Procurement and Finance is not a P2P Love Story …

… it’s a bitter rivalry to the bitter end. It’s a feud that makes the Hatfield and McCoy war look like a bitter spat. And you know what, that’s just the way it should be.

Simply put, it’s the CFO’s job to stop spending and it’s the CPO’s job to spend … spend as wisely as possible, but, in a perfect world, spend every dollar that goes out the door that is not a payroll dollar, a lease dollar, a tax dollar, or another dollar that is completely out of negotiable control.

Those job are opposites. Yes, the ultimate goal of the organization is to maximize shareholder value and that is done by maximizing the value of each dollar spent, and both parties are supposed to be working towards this goal, but the CFO, like the CEO, is also beholden to the shareholders, and their value is typically maximized when profit is maximized, and profit is maximized when revenue — spending is minimized, or, in other words, when the CFO succeeds in forcing the CPO to spend less.

And, as we know, spending less is not always the right decision. If the spending less decision results in lower quality, lower reliability, or higher risk, it’s the wrong decision as it will, ultimately, increase (warranty, replacement, service, stock-out, etc.) costs, decrease customer satisfaction, and damage the bottom line to an extent that is many time the short-term cost savings that was obtained from spending less.

But still the CFO will beat the spend less war drum while the CPO beats the give me more budget and more spending control war drum — and this will continue until the end of corporate time. It’s not a love story … it’s a never ending war. And the only hope for tense peace is to find a common enemy — like the enemy of brand damage that can occur if both parties don’t insure that all spend and decisions are made responsibly.

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