CFOs seen ignoring supply chain risks as cost cutting tightens

Chief financial officers in organizations across the globe are shunning risk management in favor of cost cutting and are failing to treat supply chain dangers seriously enough, according to a recent study by purchase-to-pay solution provider Basware in conjunction with the Kelley School of Business in Indianapolis.

The current downturn is profoundly affecting businesses around the world, and Basware's global study, "The Cost of Control," investigates the issues affecting finance and procurement. An insight into the views of 550 financial directors and CFOs from organizations around the world, the research is supported in the U.S. by Mark Frohlich, associate professor of operations management at the Kelley School of Business.

Findings from the study reveal that in spite of a high-risk economic environment, CFOs are failing to recognize the importance of closely managing supply chains through Procurement, with just 28 percent of respondents to the study saying that they believe Procurement has a significant impact on financial risk exposure.

"Businesses today are defined by their supply chains, and some of the high profile business failures of the last 12 months point to this as a root cause," observed Professor Frohlich, who previously worked as a management consultant with Deloitte & Touche. "Finance departments across the globe have been guilty of ignoring the real value that their procurement teams can bring to the financial health of their organizations for decades now, so there is real truth to the suggestion that CFOs aren't making the most of what can be an invaluable asset in the fight against the recession."

The study finds that only 46 percent of financial chiefs see real integration between purchasing and finance processes, representing a major break between two departments that should be working closer than ever to combat the downturn. According to survey results, less than half of the respondents see any level of integration between procurement and finance teams.

Click here to read more.