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I read your editorial "View from China" (November 2005), and found it long on opinion and short on facts. What in the world does Hurricane Katrina show about U.S. business other than that it was more responsive than the U.S. government? U.S. business responded both swiftly and with great generosity. I cannot imagine any Chinese business (or China's government, for that matter) showing the level of compassion that U.S. business exhibited during the storms. You fail to make a distinction between U.S. business and the U.S. government. I am not sure how you fail to make this simple distinction. I hope that Chinese business is capable of such a simple distinction.
The reality is very different. China's exports to the United States are a testimony to the willingness on the part of U.S. business and government to trust a nation that has been openly hostile to America. The current trade deficit is one area where Congress has been more than patient. U.S. business has also been more than an advocate in trade talks. This is much more than you can say about China's ability to demonstrate trust.
Name Withheld
Via E-mail
Tom Leander, editor-in-chief of CFO Asia and CFO China, responds:
The editorial did fail to draw a distinction between the actions of the U.S. government and U.S. business in the Katrina crisis. But the oversight reflects a common point of view about America — overseas among Chinese observers and elsewhere. Americans may think quite highly of their nation's ability to separate politics and business. But many Chinese would tell you that that's a veneer, and underneath America is a little like China, featuring a high degree of protectionism and with its military and government tied up with its companies. They would cite Halliburton and Enron as examples. It's important for Americans to be aware of this jaundiced view.
Adding Value Where It Matters
I enjoyed "Striking a Balance" (November 2005). As a former finance executive who subsequently went on to lead the supply-management organizations in two large companies, I'd like to share a few more ways that finance can add value where it really matters.
World-class procurement and supply management offer the potential for enormous top-line and bottom-line benefits. In fact, some of the biggest success stories in business (for example, Procter & Gamble and United Technologies) possess a major supply-management component.
To maximize the business benefits that can be achieved with procurement and supply management, however, your supply-management organization cannot work alone. Finance is often the most important internal "partner" with the procurement or supply-management organization. That partnering typically involves an active collaboration on such topics as: (1) managing commodity risks; (2) sponsoring and staffing strategic sourcing teams, often with embedded members from finance; (3) establishing a credible methodology for calculating and reporting benefits from sourcing initiatives; (4) implementing means to ensure compliance with new contracts (good for Sarbanes-Oxley, and good for eliminating inefficient and costly "maverick spend"); (5) devising ways to adjust budgets at the cost-center level so that sourcing successes have a chance to make it to the bottom line (and are not automatically spent on other things); (6) pursuing working-capital initiatives, such as improved payment terms, supplier inventory programs, and "asset recovery" programs; and (7) evaluating new supply-management tools and technology, and building a credible business case to take supply management to the next level of performance.
The bottom line is that world-class supply-management organizations are typically measured against aggressive objectives that directly relate to substantially improving business performance, especially return on invested capital. In that high- performance environment, the finance function is an ideal and valuable business partner.
Robert A. Rudzki
President
Greybeard Advisors LLC
Pittsburgh
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