CFOs think supply chains are overly complex

29 March 2012

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29 March 2012 | Adam Leach

Chief financial officers believe it is becoming more difficult to see what is going on in their company’s supply chain because the model is becoming more complex.

The Cost of Control – Disrupted Networks, published yesterday by Basware, found that of 550 chief financial officers (CFOs) and finance directors, 59 per cent are concerned about the level of supply chain transparency. A total of 64 per cent want greater clarity and closer collaboration with suppliers to overcome the increasing complexity of modern globalised supply chains.

The report also found that while 38 per cent acknowledged that paying suppliers late was likely to negatively impact the performance of both parties, around 15 per cent of their invoices are settled later than the agreed date.

Basware CEO Esa Thila, said: “Supply chains have become a complex web of commercial interactions and each organisation that is part of the network has a role to play in minimising commercial risk. Finance executives are aware that late payments or erroneous payments will create problems for their suppliers, yet late payments still exist.”

The report concluded that as supply chains become more complex, companies must put more effort into collaborating with suppliers and understanding their needs and operations. It said companies needed to curb late payments because the impact felt by suppliers would probably be passed back up the supply chain.

The report also identified what CFOs see as the biggest challenges in operating an international supplier network. Dealing with overseas providers was the biggest challenge (26 per cent), while compliance and regulation, commercial terms and conditions, and regional tax laws (all 18 per cent) were the next largest.

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