Putting the CFO at the centre of the supply chain
By Alessandro Evangelisti, ERP Sales Development Leader at Oracle Italy
It would take a brave person to predict what the next few years have in store for European supply chains with much confidence. The UK may well remain part of the single market, in which case the effects will be minimal, but in the event of a so-called “hard” Brexit companies will rethink their strategies to manage new tariffs on the movement of goods and services.
Many experts were proven wrong about the effects of Brexit and the US election, and with the state of the EU more fragile than ever the only thing we can be sure of is more uncertainty ahead. How can companies prepare their supply chain strategies for geopolitical tremors they cannot even predict?
The challenge is great, but ambitious companies should welcome uncertainty as it gives them the opportunity to prove themselves more agile and more responsive than their competitors. These attributes have come to define success for today’s businesses as much as their ability to innovate and disrupt the market.
Making the supply chain a profit centre
The supply chain in particular is due for a rethink. Our recent report reveals that greater complexity, more demanding customers and falling margins have made it crucial to run a profitable operation, but the emergence of new automation technologies and Artificial Intelligence (AI) has put organisations in a position to rebuild a more intelligent supply chain from the ground up.
The supply chain needs to be more responsive and adaptable. It must be tailored to customer expectations and variable shipping considerations. Consumers in Paris do not want to wait two weeks for a product to be delivered from a Malaysian factory when competitors can ship similar goods within a day or two. Thinking of a highly variably Euro-US dollar exchange rate, auto makers may want the flexibility to shift their manufacturing between Europe and Mexico for US-bound cars.
Calling on strategic CFOs
Becoming this nimble requires a fundamental change in thinking about the supply chain, and as the control centre for all the business’ data on performance, profit, costs and prospects the finance department will play a vital role in overseeing this change.
Today’s CFOs can gain a single view of LOB operations, customer demand, and the supply chain itself. This means they are ideally placed to pinpoint problem areas or discover new efficiencies. Equally, they can galvanise the organisation to ensure supply chain decisions are informed by operations across the business. This closer collaboration holds the key to establishing a truly connected chain where data, processes and teams are aligned.
The role of data
Data will be a critical element in programming the business for the future, and this is applicable beyond the supply chain.
Companies recognise the importance of accurate and timely data in making informed decisions, and that they need systems that facilitate the flow of information to each line of business. Every external event and every supply chain decision made has a knock-on impact for other departments, so these choices must be made with all relevant variables and LOB insights factored in.
Automated systems will increasingly feed valuable operational data from each supply chain function to a central system where it can be used to inform wider company strategy. In addition to helping with preventative maintenance in the traditional sense, this will allow businesses to get a more granular look at their processes and continuously work towards making them smoother to drive financial performance. These systems will also enable companies to work in a more joined up way and ensure that any supply chain issues that may affect sales, marketing or service teams are quickly communicated.
It’s easy enough to understand the impact of a sudden hike in oil prices on transport and logistics; it takes a superhuman effort to understand how this will ultimately affect a company’s bottom line and determine the best response. Here, predictive tools that use data to model and prepare for different scenarios become invaluable.
The strength of a company’s supply chain will increasingly be a differentiator, particularly as businesses come up against greater uncertainty and a more scrutiny from stakeholders. Just like computer programmes are now designed with artificial intelligence to manage more complex requests, supply chains must be programmed to adapt to the unexpected. This will not be an overnight change, but CFOs today have both the technologies and the strategic insight to adapt fast.