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21 October 2013 | Will Green
Firms with good links between their financial and supply chain teams are more likely to report strong growth, according to research.
A report by EY said of those organisations that reported earnings growth of more than 5 per cent over the past year, there was strong evidence of “business partnering” between CFOs and supply chain executives in 48 per cent, compared to 22 per cent of firms where there was a more traditional relationship.
But despite the advantages, the report - Partnering for performance, - found just over a quarter of finance executives and only a fifth of supply chain managers said the CFO’s position was primarily an “enabling, collaborative, business partnering role”.
Andrew Caveney, global supply chain leader at EY, said: “When cost reduction leapt to the top of the corporate agenda at the height of the financial crisis, supply chains – which typically hold a large proportion of many companies’ costs – were one of the first places that CFOs turned to for savings. However, as companies looked to stimulate growth, manage economic uncertainty and the impacts of globalisation, the supply chain has also become a source of competitive advantage.
“To really unlock both the cost and agility advantage of the supply chain, it is key that the CFO and the head of supply chain collaborate effectively. Through this collaboration, the CFO can support the supply chain leadership in ensuring greater alignment with corporate strategy, better investment decisions, better risk management and improved supply chain insights through analytics capability.”
The report found that 70 per cent of CFOs and 63 per cent of supply chain executives felt their relationship had become more collaborative over the past three years, and that they were more likely to take a partnering approach if they had been in the role for less than five years.
Meanwhile, collaborative CFOs spent a quarter of their time with the head of supply chain compared to the 12 per cent spent by their more traditional counterparts.