Mike Hales, Partner, Americas at AT Kearney, explored how to boost earnings per share (EPS) through suppliers during a Thought Leadership Spotlight with Argyle’s CFO membership at the 2015 Chief Financial Officer Leadership Forum in Chicago on Nov. 18. In his presentation, “Boost EPS Through Your Suppliers,” Hales discussed how organizations can reap the benefits of “finance functional excellence” by building long-lasting partnerships with suppliers.
According to Hales, an organization’s chief procurement officer can serve a vital role, particularly when it comes to working with suppliers. However, the CFO ultimately determines whether or not a chief procurement officer is successful, Hales said. Furthermore, Hales noted the CFO remains accountable for the chief procurement officer’s overall performance: “Even if you’re not the person that the chief procurement officer reports to you’re probably the most powerful ally for that chief procurement officer to succeed. Your ability to put things into budgets or not put things into budgets really determines the success and the impact that that chief procurement officer can have.”
Suppliers have become more important than ever, Hales said, because they can dictate an organization’s cost performance, innovation and risk. In addition, Hales noted the chief procurement officer controls the pipeline to suppliers, making this professional an important figure because he or she can improve an organization’s relationships with suppliers: “The great chief procurement officers will also know what their cost reduction pipeline is and they’ll have the ability to flex that cost reduction pipeline in case you have that activist investor come knocking on the door or in case a certain contract doesn’t come through as you expect it so that you can protect that in your performance.”