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Business Partnering is becoming a key perquisite for Finance Professionals.

In order to be a useful Finance Business Partner & guide your Business Stakeholders accordingly; you got to be able to understand the underlying business model of the Company that you’re working for.

There is no better way to start-off; then to understand the ‘Supply-Chain’ of your Organisation.

Academically speaking, Michael Porter has done phenomenal work in this area.

Porters Value Chain

Supply Chain?

In its simplest terms, supply chain is how we source raw materials to manufacture goods & services for our customers. It is how we transform those raw materials into final products & services for the end customers (B2C/B2B).

In any given Organisation, the underlying procurement ecosystem will vary, depending on its size, industry, & geographical location.

Procurement of goods & services is inevitable in any given business.  Whether it’s the acquisition of new talent or procurement of new goods & services; the underlying process tends to be the same.

In the FMCG Industry (Unilever, Nestle, P&G); goods may be produced in one country; but used in another country (inbound/outbound logistics).

There are underlying costs associated with transforming (operations) & transferring (distribution) these products & goods to the consumer countries.

Big 3 FMCG Giants

Unilever, Nestle, & P&G – Procter & Gamble are the Big-3 FMCG Companies of the world. Billions of people use their products on a daily basis.

A farmer growing coffee beans in Malawi may sell his produce to a Big-3 Company in Europe. The Big-3 Company will incur import duties, transportation, & logistic costs to import the coffee into their respective consumer country (inbound/outbound).

Brexit is likely to change the above cost implications, as some of the perks available under Free-Market treaty may not be available in the future; when moving goods in & out of the EU Countries.

As a Finance Business Partner, you have to be able to explain the above story & analyse the underlying financials by keeping into mind the above-mentioned variables (logistics, advertising, marketing, withholding tax).

Future Outlook

With the arrival of AI, Robotics, & Blockchain; the world of supply chain is changing dynamically. It would be fair to say that we are now embracing Digital Supply Chain ecosystem.

The likes of Amazon & Tesla are talking about the whole new supply-chain-ecosystem by 2030-50. They are suggesting that the use of delivery drones, Quantum Computers, & Hyperloops will become a norm to transport products & goods to the end customers more speedily.

Therefore, to be an effective & reliable Business Partner in this day & age of digitalisation; Accountants will have to be able to understand the digital-ecosystem & the underlying cost/margin drivers.