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Saturday, October 22, 2011

CFO's and the Supply Chain

Have never thought of it in this way, but its a useful thought.  In CFO mag:

"Supply chain and finance are usually seen as separate and conflicting disciplines.

In a retailing or manufacturing company, key performance indicators are typically set by the chief operating officer to maintain high customer-service levels by keeping inventories high. At the same time, the CFO pushes the company’s supply-chain management to reduce inventory as much as possible to avoid the financial burden imposed by high working capital requirements. As a result, supply-chain and financial incentives become misaligned, and efforts to arrive at a compromise can be extremely frustrating for both disciplines. However, it is possible to bridge this divide ... "

1 comment:

Ben Benjabutr said...

I think supply chain professionals needs to inject the idea about cost/service trade-off to finance people a lot. Because too low inventory (like what happened to Toyota after earthquake) can hurt service level and profitability. Finance people tends not to see both side of the coins.