Building a Procurement Business Case for CFOs (Part 6)

Read the previous installments in this series below:

Part 1: Introduction and Background
Part 2: CFO Demographics
Part 3: CFO Churn and Risk Aversion
Part 4: The Modern CFO in the Mirror
Part 5: Half Accountant, Half Strategists: The CFO as Storyteller

As finance executives move up in the ranks, there is an almost linear progression in terms of strategic involvement in the business. Because of this, it should not come as a surprise that CFOs tend to focus on broader business strategy and longer-horizon issues and opportunities compared to controllers, including those essentially serving in the role of divisional CFOs. Even though CFOs may complain about their fees, they really do like to learn from top-notch consultants. Our research suggests this is particularly the case when they get to engage and work with partners from the top strategy firms where:

  • They'll get ideas for improving the company's free cash flow, capital cost/structure, competitive position, etc.
  • They'll learn about ways to achieve competitive advantage. This is particularly of interest if the consultants possess deep, intimate vertical and competitor knowledge

In short, CFOs won't admit it, but they like to learn, especially from experts in their field, and especially if it will further their strategic advancement. How does this translate to what types of meetings they'll take and prioritize beyond the scheduled ones (both with external parties and internal reports/stakeholders)? For one, they'll take meetings with any individual who they think can further their career through connections and executive networking (truly executive networking at the CEO and board level). Second, they'll take meetings and get involved in initiatives and planning when they know that someone will be teaching them about something they didn't fully understand (e.g., a new tax loophole) or were unaware of.

We can think of many procurement-driven types of programs that fall into this CFO-level interest category. Two include:

  • Supply chain strategies focused on working capital management or discounting (especially discounting where a bottom line journal entry and be flipped into a top-line journal entry)
  • P2P and demand management initiatives that can reduce consumption and spending while tying to other "pet" company concerns (e.g., green profile, CO2, etc.)
  • Supply chain and procurement strategies that can increase overall competitive advantage and top-line improvements and/or thwart a competitor

Up next: The CFO's secret motivations.

- Jason Busch

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