Why the C-suite needs genuine procurement expertise

A leading expert on supply chain management (SCM) has called on CFOs to recognise the death of procurement competence in the C-suite and start remedying it through procurement recruitment.

Noting in CFO Magazine that the supply chain accounts for over 37% of an organisation’s operating expenditures and has a major influence on revenues, seasoned SCM authority Chuck Franzetta laments the continuing absence of supply chain expertise in the C-suite.

CFOs often find themselves landed with responsibility for SCM despite lacking the time and the expertise to take this function on. The problem is that there is rarely anyone else to turn to who has full comprehension of the scope of what good SCM represents to the organisation.

Companies simply can’t produce and sell if they can’t source the needed raw materials and get the finished goods to customers with reliable logistics.

Conceding that CFOs may possess detailed understanding of matters such as how revenues can be imperilled by shortfalls in production, or enhanced by fast adaptation to emerging opportunities, Franzetta nonetheless notes:

“But most don’t have the time, background, or technical expertise to delve into supply chain issues that can enhance or detract from revenues, such as how managing the product mix can produce higher margins. Without someone providing the correct overall guidance, companies often launch ad hoc efforts to improve operating efficiency and reduce costs.”

More positively, Franzetta observes that growing numbers of CFOs are beginning to appreciate the need to augment their teams with a procurement “guru” at the right level of seniority (reporting to a VP or CEO).

Franzetta emphasises the need to source the right people for these new senior procurement jobs. Proficiency with the new technology informing SMC is, in his view, necessary but insufficient. Actual, hands-on supply chain expertise and experience is essential, too.

CFOs, he recommends, should stop taking on SMC responsibilities they are ill-equipped to carry out and instead become the champion of “recruiting the appropriate talent required for this crucial role”.