You can win over the CPO, the CIO, the COO and even the CEO, but if you don’t win over the CFO, chances are your project, even if it has an expected 10x ROI, won’t go anywhere if the CFO won’t cut the check. You need the support of the CFO, and fortunately for you, it’s not as hard to get as you think it might be if you do your job and demonstrate how the project helps the CFO do his.
Remembering that it is the CFO’s job to not only control cash-flow and monitor the financial health of the company, but to serve the shareholders, you should have no problem winning over the CFO over if you can clearly demonstrate that your project will improve the financial health of the company AND serve the needs of the shareholders in a reasonable time-frame.
But how do you do this? As I described in The Quest for Purchasing Fire on the e-Sourcing Wiki, you clearly define the value proposition, build the business case, create a great presentation, and, most importantly, address the concerns of the CFO.
What are the concerns of the CFO that you can address? As outlined in a recent article in i2’s Supply Chain Leader on linking the CFO to Supply Chain Execution, your well thought-out supply chain project should reduce the company’s cash-to-cash cycle times, reduce the company’s risk profile, support profitable growth, and deliver predictable revenue … big concerns of every CFO in today’s economy.
- Reducing cash-to-cash cycle times
If you increase your perfect order rate, you’ll optimize cash collection and shorten cash-to-cash cycle times. A number of projects will increase perfect-order rates. They include:
- Transportation Management Systems (TMS) and Warehouse Management Systems (LMS)
- Just-In-Time (JIT) and Vendor Managed Inventory (VMI) initiatives
- Reducing the company’s risk profile
If your project addresses supply risk, currency risk, or total landed cost risk, it will reduce your company’s risk profile, and total cost.
- Better inventory management will reduce supply risk and decrease costs as less shipments will need to be expedited
- Negotiating contracts in relatively stable currencies, like the Euro, or your home country currency can reduce currency risk.
- Implementing a global trade management system to help you insure compliance reduces the risks of customs delays, fines, and seizures.
- Achieving profitable growth
If you can calculate the top-line and bottom-line returns of your project, you can win the CFO over more quickly.
- E-procurement systems will instantly eliminate high manual invoice processing costs, which are between $30 and $90 in an average organization
- e-Sourcing platforms with decision optimization will cut at least 10% off your total spend, and keep it off
- indexed contracts will insure that your price increases never rise more than raw material costs and, more importantly, insure that you see price decreases when commodity indexes drop
- Deliver predictable revenue
A project that you can repeat month after month, such as the application of e-Sourcing to category after category, or spend-analysis on different areas of the business which looks at the data in different ways, can deliver long-term predictable revenue streams. If you identify projects that keep on giving, your CFO will be very happy.