Riportiamo di seguito la recensione del libro Finance Unleashed – Leveraging the CFO for Innovation di Magnus Lind e Kelly Barner, pubblicata sul magazine “The Procurement – Acquisti in team” (Anno 4 Numero 1) nella sezione Recensioni.
FINANCE UNLEASHED provides busy executives with a sustainable vision and framework for increasing revenues and profitability while improving their financial business model. The book describes the potent opportunity associated with optimizing the financial flow of the supply chain. In most companies today, there is a huge amount of waste in corporate costs, time delays, and inefficient capital usage. In addition, each transfer of ownership in the supply chain can add as much as 2-5% in payment fees and foreign exchange costs. This waste and these costs are then passed along to customers, resulting in reduced competitiveness.
The financial supply chain (FSC) is probably the most significant and immediate strategic improvement opportunity for the CEO and the board. The challenge is to transition financial supply chain practices from an inside-out perspective (or from siloed supporting processes) to become the fully-fledged business flow that it must be. The financial supply chain could be the best opportunity to disrupt your industry and seize market leadership.
The purpose of FINANCE UNLEASHED is to illustrate how non-financial companies can address this paradigm shift by optimally managing the flow of finance (cash, credit, financial risks, payment). The FSC is in the remit of the CFO. Until now, CFOs have been able to avoid driving the business because business development has been centered on the physical chain of goods and services. Now, however, the CFO is put in the driver’s seat.
Lind and Barner believe this paradigm shift will force the CFO office to become customer-centric, viewing the FSC as an ecosystem of suppliers and distributors. This opens up new revenue streams and customer offerings, which combine to boost competitiveness, innovation, and profitability. Customer-centric finance requires the CFO to approach improvements with all stakeholders, as is done to manage the physical chain. This is in stark contrast to what finance does today – focusing on one balance sheet at a time in near isolation – and will take the CFO far away from working capital targets and other suboptimal financial metrics.
The physical supply chain started to undergo this shift in the 1970’s under the banner of Lean Six Sigma initiatives. Now the CFO must take a leading role in the development of valuable customer offerings and business models.
FINANCE UNLEASHED provides a three-step approach for transforming finance from an inside-out administrative function into a leading team that embraces an outside-in perspective, and ultimately drives increased competitive advantage.
There are still significant opportunities in the physical chain, however those that remain are often dwarfed by those that exist in the ‘virgin’ financial supply chain. The alternate paradigm presented in FINANCE UNLEASHED can not be overlooked. This is an exciting time to be in finance, and there are ample opportunities for finance executives to excel – if they are willing to assume the mantle of full-fledged business leader.
Companies are rarely disrupted in isolation; the whole supply chain is likely to be disrupted as one. Tesla serves as an apt example. It has refined and developed leading technologies, yet they did not invent the electric car, the battery, or even the solar cells they are associated with. What Tesla has done is to connect them. You get power from the sun, and store it in fixed installed wall batteries that charge the mobile batteries (the car). Tesla has developed the full circle from a customer perspective instead of from a technical or product perspective. They are 80% vertically integrated (according to Goldman Sachs).
Tesla has decided to make a play through integrated supply chains instead of the too common practice of chopping up of the chain and engaging in an ‘ecosystem fight’, where each company focuses on their own working capital levels instead of what the chain’s end customer really wants.
In FINANCE UNLEASHED, Lind and Barner have developed a model for making supply chains more cooperative and resilient, instead of allowing each company to remain internally focused, especially on the financial side.
The aim is to replicate the physical supply chain’s focus on staging an ‘ecosystem play’, drawing the financial chain away from the ‘ecosystem fight’. FINANCE UNLEASHED presents cases from companies such as UPS, DHL, and Turkcell, where the CFO has actively reinvented legacy business models.
The book also includes interviews with influencers, CFOs, and policy makers, providing first-hand insight and inspiration into the biggest business opportunity of the 21st century.
Magnus Lind sarà fra i protagonisti del prossimo Supply Chain Finance con l’intervento: “Is Finance changing and is Procurement becoming more strategic?”.