Meet Your New Procurement and Operations Boss: the CFO (Part 1)

- February 7, 2011 7:02 AM
Categories: Spend Management |

I’ve spent a material amount of the past few years of my career interviewing and working with vendors, services providers and practitioner organizations about the best means of drawing finance into the procurement and operations equation. There are so many points of intersection of strategy and execution between procurement and the CFO (not to mention treasurers, controllers, divisional controllers, A/P, internal audit, etc.). These include working capital management strategies involving suppliers, enterprise risk management, P2P systems, implemented savings tracking and cost reduction in shareholder terms (e.g., ROIC, RONA, OBIDA, EBITDA, etc.). And that’s just the functional list of areas! Add in overall competitive global strategy — as one colleague likes to note, the CFO is increasingly “the keeper of company strategy” in addition to remaining “the keeper of the books” — and other areas, and it becomes rapidly apparent how procurement and supply chain should be tied at the hip to finance leadership.

In a series of posts looking at tying procurement and finance together, I’ll provide fodder for Spend Matters readers to help them make the case internally for closer procurement/finance working relationships, identifying specific points of intersection and operational takeaways to collaborate together in specific areas. I’ll begin today by calling your attention to a recent Accenture study that summarizes some of the key findings from a recent survey examining the expanding role of finance in the enterprise, including the procurement and supply chain areas. Highlights from the study suggest, “80 percent of senior finance executives said their scope of responsibilities has expanded, with finance also now overseeing programs in other departments across the enterprise.” Top areas of expanded oversight include IT (43%), strategy and business development (41%), and HR (39%). These areas are slightly higher than procurement (35%) and supply chain management (25%).

But if we drill down a bit more in the findings, it appears that finance leaders are increasingly drawn towards areas of involvement where procurement and supply chain can — and should — take top priority. For example, nearly 80% of survey respondents “said flexibility is needed in their planning and forecasting, rather than the traditional annual process…[and] more than half of them also said they needed greater flexibility in their cost management (61%), transaction processing (60%), cash management (58%), performance reporting (58%), capital expenditure management (56%) and asset management (54%).”

Nearly all of these areas, perhaps with the exception of asset management in most organizations, are places where procurement and supply chain teams are having greater and greater impact in top performing companies — and are also where Spend Matters is seeing the greatest alignment of shared priorities with finance. Stay tuned for the next post in this series, where we’ll begin to examine these points of intersection and priority in more detail.

- Jason Busch

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