more-arw search

Bridging the Gap Between Finance and Operations

The supply chain and the finance departments are no longer so segregated.

Before the economic crisis came to light in 2008, what happened in the supply chain office was usually far from the minds of financial leaders.

But as more companies sought to slim down their operating costs and reduce overhead, they started to realize the cost reductions that the supply chain can create, supply chain management professor Alejandro Serrano writes for CFO magazine. As a result, the relationship between the COO and the CFO has become much cozier recently.

Sometimes, it may seem as the two C-level executives are working toward opposing goals, particularly in the manufacturing and retail industries, Serrano says. The COO wants to keep customers happy by ensuring the desired products are always in stock, while the CFO wants to keep inventory as lean as possible, in order to maximize cash flow.

"In turbulent times, for instance, finance may have stronger reasons and incentives to free up cash by reducing inventories. But in prosperous times, supply chain may advocate the need for on-time deliveries even though such a strategy elevates inventory volumes," he writes.

As Gill Plimmer writes for the Financial Times, there has also been a new trend of putting supply chain managers on corporate boards, as supplier value and relationships with third-party vendors has become more critical to the bottom line.

Comments

Topic Expert
Linda Wright
Title: Consultant
Company: Wright Consulting
(Consultant, Wright Consulting) |

In my last corporate role, I acted as SVP Finance and Operations and Treasurer. My duties included running AP, AR, Cash and Procurement, among others. The combination allowed me to better understand and support the business, insuring best terms and conditions for investing and buying goods and services. A company first, the practice got high praise.

Wayne Geffen
Title: Controller
Company: in between
(Controller, in between) |

I have found that I realized the greatest results when we had a strong partnership. My team can do more than just report on the results and can work toward developing ideas and metrics to help the operators make the right decisions timely to grow the business

JT Moore
Title: CFO
Company: Apollo Company
(CFO, Apollo Company) |

Need more and better communication.

I have had (a)success at each position and (b) have successfully filled both positions at the same time.

Either will work, but there cannot be "fights'. Cooperate. Work together to have a more successful company, and we would not being having this discussion.
JT

Janet Hintz
Title: Management Consultant
Company: Hintz & Elbert LLC
(Management Consultant, Hintz & Elbert LLC) |

Fortunately, minimizing inventory investment and maximizing fill rates are not mutually exclusuve. The keys are understanding demand variability, utilizing demand resource planning tools, and reducing cycle times. If these can be managed effectively, sales increase, inventory levels decrease, and customers receive on-time orders. Provide innovation and success happens!

Topics: