Call Up Your Inner Finance Athleticism, Supply Chain Professionals
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An “athlete” is a person who is proficient in sports and other forms of physical exercise. With definitional expansion of terminology, a “supply chain athlete” is a person who is proficient in the operational activities that result in the right products, at the right price, and at the right time to achieve value in the consumer’s demand mindset.
To be an athlete, a person is constantly working to increase his/her proficiency through experiences, capability building, and value driven outcomes based decision making. The consumer is demanding, the marketplace is dynamic and global, the labor force is human and automated, the distribution points are varied and complex and the asset utilization is complex. Supply chain professionals are challenged with the edict “be an athlete.”
Inserting financial acumen in the supply chain activities is more than creating a sharper KPI dashboard, calculating a consequential working capital impact on building inventory, or raising awareness to additional expenses on compliance breakdowns.
The approach is to critically think about value driven outcomes versus task oriented activity value chains. Historically, operational minded activities maximize the queue times, drive down input costs, and rationally use overhead to spearhead more volume at scale. The paradigm now is to ensure that significant asset investments are getting smarter for flexible and sustainable utilization, leverage other’s assets in a platform manner to create variability in cost accumulation, and maximize a labor input of a mix driven by full time, part time, temporary and automation.
Financial foundations are necessary to ensure success. The behavior of costs into fixed and variable classifications is important. Fixed costs identification will warrant decision-making on spending decisions warranted by volumes that maximize their love of throughputs. Variable costs, however, will elicit decision-making based on activity-based decisions for more surgical accumulation of costs directly impacted by the catalyzed nature of related activities.
Supply chain professionals will continue to emphasize that capital chases value. The deployment of company resources to fund the operations in a value chain model is core to any business model. The origination of the capital is another financial foundation. Investor based capital is intended for growth. Debt based capital is broadly intended for long term asset investments whereby the value achieved from the output of the investments exceed the borrowed costs. Divested capital, which is vogue today, is intended to sell assets that are unproductive or unnecessary in a re-pivot of the business model and the cash can be used elsewhere for growth. Working capital is a functional source of funds when the inventory and vendor relations are managed to take advantage of good customer demand forecasting alignment and payment terms that line up with the business breathing harmony of the sales and collections cycle.
Lastly, be profitable. Sounds easy but it is a difficult orchestration of all activities functioning with connected efficiencies. When profitable, the organization generates its own capital to chase new value.
So, invest in yourself to be the best financially sound, supply chain professional “athlete” and use your foundations responsibly to help the organization expend capital and create value for your employees, customers and shareholders.
Author:
Tony Poidomani, Chief Financial Officer, CSCMP
