An investment in the CPO-CFO relationship will pay dividends for organizations that take this partnership seriously. There’s no business relationship that’s quite as symbiotic as the CPO and the CFO — or at least that’s the way it should be. When these two executives aren’t aligned, it means that money is being left on the table.
Procurement and Finance share a common language: dollars and cents. So, what’s the key to a close working relationship? Spend visibility.
4 ways in which spend visibility can enhance the CPO-CFO relationship
A single source of truth will provide the business intelligence your colleagues need to understand historical and current spend and accurately forecast future spend. Given the strategic imperative of cost management, here are just a few ways that advanced spend analytics can strengthen the alignment between Procurement and Finance.
1. Boost Performance and Innovation
Pulling reports and analyzing spend data shouldn’t require the knowledge of a data scientist. It also shouldn’t come from multiple Excel spreadsheets that have to be imported into a separate business intelligence tool that requires data mapping and third-party software integrations.
Procurement teams need to lean into automation and hand off the manual error-prone tasks. Artificial intelligence (AI) can handle a number of these chores to provide an instant analysis of spend and payment terms in a fraction of the time. This frees up your procurement team to focus on value creation, like relationships with suppliers that provide the spark for innovation.
But what will really delight your friends in Finance is the ability for a spend analytics solution to identify, clarify, and normalize unmanaged spend categories. A full-picture analysis of the amount and types of spend that need to be brought under management will help Procurement take action to reduce maverick spend scenarios.
2. Data Integrity that Smashes Silos
Your colleagues in Finance need to build accurate forecasts and cost-management scenarios to protect the organization from future economic shocks, but they can’t create these in a silo. When spend is under management in one centralized location, Procurement and Finance can work together from a single source of truth. Data integrity is essential to this exercise. Here’s why:
- Visibility into external spend will help identify areas where spend can be reduced.
- Analytics capabilities will identify risks and opportunities.
- A strong digital infrastructure will support compliance and alignment of corporate goals and strategy.
This goes beyond just monitoring dollars in and dollars out. Now, CPOs can provide strategic intel from the supply chain to Finance teams. Working together, Procurement and Finance can drive business planning and execution.
3. Decision-Making from Dashboards, Not Crystal Balls
The events of 2020 made it clear that real-time data is a competitive advantage. Faster and more accurate decision-making is possible with a holistic view of spend throughout the supply chain with curated dashboards, no crystal ball or data scientists are required.
Analyzing spend patterns over time will establish baselines and benchmarks that inform supplier negotiations, identify areas of value leakage, and exposure to risk in the supply chain. The outcome is stronger supplier relationships in the long term and the ability to implement quick-win strategies in the short term.
4. Close the Gap Between the CPO and the CFO
Many companies and suppliers suffered irreparable losses in 2020. For those that turned the corner, a strong working relationship between the CPO and the CFO is important for the future of the organization. This requires accurate data from a single source of truth so that strategic and operational goals can be realized. Any enterprise that is serious about growing back more resilient will invest in this crucial business relationship.