Globalization, fluctuating financial markets, capacity constraints, shocks and disruptions, shifts in revenue, and changing customer needs. Each on their own can cause significant challenges but today’s supply chains face most of these and more.
As supply chain become more intertwined with the success of a company, the modern CFO must take a more dynamic role in supply chain planning. The CFO must be connected to the entire supply chain with end-to-end visibility. A metric-driven, collaborative approach drives supply chains toward greater agility and resiliency as markets twist and turn.
In an international climate rife with volatile financial markets, continuous supply chain shocks, and shifts in revenue, the modern CFO’s role must evolve.
It is critical that CFOs collaborate with Chief Supply Chain Officers (CSCOs) and play a more active role in planning business strategies, with metrics driving the focus and a digital planning platform righting the boat. In this white paper we will examine how adopting a metrics-driven, collaborative approach allows CFOs to drive supply chains toward greater agility and resiliency - even in disruption.
Global and local supply chains have faced significant challenges for several years with the pandemic causing significant turmoil well into 2021 with many predicting normal patterns not returning until 2023. Demand changes daily, and continued challenges from capacity constraints show minimal signs of improvement
CFOs Must Adopt New Ways to Perform the Same Tasks
The data siloes of the past that kept the duties and information separate between CFOs and CSCOs no longer work. The two must partner to collaborate on scenarios to better understand the fiscal impacts of strategic decisions to build short-term readiness and long-term resilience while driving supply chain visibility.
Unfortunately, we see far too often continued separation of the two roles. “In most companies, finance always sits downstream in the entire value chain,” according to Vikram Lamba, CFO of Civica, a nonprofit generic drug company launched in 2018 to address chronic drug shortages. “They do monthly and quarterly reports, but most of the time they are telling people yesterday’s news.”
A 2019 CFO Survey released by Duke University’s Fuqua School of Business, supports Lamba’s sentiments. Surveyed CFOs across the world said they worry about economic uncertainty, shifting government policies, attracting and keeping qualified employees, weak demand for products and services, and access to capital. But supply chain didn’t make their list.
In a more recent Duke Fuqua CFO survey sentiment is seen shifting with CFOs placing supply chain toward the top of their list of concerns. CFOs reported greater involvement in supply chain helps them achieve financial stability in disruption. When CFOs forge partnerships with supply chain operations, they can safeguard organizations against further economic disruption. This partnership requires providing CFOs access to advanced supply chain planning solutions. These digital planning tools enable CFOs to access, manipulate, share, and discuss real-time data from all points of the supply chain.
Why CFOs Need a Greater Role in Supply Chain
COVID-19 exposed supply chain vulnerabilities across the globe. Within less than a year, the virus had infected nearly 86 million people and caused nearly 2 million deaths.
Businesses with low cash reserves or unstable cash flows struggled. Even firms in good financial shape were strained as volatile demand, revenue shifts, and supply shortages took hold.
During a crisis, companies must model the supply chain and consider the impact on cash cycles, and which supplier reliability and customer payment terms can upend. This requires end-to-end visibility to all stakeholders to drive greater collaboration between CFOs and CSCOs.
Global growth also increases demand for a CFO and CSCO partnership. This partnership’s importance rises as companies strive for greater growth. Efforts to grow push supply chain to the forefront and requires an “all hands-on deck” approach to create value and lead strategy.
The pandemic and other disruptions cast a spotlight on improving the handling of demand swings and forecast challenges. A supply chain/finance partnership aligned on a digital platform provides the means of making improvements to better weather these challenges. Studies report 90% of companies expect disruption from the pandemic to impact their businesses for some time. The companies still grapple with shortages, demand and price swings, and other upheavals that impact their supply chains and their bottom line. But a single source of truth that allows CFOs and CSCOs to monitor the supply chain and make critical decisions together hardens supply chains against further disruptions.
What CFO and CSCO Collaboration Looks Like
As the global business environment continues to shift, CFOs must partner with CSCOs to evaluate scenarios and better understand financial impacts of strategic decisions to build short-term readiness and long-term resilience.
With tighter cash flows, global growth, and continued disruption, companies must train an eye on finances. They must model the financial supply chain and consider cash cycle impacts like supplier reliability and customer payment terms.
While improved internal collaboration is key, there is more one should strive to achieve. Look beyond the organization’s four walls to expand across the supply chain ecosystem. Collaboration must include suppliers, manufacturers, customers, and beyond. Sharing one source of information on metrics, project progress, and actions required to address problems, drives supply chain visibility to all stakeholders.
Boosting supply chain performance requires all stakeholders to operate by goals, objectives, and targets that align with a company’s primary objectives. Sharing data and better managing processes and activities improves alignment with company objectives.
Adopting a single source of truth that all stakeholders can access facilitates collaboration and ensures that everyone bases critical business decisions on the same data. This alignment also provides stakeholders one source to store and access relevant data. Sharing one source of information on metrics, growth, and required actions promotes a team culture better equipped to meet the needs business demands and potential disruptions.
The Role Data Plays
CFOs need a digital platform as they shift between navigating uncertainty to recovery and growth. While modern technology facilitates data sharing between applications and disjointed systems, companies without a digital planning platform that employs a unified data model will encounter barriers in obtaining an end-to-end view of their operations.
The volume of business data doubles every two years. This information rests in data siloes that only specific people can access. Often stakeholders operate off vastly different data sets when making decisions. Establishing a unified data model places all information into a single location. And, when one person updates the data, all stakeholders see the update.
This single source facilitates communication and data sharing between companies and suppliers while also unifying internal stakeholders like CFOs and CSCOs. Putting supply chain experts and other C-suite executives on the same page streamlines demand signaling, forecasting, S&OP planning, and accelerates decision making.
A digital planning platform promotes the CFO and CSCO partnership, which improves demand signaling and forecasts, and provides end-to-end supply chain visibility. The system gathers data in real time and consolidates it into a single platform. When all stakeholders can access the latest information, they can make faster and better decisions, even during an unforeseen disruption. Now, through what-if scenario analysis, the team can focus on strategic initiatives through data-driven decisions.
Adopting a Digital Planning Platform
A recent McKinsey Global Institute survey revealed companies expect severe supply chain disruptions every 3.7 years. This volatility makes it more important for CFOs to connect financial and operational drivers, use external data to make data-driven decisions, and continuously model scenarios to mitigate risk and uncertainty.
CFOs need enhanced visibility into every corner of the business, not just finance, to collaborate with other stakeholders and optimize business performance.
Civica Rx is one of many companies that once lacked a single source of truth to foster true partnerships between internal and external stakeholders. But as the nonprofit generic drug company expanded to more than 45 health systems representing 1,200 hospitals in all 50 states, company leaders realized they needed support to synchronize demand and supply.
Civica partnered with John Galt Solutions and implemented the Atlas Planning Platform to gain supply chain visibility and make data-driven decisions. In a short period, Civica achieved the following results:
- Improved service delivering high quality, affordable medicines across a growing network of hospitals
- Accelerated supply chain performance through real-time, demand-supply match using a single, unified platform
- Balanced business decisions with greater confidence considering service goals, inventory, product shelf life, and financial resources
- Leveraged performance score cards for business insights on plans generated from data across 14 enterprise systems
The Lesson
CFOs that improve collaboration with internal and external stakeholders and take a more active role in planning business strategies will find it easier to right their supply chain ships even in stormy seas.
As Civica learned, Atlas Planning Platform enables teams to synchronize their plans in real time, continuously model scenarios, and collaborate across the organization and supply chain network to make better and faster decisions with more confidence. The Atlas Planning Platform furthers the CFO and CSCO partnership by linking operations to financial results and synchronizing strategic and tactical plans over multiple time horizons.
From getting the right products into the hands of patients when they need them to keeping up with regulations, life sciences supply chains are about as complex as they come. Real-time dashboards are critical to decision making. Collaboration between the CFO and CSCO is key.
In the on-demand webinar below, learn how Civica leverages real-time analytics to evaluate scenarios, view trade-offs between revenue, costs, inventory, and margin to make cross-functional data driven decisions