By Kathy Gibson – Chief financial officers (CFOs) in manufacturing companies are operating in crisis mode – and access to data is key to helping them to embrace their new, hybrid, role.
Marius Wessels, manager: professional services at Syspro Africa, explains that hybrid CFOs need tools that give them the same degree of insight into operations as into finances.
“They now have to achieve equal mastery of both facets of the company’s performance, understanding how production data affects finances,” he says.
Aucamp van der Schyff, commercial and financial manager at Syspro Africa, presenting the findings from Syspro’s Global CFO Survey, confirms that manufacturing CFOs are placing a greater emphasis on operations.
“To build resilience, hybrid CFOs require access to all of the company’s data – both operational and financial.”
In response to a series of external shocks, including post-pandemic supply chain disruptions, rising material costs, inflation and environmental challenges, manufacturing CFOs are increasingly adopting a hybrid role, Aucamp says. This approach emphasises operational efficiencies to mitigate future economic shocks.
The research demonstrated that CFOs are increasingly expected to operationalise digital transformation (52 percent), which again points towards a greater involvement in operational areas.
Indeed, 80% of business say strategic business knowledge is vital for CFOs, while 72% say they need an accurate insight into managing risk versus opportunity.
As companies adopt a more conservative fiscal strategy as a response to macroeconomic challenges, they still recognise the need for digital transformation.
Sixty-three percent of respondents have opted for a more conservative business strategy and more than half (57%) anticipate a return to profitability by the end of 2023, while an additional 24% expect to reach this point by mid-2024.
The majority of CFOs (85%) are either part of or lead the digital transformation project team.
However, for African CFOs, fiscal conservatism is influencing their plans for digital transformation, with 65% of respondents planning to fund digitisation initiatives using cash, and 60% identifying cost efficiencies as the primary benefit of their digital transformation investments.
CFOs see the causes of instability in their businesses as labour shortage, economic uncertainty and supply chain disruption – this last has been the biggest cause of challenges for instability.
In Africa economic uncertainty takes top spot, with supply chain challenges taking second place.
A key finding from the study is that resilience comes from within. Hybrid CFOs are building internal resilience through cost efficiencies and increased margins rather than working about macroeconomic events beyond their control.
A big majority (98%) of respondents said changes made due to the pandemic made their businesses more resilient.
Over the next two years, hybrid CFO priorities will be driven by risks, the survey found.
Collaborating closely with the IT department and leadership has emerged as a key priority with most of the CFOs surveyed (77%) either working closely with the CIO/IT team, overseeing and leading all IT projects or having the CIO/IT team reporting directly to them.
The top five business priorities were identified as margins and profitable growth, cashflow, QM, visibility into performance and operations, governance and risks.
In Africa specifically, the top five business priorities for manufacturing CFOs in 2024 are margins/profitable growth, cashflow, quality management, visibility into performance and operations, and governance and risk.
Globally, the top five risks are cashflow, inventory costs, trading conditions, security, margins and profitable growth, and supply chains.
Innovation remains undimmed, Aucamp says. “Agility and adaptability are key to business survival, and we find the businesses are still spending – but a return on investment (ROI) is key.”
Despite challenges, CFOs are prioritising investments in new equipment (44%), inventory stockpiling (40%), expanding operations (31%), increased human resources capacity (25%) and new technology (21%).
Investing in business intelligence to support better clarity and information transparency across the business for better decision-making is a focus for 51% of those surveyed. Respondents also show a clear leaning towards investing in ERP as a means of delivering operational efficiencies.
In terms of tech investments, ERP is the clear winner, followed by business intelligence and customer relationship management.
There has been a low uptake in robotics and smart technology, probably because of their high cost.