2010: Time for a CPO-CFO Resolution

This afternoon Spend Matters would like to welcome Kevin Cornish, of Aravo and supply risk blog, @risk.

Financial analysts are already weighing in with their 2010 forecasts for the banking, credit and lending industry, and not surprisingly, the predictions for next year are somewhat grim. Most expect that budgets will remain tight, risk capital will remain elusive, and consumers will remain focused on increased savings, decreased consumption, and lower debt.

But, how will all that impact supplier risk? For me, the implications are clear, and they demand one thing in particular: To succeed in this business environment, your company needs a cooperative and collaborative relationship between finance and procurement.

Why? Because if we've learned anything from this recession it's that having a focus on supply chain excellence and integration significantly helped survival. And, while there have been signs that the world economy is beginning to heal, Federal Reserve Chairman Ben Bernanke and others have cautioned that the recovery is likely to be both muted and prolonged.

In other words, if you want to position your company for the bumpy recovery to come, you need to start thinking more strategically about systemic cost savings. For instance, now that opportunities for negotiated supplier discounts have virtually evaporated, you're going to need to explore new integrated finance and purchasing processes that can help you unlock tangible savings.

Plus, it's time that both CEOs and CFOs woke up to the negative realities of supply chain risk. Today's elongated and enormously complex supplier networks demand everyone's attention -- because these days, your company's reputation, its liability, and its financial success all depend on effective management of your supplier network.

As uncomfortable as it may be, CPOs need to initiate the discussion. After all, they're the ones who are facing these risks every day, and they're the ones who will facilitate risk management solutions.

But, the conversations need to be broad-based across C-level management, and the initiatives that result must be linked to an enterprise-wide strategy. Stop to think it through, and you'll see that this is the most reasonable and cost-effective approach -- since supply chains have evolved to become critically integral to business success.

Is it too early to make a New Year's resolution? In this case, I don't think so. Looking ahead to 2010, my advice is to resolve to break down the barriers that keep finance and procurement locked in their individual silos. Improved communication and collaboration between the CPO and the CFO will help to better leverage your supply chain to become a strategic source of competitive advantage.

Sure, taking my advice may mean wading into uncharted waters, but remember, that's where you're most likely to discover innovative solutions. And your company needs its own unique, innovative solutions so that it can better weather the variety of significant supplier risks that are sure to be part of the 2010 business landscape.

Spend Matters would like to thank Kevin for sharing his thoughts.

- Jason Busch

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