The Singapore and Hong Kong team attended the World Finance Forum two-day conference, which took place in Singapore from Oct 25 to 26, 2023. The annual summit brought together industry leaders to discuss the latest trends and innovations in finance transformation, AI enablement, business partnering, financial planning & analysis, leadership, sustainability, and supply chain resilience.
During the conference, our team had the opportunity to engage in insightful discussions with industry leaders within in the FMCG, Consumer Goods, Retail and Chemical industrial sectors.
On day two, we sponsored a session entitled “The Importance of Supply Chain Reinvention in a CFO’s Agenda”, facilitated by Nelson Chow, Chairperson of Institute for Supply Management (ISM) Hong Kong.
Here is a quick recap of that session:
In the tumultuous waters of today’s business world, often described as VUCA (Volatile, Uncertain, Complex, Ambiguous) or BANI (Brittle, Anxious, Nonlinear, Incomprehensible), financial leaders find themselves akin to co-pilots navigating a ship through a storm. Finance professionals bear the responsibility of guiding their companies through challenges, ensuring not only survival but also sustainable business growth.
The stark reality is that 52% of Fortune 500 companies from the year 2000 have vanished, leaving behind a trail of once-prominent names such as Compaq and Toys “R” Us, alongside giants like IBM and General Motors experiencing significant drops in their ranking. The pressing question for finance professionals becomes clear: How can we stay competitive and ensure sustained profitability?
Amid these challenges, the silver lining is our presence in Asia, a region projected to be the primary contributor to global GDP by 2030. This not only positions Asia as a growth engine for companies but also underscores the need for increased investment in the region.
With a burgeoning GDP and a colossal population, Asia is witnessing the rise of the middle class, offering substantial market opportunities across diverse industries. However, the complexity of Asia, encompassing diverse languages, working styles, macroeconomic factors and regulations, demands a strategic approach.
Returning to basics, high GDP growth and a growing middle class make the demand side promising. Turning our attention to the supply side reveals a significant shift of the supply chain towards Asia. Despite economic challenges, China remains a technological powerhouse, while Southeast Asian countries like Vietnam, Thailand, Indonesia are emerging as crucial manufacturing hubs, driven by strategies like “China + N” to de-risk supply chains.
So, what’s in it for finance leaders? With the spotlight on Asia, CFOs play a pivotal role. Beyond maintaining financial stewardship, the focus should extend to sustainability, innovation and digital transformation.
On the cost side, addressing the core of COGS (Cost of Goods Sold) – SKU rationalisation, procurement & strategic sourcing, logistics optimization – can yield significant results. On the revenue side, strategies like customer and product profitability analysis can drive revenue growth by adjusting the pricing strategies.
Yet, the journey doesn’t conclude here. Maintaining positive cash flow, especially with the escalating cost of capital, demands strategic moves. Leveraging supply chain financing, optimising inventory management and rationalising payment terms are additional levers for success.
In the current business landscape, compliance with evolving sustainability and ESG (Environmental, Social and Governance) regulations is non-negotiable. It’s essential to track Scope 3 emissions and collaboratively manage sanction and supply chain risks.
Supply chain reinvention transcends traditional benefits, promising not only improved revenue, profitability and cash flow but also heightened agility and resilience. The power to drive change and steer companies toward a future-ready state lies within the grasp of influential financial leaders. Beyond the low-hanging fruits, they should consider exploring untapped value in their core value chain through supply chain reinvention.
To initiate this transformative journey, Argon & Co has designed a quick survey to start reflecting on some potential weak links in supply chain, which can be found at this link: https://forms.office.com/e/rytJuxJjDm
In conclusion, we find ourselves in an age marked by both chaos and growth opportunities. Lessons from the COVID era remind us that disruptions can strike unexpectedly. Supply chain reinvention is not merely an option: it’s a necessity to drive revenue growth, protect margins and mitigate risks. Finance professionals, seated in the co-pilot’s position, hold the power to lead this transformation and unlock untapped value. It may not be easy, but it’s the right path; and with the right partners, it’s more achievable than it seems. So, let’s set sail into this new era of possibilities.
Finally, we’ve compiled a selection of the pivotal insights and noteworthy takeaways gathered by our team during this recent event:
Leveraging AI for Enhanced Financial Resource Allocation and Security
AI-driven forecasting and budgeting tools enable businesses to optimise resource allocation by analysing historical data, identifying patterns, and predicting future financial and cash flow needs for efficient resource allocation. Furthermore, AI goes beyond process automation, enhancing anomaly detection, fraud prevention, and non-compliance identification more effectively than traditional technologies, thereby safeguarding an organisation’s data and financial integrity. However, it is essential to note that AI’s efficacy relies on the quality of data input, highlighting the continued importance of human oversight in ensuring data accuracy.
Today’s CFO role is not only about managing the numbers
In today’s business landscape, the role of a Chief Financial Officer (CFO) extends far beyond traditional financial responsibilities. As traditional processes become increasingly outdated, finance teams can no longer be limited to mere number crunching. Instead, they must undergo a transformation into true strategic partners, actively driving business growth. This evolution involves embracing new technologies, championing innovation, and optimising operations to maximise profitability. Moreover, finance teams must possess a deep understanding of the business objectives they aim to achieve and the challenges they seek to address through technology. Simply digitising or automating financial processes as part of a digital transformation initiative does not guarantee a successful outcome. To excel in this evolving role, CFOs and their teams must align their financial strategies with the broader objectives of the organisation, ensuring that technology is harnessed effectively to meet specific business needs and drive sustained success.
Navigating and Enabling Financial Transformations in the Modern Business Landscape:
The ability to drive financial transformations is a critical aspect of modern CFO responsibilities. Digital finance transformation encompasses a comprehensive overhaul of strategy, operations, processes, methodologies, business practices, and talent. This holistic approach is aimed at delivering more streamlined and cost-effective results. It’s important to note that finance transformations are substantial endeavours, and their magnitude remains significant regardless of the size of the business. CFOs must carefully evaluate, prioritise, and scope activities within these transformations, with a keen focus on the key differentiators that drive success. Furthermore, CFOs are tasked with creating a future-state design, incorporating best practices, case studies, and essential tools to support their business case. This multifaceted approach allows CFOs to not only adapt to changing financial landscapes but also to proactively shape the financial future of their organisations.
Fostering Actionable CFO-Business Partnerships through Clear Communication and Expectation Setting:
The CFO-business partnership is critical to the success of any organisation. One of the most important things for CFOs to do is to have clear expectations for their business partners. This means communicating what they expect in terms of roles, responsibilities, and deliverables. It is also important for CFOs to understand to communicate with the right level and medial considering who their stakeholder is. Communicating with C-level executive will need a different level of detail and depth of information compared to talking with manager from operational level.
Taking Action to Bridge the Workplace Generation Gap for Gen Z Talent in Finance:
In today’s workforce, there is a notable generation gap between leaders and team members, many of whom are from Generation Z. To bridge this gap, it is crucial to understand what is important to Gen Z workers. Gen Z values a flexible work environment and opportunities for professional development. They are also the most digitally savvy generation to date, so communication within teams needs to be adaptable to this new digital landscape. To attract and retain Gen Z talent in finance, financial institutions should: offer a flexible work environment, provide opportunities for professional development, embrace digital transformation, and communicate in a digitally savvy way.