A Chief Financial Officer (CFO) is a member of the top-ranking officers in an organization known as the C-suite. This suite consists of the Chief Information Officer (CIF), Chief Operating Officer (COO), and the Chief Executive Officer, popularly known as the CEO.
For any organization to be successful, it has to have a CFO. The CFO can either be part-time, known as a fractional CFO, or a full-time employee depending on the company’s needs.
As the name suggests, the role of a fractional CFO revolves around financial management. They keep a record of the cash flow in an organization and prepare financial plans that guide activities such as resource allocation in departments.
During financial management, a CFO reviews the company’s financial situation to ensure accurate and timely reports. They also seek to identify the organization’s financial strengths and weaknesses, after which they come up with solutions.
Other than financial management, the CFO is the first line of defence for risk management. They’re required to identify risks early, understand them and offer solutions. Their scope of risk management cuts across all departments in an organization. Therefore, for example, they’re expected to come up with mitigations measures for cybersecurity threats in the IT department and solutions for disruptions in the supply chain, to mention but a few.
The roles of a CFO are wide and depend on the organization’s needs and terms of the contract. You can visit here for fractional CFO services. However, this article will focus on how a fractional CFO can manage supply chain disruptions. Keep reading to learn more.
How Can Fractional CFOs Solve Supply Chain Disruptions?
A wide range of things causes supply chain disruptions. Some are transitional or temporary, while others are permanent with long-lasting effects. An example of a transitional disruption is the recent Covid-19 pandemic. Due to the pandemic, international travel and transport were hampered, affecting the transportation of goods.
Additionally, people were asked to stay at home as a control measure of the pandemic, which saw the closure of many manufacturing companies. This meant that goods weren’t being produced; hence none were being transported. It’s only now that supply chains across the globe are beginning to recover from the disruption, following better management of the pandemic.
Permanent supply chain disruptions include;
- Institutional problems
- Political instability
- Poor quality of the supply services
- Lack of space
- Climate change regulations and adherence to the same
Such disruptions can lead to far-reaching effects if not solved promptly and effectively. As such, every company needs a CFO to offer long-term solutions, if not a fractional one. Here’s how the Fractional CFO can help solve supply chain disruptions:
By Working In Partnership With Other Departments
Supply chain and logistics is a wide operation in an organization. It involves people from different departments such as manufacturing, operations, marketing, sales, and suppliers. When a disruption occurs in one department, its impact ripples through all other sectors. Therefore, if a fractional CFO is looking to mitigate supply chain disruption efficiently, they should resist the urge to work alone.
When a CFO functions solo, they may miss important information such as the geopolitical climate of their peak customers. This is important information that may cause a disruption in the supply and which they would have learned from, say the marketing department.
With such prior knowledge, the CFO can collaborate with the supplies department and recommend a different route for the company’s cargo. The most successful CFOs collaborate with internal staff, such as the other C-suite members and other end-to-end supply chain team members.
Other than that, you can’t manage what you don’t understand. By working with the other departments, the CFO better understands how the supply chain works and how he can use it to drive more profits to the enterprise, as discussed in the next point.
Understanding The Supply Chain
Before the CFO can address any disruptions, they’re expected to have a firm understanding of a company’s supply chain and how it drives business. For example, the CFO should have data on the most profitable customers in the organization and the products they order. The CFO will have to work with the sales department to access this info.
When a supply chain disruption directly affects the most profitable customers, the CFO should reach out to them to affirm them of prompt solutions. Alternatively, if the disruption is due to the reduced manufacturing of products, the CFO may prioritize the supply of the scarce goods to their most profitable customers first.
That way, they’re able to maintain their customers even during a supply chain crisis. It also helps build better customer relationships that may lead to more significant transactions in the future.
That said, the fractional CFO doesn’t have to wait until a disruption happens to reach out to the customers. With such information, the CFO should cultivate good customer relationships earlier. They can do it by regularly checking up on their profitable customers to identify their needs and strategies and how to meet them.
When the bond between the business and client is stronger, the clients do not necessarily panic or leave the company when disruptions occue. This is because they trust the company’s leadership. Such levels of trust can only be built from consistent, deliberate follow-ups from the CFO, such as through planned personal calls to the customers.
By Using The Digital Supply Chain
One of the ways to manage supply chain disruptions is by predicting them and putting in place prevention measures for better visibility and insights to inform the predictive analysis. A fractional CFO should advise the organization to invest in the digital supply chain.
The digital supply chain includes visualization applications, demand technologies, and risk management technologies. With these technologies, the CFO can prevent disruptions and manage already occurring disruptions efficiently.
Collaborate with External Partners
Even though businesses are meant to compete, there comes a time when operating as an island is more detrimental than collaborating with other companies (eg. temporary staffing agencies) in your line of work. For example, in case of supply chain disruptions such as reduced production of goods from your company, the fractional CFO can sign an agreement to partner with another business.
The agreement will require that the collaborative partners produce the goods as your business comes up with a solution. Such collaborations see to it that your business doesn’t lose its customers due to lack of goods in the market.
Other than that, collaboration can be used where one company partners with another to transport its goods. Additionally, two different businesses may partner up for warehouse management of their supplies. All these are quick solutions to supply chain disruptions. The faster a solution is found, the less money is lost. This emphasizes the role of the CFO, which is to make sure the business stays profitable.
To Sum It Up
If you have been wondering if a fractional CFO will help you with your supply chain disruptions, yes, they will, as seen in the four ways discussed above. Hire that fractional CFO and revive your supply chain operations today.