Meet Your New Procurement and Operations Boss: the CFO (Part 3)

In the first two posts in this series (Part 1 and Part 2), we explored a recent Accenture study looking at finance's evolving charter and focus as well Spend Matters' 2010 list of procurement and finance top areas of focus and collaboration. Today, we'll continue this analysis by jumping to our 2011 list of procurement and finance priorities. These lists are based largely on our own primary research talking with practitioners, industry advisers and technology vendors. They also reflect a detailed market scan of secondary sources (e.g., Accenture, McKinsey, Hackett, BCG, Corporate Executive Board, etc.) that have also carried out extensive primary research in the area.

Our first item on the 2011 list of procurement and finance collaborative priorities maps well to one of Accenture's findings: how 61% of respondents to the study noted "needed greater flexibility in their cost management" as an area of focus. In this regard, our own research suggests that in 2011, we'll see a continued focus on cost savings either to protect fortress balance sheets that companies have amassed or just to survive. But at the same time, we'll see an increased emphasis on anticipating/forecasting (cash, revenue, demand, etc.) and mapping these plans and scenarios to procurement and working capital strategies given the overall economic climate that suggests a continued rocky recovery. In addition, procurement and finance organizations are likely to:

• Continue to find new ways of becoming more efficient on the periphery (e.g., A/P, indirect spend) which will allow them to focus more on core operations
• Focus on commodity, cost volatility and reducing exposure/risk in these areas
• Optimize for total supply chain/supply management costs for procurement and payables (inventory, working capital, unit cost, logistics, tax implications, etc.)
• Double down on risk management, albeit from an expanded perspective/definition that goes beyond supplier financial risk

Without question, 2011 will be a year that procurement and finance come together -- not based on the potential of taking a more collaborative approach to engaging together in key areas -- but because they have to. How are organizations beginning to respond to these new joint finance/procurement priorities from operational and investment standpoints? Check back for the next post in this series to find out.

- Jason Busch