More NewsCFOs are Ignoring Supply Chain Risks as Cost Cutting Tightens, Finds Research

CFOs are Ignoring Supply Chain Risks as Cost Cutting Tightens, Finds Research

Chief financial officers (CFOs) in organisations across the globe are shunning risk management in favour of cost cutting, and are failing to treat supply chain dangers seriously enough, according to a major new piece of research released by a business academic and Basware.

The research surveyed 550 financial directors and CFOs from organisations globally. The research is supported by Professor Adrian Done of Barcelona’s IESE Business School.

Findings from the report, ‘The Cost of Control’, revealed that in spite of a high risk economic environment, CFOs are failing to recognise the importance of closely managing supply chains through procurement, with just 28% of respondents to the study saying that they believe procurement has a significant impact on financial risk exposure.

The research also found:

  • Less than half (46%) see any level of integration between procurement and finance teams.
  • Almost 60% of indirect spending remains untracked by global organisations.
  • 64% of respondents rate cost cutting as top priority, were as just 39% cite reducing risk as a priority. Only 24% of respondents remained focused on environmental practices.

Professor Done said: “Businesses today are defined by their supply chains and some of the high profile business failures of the last 12 months point to this as a root cause. Finance departments across the globe have been guilty of ignoring the real value that their procurement teams can bring for decades now, so there is real truth in the suggestion that CFOs aren’t making the most of what can be an invaluable asset in the fight against the recession.”

“The subsequent finding that only 46% of financial chiefs see real integration between purchasing and finance processes makes this particularly alarming, as it represents a major break between two departments that should be working closer than ever to combat the downturn,” he continued. “With the suggestion that just 27% of CFOs consider that procurement has a positive effect on enterprise profitability, this all suggests that the procurement role itself and the wider supply chain is not seen as a significant contributor to bottom line performance.”

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