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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.
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).
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.