CSCMP's Supply Chain Quarterly
November 27, 2014
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CFOs overlook the value of procurement

As cost cutting absorbs more of their attention during the economic downturn, many chief financial officers appear to be ignoring supply chain risks.

As cost cutting absorbs more of their attention during the economic downturn, many chief financial officers (CFOs) appear to be ignoring supply chain risks. Twothirds (66 percent) of the respondents to a survey of 550 financial directors and CFOs in the United States and Europe said that cutting costs is their top priority, while only 38 percent cited reducing risk as a priority. The research, conducted by the Kelley School of Business at Indiana University in Bloomington, Indiana, USA and the software vendor Basware Inc., was published in a report titled The Cost of Control.

Only 28 percent of the respondents said they believe procurement has a significant impact on financial risk exposure—a costly oversight, the report's authors said. "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 recession," said Mark Frohlich, one of the authors and an associate professor of operations management at the Kelley School of Business.

Just under half of respondents said they see any real integration between purchasing and finance processes. This suggests that finance heads are overlooking the value of procurement teams in bringing security and stability to their organizations, said Ari Salonen, Basware's general manager for North America.

To obtain a copy of the report The Cost of Control, go to www.basware.com/control.

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