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Supply Chain Finance & Accounting: Moving Up the Value Curve

While a significant number of companies have transitioned the Supply Chain function to a Shared Services type design, others have been less willing to do so for a variety of reasons. One aspect of the Supply Chain area that is conducive to consolidation is the related Finance & Accounting activities associated with this critical process.  Since Supply Chain is such a large and complex operation in many companies, it is very common for “satellite” Finance-related processes to emerge outside the traditional Finance & Accounting umbrella.   While there may be a number of good reasons to have these processes located close to the Supply Chain organization, transitioning them to Shared Services will likely result in greater efficiencies in the long run, as is the case for most processes.

A recent Peeriosity PeercastTM featured a major consumer products company with an extensive Supply Chain organization that operates across the globe.  This company shared their journey in successfully migrating a number of Supply Chain Finance & Accounting processes to their Shared Services operation, with specific details about the steps they took in doing so. 

This journey began in 2008, when the company was already moving along the Shared Services path. Their first project was a pilot when they invested in 8 employees in an overseas location to focus on inventory reconciliations for approximately 120 of their external contract manufacturing facilities.  The test was considered a success and the decision was made to continue investing in the team.  The second project was started a year later and it broadened the reconciliations to the company-owned warehouses, which resulted in an additional 6 employees being brought onto the team.  The Shared Services team applied automation to these new processes and the second wave of the transition was simplified given the team’s newly developed process knowledge.

At the end of 2009, Freight Audit was added to the scope of the Shared Services team, which required a new team with new skillsets.  They continued through stabilization and process improvement for a few years, when in 2013, the Shared Services organization signed up for the largest transition project to date, in which all company plants were involved.  They transitioned over 25 unique Supply Chain F&A related processes, including Reporting, Dispositions, Incentive Planning, and Ad Hoc Analysis, and over 30 analysts were hired for the project.  Since then, Shared Services has been working on opportunities to move higher level analytical and ad hoc projects from the Supply Chain organization to their operation and have developed a strong reputation for providing high-quality service levels for their internal business partners.

In conjunction with this PeercastTM, a poll was developed using the iPollingTM technology that looked at where responsibility was held for Supply Chain activities at the Peeriosity member companies.  The first question addressed the overall Supply Chain function, including production planning, purchasing, logistics and inventory management, and where these process areas are located within the organizational structure of the company.

Looking at the poll results, 28% of the companies have their Supply Chain operation as part of a centralized headquarters type function, while 17% have it residing in a Supply Chain Shared Services structure.  The decentralized approach appears to be becoming less popular, with just 11% of the companies utilizing that type of design.  The remaining 44% of the companies are using some sort of a hybrid model with a combination of two or more of the structures being utilized.

The second poll question then looked specifically at the Finance & Accounting functions within the Supply Chain process areas and where they reside within the company.  The results shift significantly compared to the first question, with Shared Service Finance garnering 44% of the responses and the combination structure at 44%, just as it was for the overall Supply Chain results. 

Clearly, the approach of having Finance Shared Services perform the Finance-related activities found in many Supply Chain organizations is gaining popularity and is likely the ultimate destination for these processes at most companies in the future.

Who performs Supply Chain F&A processes at your company?  Are you planning to transition these to Shared Services in the near future?

Who are your peers and how are you collaborating with them?

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“PeercastsTM” are private, professionally facilitated webcasts that feature leading member company experiences on specific topics as a catalyst for broader discussion.  Access is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from attending or accessing discussion content.  Members can see who is registered to attend in advance, with discussion recordings, supporting polls, and presentation materials online and available whenever convenient for the member.  Using Peeriosity’s integrated email system, Peer MailTM, attendees can easily communicate at any time with other attending peers by selecting them from the list of registered attendees. 

 “iPollingTM” is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from participating or accessing content. Members have full visibility to all respondents and their comments. Using Peeriosity’s integrated email system, Peer MailTM, members can easily communicate at any time with others who participated in iPolling.

Peeriosity members are invited to log into www.peeriosity.com to join the discussion and connect with Peers.   Membership is for practitioners only, with no consultants or vendors permitted.  To learn more about Peeriosity, click here.

 



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