benefits of having the two functions working effectively together.
A second barrier is lack of capabilities. Although business partnering between finance and other functions is undoubtedly important, it doesn’t always come naturally to form these relationships across organizational boundaries and work in a collaborative way. It does require finance professionals who understand the business and how the supply chain works, in order to be able to interpret data and create value.
To what extent does a business partnering relationship between finance and the supply chain add value?
We have found that there is a close connection between helping the supply chain to achieve the financial goals they have set with regard to costs, working capital and inventories, and meeting our own long-term financial strategies. The congruence between what the supply chain function is aspiring to and our own enterprise objectives has become increasingly vital.
The views of third parties set out in this publication are not necessarily the views of the global EY organization or its member firms. Moreover, they should be seen in the context of the time they were made.