Staying relevant in today's evolving business world requires chief financial officers to come up with ways to stay ahead of globalization and industry trends. In order to be successful, CFOs should look into the crystal ball that is their supply chain.
Analyzing data generated from a company's supply chain allows decision-makers to get a head of the curve and understand what consumers want. Businesses that comprehend what factors affect products throughout the supply chain, as well as how these changes impact customer trends, can gain a competitive advantage over rival companies, according to a Business Finance Magazine report.
By using these real-time analytics organizations can do several things.
1. Forecast pricing
Because of the economy, a number of industries have been forced to contend with changes in the market. Inconsistency makes it harder for supply chain managers to balance inventory assets and acquisition costs.
To achieve this balance, CFOs need to develop a complex analytical model that determines the reasons behind market volatility. That includes looking into consumer trends, supplier relations and other macroeconomic factors. All of these can be acquired from data gathered through the supply chain, the news source reported.
2. Comprehend risk
By nature, supply chains are prone to risk because of their many financial and physical moving parts. However, CFOs that understand the entire supply chain process will be better prepared for cost fluctuations, as well as supply and demand shifts, Financial Magazine noted.
By evaluating different sections of the supply chain and conducting interviews with suppliers, CFOs can also learn how these changes will affect the company as a whole.
3. Improve inventory turnover rate
This, of course, is a top priority for businesses. The ability to quickly convert products into sales means that companies can reallocate the profits into other portions of the organization.
Once again, a chief financial officer that has a concise understanding of the supply chain's inner workings will be able to pick up on consumer trends and help the company improve its turnover rate. By avoiding unnecessary inventory, businesses can quickly move from one project to another without needing to worry about reserves, Financial Magazine reported.
One way for organizations to reduce their excess products is to convert into a demand-driven company. This means CFOs should no longer use unpredictable forecasts, as they have in the past, and instead focus on what consumers are doing. Having strong visibility will allow supply chain managers to make real-time adjustments and help the company save money.