May 18 - 20, 2021
Ask Joanna The CPO's Corner 2
The CPO's Corner
How can I get my CFO to see past savings alone and see the value of the other benefits Procurement delivers?
First of all, your CFO is numbers-focused, and savings will always be near and dear to his or her heart. That’s reality. If you try to change the conversation, there may be an assumption that you’re trying to cover something up. So I suggest you don't try to change it - you should try to expand it instead. Here’s how it goes:
1) Every time you report on savings, enhance the report with information about some other value you are adding. Maybe its cash flow (CFO’s love good cash flow), reduced inventory, better service levels, a good idea that came from one of your suppliers, etc. Every chance you get, add other metrics or verbiage to expand the conversation beyond savings.
2) Make sure your numbers and methodology for savings calculation are robust. Ask someone in Finance to review your assumptions and provide feedback. If you can put an audit process in place, and you can get the finance team to back up the numbers you are reporting, it will do a lot to boost your credibility. I’ve done this in a few firms, and it helps provide a comfort level for the CFO that members of his or her team have signed off on your numbers. Once the savings are accepted as “real”, there’s more room for conversations about other things.
3) Enlist your internal customers. If there is another team that is happy with your works, ask for an endorsement. The CFO is going to be pretty impressed when the head of sales mentions your team at an Executive Committee meeting. I’ve seen this used very effectively, especially in companies with poor systems where it’s hard to calculate an exact savings contribution. Everyone likes some positive press, so the leader of your division will be thrilled when another executive mentions a contribution.
4) Look for a problem to solve. Somewhere in your company, something isn’t going well. Maybe its poor quality, erratic service, high error rate. When there’s a supplier involved, it’s a perfect opportunity to raise the profile of the procurement group by working with the supplier to fix it. Remember, no one knows more about SRM (Supplier Relationship Management) than we procurement folks do.
Joanna Martinez is a global procurement / supply chain leader and the founder of Supply Chain Advisors LLC. She is a frequent lecturer and blogger on procurement topics and also provides coaching, strategy development, training, and cost reduction opportunity assessment. Her clients range from Fortune 100 companies to technology startups.
As either regional or global CPO, Joanna has led transformation initiatives for companies in many different sectors: among them Johnson & Johnson (consumer products), Diageo (beverage), AllianceBernstein LP (financial services) and Cushman & Wakefield (real estate services, property management). She has also held client-facing roles, effectively giving her the opportunity to “sit on both sides of the table”.