My colleagues Pierre Mitchell, chief research officer for Spend Matters, and Paul Lee, director of research at ISM, recently penned a thoughtful analysis, Reducing Costs By Optimizing the Financial Supply Chain, around the most important gap between procurement and finance. No, it is not accounts payable, as some might think, according to the results of a Spend Matters/ISM snap poll titled “Supply Management Issues in the Financial Supply Chain” conducted earlier in 2014. The analysis is based on responses from more than 300 CPOs and other executives exploring issues across what we sometimes term the financial supply chain.
We’ll share insights from the study in a series of posts including highlights of some of the most salient findings and observations from the report. But perhaps it makes the most sense to step backward and explore the rationale for why we wanted to investigate the area in the first place. In this regard, framing the argument for the study, Pierre and Paul begin the study by noting:
“As business complexities continue to grow and global supply chains become more varied, organizations are pressured to maximize current investments, increase productivity, and reduce costs to stay competitive. In order to withstand this pressure, organizations need to constantly reconsider and optimize the way they interact with their supply chains – one of their most critical assets.
“The ability to manage information and financial flows is critical not only for corporations to access low-cost goods and services, but also for their network of suppliers to access low-cost capital. Procurement teams need to partner with their finance departments and third-party technology providers to ensure that critical suppliers can attain cash as efficiently and effectively as possible.”
Yet today, the majority of organizations are not just failing in this regard – they’ve just started to try. Find out where they are in this journey as our analysis continues.