CPOs who understand and capitalise on their financial supply chain can provide broader, deeper and sustained value to their business.
But it is not actively managed today inside most organisations, says Bill Crothers, former UK government CPO, overseeing over £50bn pa of central government spend. “At least not outside of targeted supplier areas, such as using card programmes for ‘long tail’ suppliers and travel spend or factoring programmes,” he says.
Crothers points out that advances in technology mean that today’s supply chain finance (SCF) programmes now make it possible to include even ‘long tail’ suppliers. This can give leverage and visibility, and improve cash conversion rations, working capital needs, and reduce pressure on long term debt requirements.
SCF programmes particularly help small and medium enterprises access a cheaper source of funds, securing their supply as well as allowing companies to act as a good corporate citizen. The programmes work across treasury, finance and procurement functions.
With finance at the centre of supplier connectivity, CPOs can create incentives internally and with suppliers to adopt payment and invoicing programmes that can cut errors, costs and paperwork in the procurement process.
Procurement teams tend to have a role of veto during SCF decisions, but Crothers says take the initiative and get smarter on financial supply chain and understand the accounting and operational elements. It will be invaluable for business and the potential of the CPO role, he adds.