Only 47% of Supply Chain Leaders Communicate Well With Finance: Weekly Stat

The relationship between finance leaders and their supply chain teams needs work, according to new research.
Only 47% of Supply Chain Leaders Communicate Well With Finance: Weekly Stat
Photo: Marko Geber

The expansiveness of the CFO role, from compliance to risk management to financing a welcoming and sustainable company culture, leaves finance chiefs’ hands full. Good communication among leadership is essential, given these myriad responsibilities, especially during the hardest times.

Managers who oversee supply chain, an area where CFOs have faced their fair share of issues over the last three years, have felt the challenges of meeting customer expectations amid myriad challenges.

On the surface, items such as customer demand and technology investment may seem common between supply chain managers and finance chiefs, but new data shows less than half (47%) of a survey of 1,000 supply chain leaders by SAP and Oxford Economics said they communicate well with the finance team. That’s the lowest reported by any department.

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Struggles With Relationship Building

According to the study, survey respondents may be “underestimating the value of a strong business ecosystem.” Less than half (47%) of supply chain leaders said improvements around “visibility with trading partners” across their supply chains would promote resilience. 

Finance leaders know that communication is pivotal for success in the C-Suite. But within supply chain departments, managers struggle to build working relationships to hedge against supply chain disruptions. Less than one-third (32%) have highly collaborative relationships with their Tier 2 providers (their suppliers’ suppliers). Only a quarter (25%) have the same relationship with their Tier 3 providers.

Additionally, less than four in 10 (39%) collaborate well with maintenance providers, and a nearly identical 38% say the same for their outsourced manufacturers.

Unlike CFOs, a lack of communication isn’t translating to employment issues. Among issues reported, only 13% named talent issues as a top challenge, the lowest-ranked choice.

Avoiding Disruption

Thought leaders who have identified the issues around supply chain management believe solutions are available by embracing additive technology. Without identifying the communication issues directly, the other issues facing supply chain leaders can be fixed by continuing to incorporate the best available technology.

“In recent years, it has become apparent that our global supply chains are vulnerable to disruption,” said Thomas Saueressig, member of the Executive Board of SAP SE responsible for SAP Product Engineering.

“This has far-reaching consequences for the manufacturing industry as well. SAP is a driving force in many industry-relevant initiatives, such as Catena-X and Manufacturing-X. Open data ecosystems, especially, have their place in the manufacturing industry,” Saueressig said.

“What is more, in many of the conversations I’ve had with business leaders, and according to our latest Oxford Economics study, it becomes clear [is] they see the need of investing in ‘Industry 4.0’ principles and AI to increase supply chain resiliency, but many are still in the piloting stage,” he said. “[We] are in a unique position to accelerate the journey to resilient manufacturing because we can embed intelligent capabilities in enterprise software across all end-to-end-processes.”

This ‘Industry 4.0’ technology, consisting of things like predictive analytics and other advanced data analysis tools, is yet to be overwhelmingly incorporated within supply chains. According to findings, only 36% of respondents said they had used any type of predictive analytics tools in the past. 

Ethical Sustainability Emphasis Declines 

According to the data, ethical sustainability is a falling priority. Whether it’s distractions from the issues surrounding price concerns, communications issues, or risk management, data compared to 2021 shows supply chain leaders have significantly less visibility on labor ethics, sourcing of raw materials, and end-of-product lifecycles.

Despite this, nearly half of respondents (46%) say their customers are more and more concerned about buying sustainably sourced, ethically designed products. In their balance of these two factors, they have developed what researchers call an “out of sight, out of mind” mentality. There is a drive to reprioritize sustainability efforts among supply chain leadership.

Nearly three in 10 (28%) of supply chain executives included improving sustainability metrics as one of their top-three strategic goals. From present-day cobalt mines in the Democratic Republic of Congo using exploited labor to harvest lithium ion for nearly three quarters of the electric batteries in vehicles and mobile devices, to the questionable labor practices in China in the assembly of products sold in the West, sustainability for many manufacturing based, consumer-centric companies is yet to even approach its infancy.

Guidance for CFOs

In an exclusive take, Darcy MacClaren, head of SAP North American’s digital supply chain and industry 4.0, gave advice on how CFOs can use this information to further the strength of their supply chains. According to MacClaren, executives must build strategies that promote fluid communication throughout the organization.

“Creating and managing a resilient, sustainable enterprise is top of mind for just about all major business leaders,” said MacClaren. “Although predicting the future is nearly impossible, CFOs and other C-suite executives can position their businesses favorably by developing holistic strategies that connect the business end-to-end.”

“CFOs should be closely involved in the company’s supply chain operations and work closely with supply chain colleagues to identify opportunities for improvement,” MacClaren continued. “By optimizing efficiency and speed, businesses can reduce overall costs associated with inventory management, allowing for the CFO to identify areas for improvement and work in tandem with the supply chain executives to develop long-term strategies that help the company achieve its financial goals.”