Supply chain executives should expect questions from the CFO covering data, resource allocation, and balancing conflicting expectations, according to a report.
The report, from Deloitte, said the coronavirus pandemic had elevated supply chain risk to a top priority for finance, with CFOs looking to implement “risk-adjusted cost optimisation”.
The report said the ability to embed supply chains with flexibility and resilience could be a differentiator, while shifting customer expectations regarding supplier practices around ESG, diversity and equity had added another layer of complication.
“While their skills in distribution may have been a top qualification, supply chain leaders now need not only to be proficient in technology – as the supply chain grows increasingly digital – but also to have a command of financial acumen,” said the report.
“Leading CFOs can provide analysis to help supply chain executives see the financial implications of their decisions, including calculating the drop in working capital that will result from adding inventory.”
The report set out five questions CFOs could be asking supply chain leaders:
1. What tools do we have – and which should we invest in – to ensure we have complete and timely data?
“Finance leaders may want to explore collecting data from the supply chain in real-time, using it to feed predictive scoring in a dashboard that monitors the top risk domains,” said the report.
2. What’s our framework for making decisions about allocating resources to the supply chain?
“The focus should be on investments that can help the company emerge stronger from the pandemic,” said the report.
3. How do we balance conflicting expectations?
The report said supply chain leaders typically face competing demands from other functions to reduce costs, improve service and optimise assets. To stand on its own, the function should develop precise data around these issues, such as where it would most benefit from having a back-up supply source.
4. How well do we manage and measure supply partner risk?
Doing a better job of managing third-party risk could help companies resist the “knee-jerk temptation to insource more aspects of its supply chain”, said the report.
5. How do we judge the success of data compilation efforts?
While investing in acquiring and integrating more information may diminish short-term profitability, it will put the company in a better position to maintain flexibility and functionality in the face of disruptive events, said the report.
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