The rules of the game are changing fast. For consumer goods companies, disruption is upending traditional certainties on an epic scale.
Consumers are now in control. They’re using digital platforms to buy directly from manufacturers, bypassing traditional retail. Their preference for convenience is making subscription models ever more prevalent. Above all, relevance is now their number one priority. They expect brands to provide the products, services, and experiences that meet their individual needs at just the right moment.
Traditional operating models simply weren’t designed for this level of complexity, which requires an incredible amount of organizational agility — something that many businesses just don’t have yet. It also calls for a rethinking of the entire value chain, all the way from developing new concepts, through manufacturing, to the store shelf, and beyond.
To find new growth, brands must solve these challenges, injecting agility across the value chain, leveraging a wider ecosystem of partners, and delivering relevance at scale for a marketplace of millions of individuals.
CFOs in the Front Seat
Chief financial officers are uniquely positioned to help drive this journey forward. They have the necessary insights to build the business case for change, targeting operational improvements and the use of new digital technologies. And they have a crucial role in driving the efficiencies in the core business that will fund the pivot to more profitable growth.
Accenture’s research finds that CFOs see their role changing. They’re now just as likely to view themselves as “value champions” and “transformation drivers” as performing their more traditional business functions. For instance, 81% of surveyed CFOs say targeting areas of new value across the business is a major focus, while 78% say they lead efforts to drive business-wide operational transformations and efficiencies through digital technology.
CFOs understand the need for speed and agility today, with over half of respondents (58%) saying they’re working toward real-time analysis of business performance. Notably, that’s expected to rise to a massive 89% in three years — the highest proportion of all the sectors Accenture surveyed.
Delivering relevance at scale means adapting the consumer goods supply chain for new levels of personalization and multiple sales channels. Given the challenges of doing this alone, most brands will need to leverage a much wider ecosystem of partners across the value chain. And here, CFOs have a vital role to play. Bringing a data-driven approach to selecting partners, CFOs can ensure this complex endeavor remains focused on the value-adding outcomes the business is targeting.
When it comes to operational efficiency, CFOs are also increasingly looking beyond SG&A expenses to target the cost of goods sold. Zero-based budgeting is a methodology gaining traction in consumer goods, with Accenture’s research showing the greater visibility it brings can lead to rapid COGS savings of up to 10%.
In addition, consumer goods CFOs are taking a lead on data governance. They understand the value of data and see it as a strategic business asset, with 84% of finance departments taking responsibility for their organization’s data governance (higher than in any other industry surveyed). In fact, Accenture’s research finds that “inconsistent, inaccurate and inaccessible data” is viewed as the greatest challenge facing consumer goods CFOs.
These new requirements are changing the skills profile. CFOs themselves say that anticipating and managing risk, long-term strategic thinking, and insight into new technologies are now their most important capabilities. What’s more, they know the broader finance function needs to change too, with the ability to innovate now the most sought-after capability for junior finance staff.
Five Actions Every CFO Should Take
So what are the immediate priorities for CFOs as they drive relevance at scale for their brands? Here are five actions they should be taking today:
1. Digitalize finance — then the company. Finance is an ideal testing ground for digital technology, automation, and artificial intelligence (AI). CFOs should be using their experience and lessons learned to drive a digital transformation across the business.
2. Harness data for insights. CFOs know the value of data visibility and should champion the use of real-time analytics and insights across the C-suite and beyond.
3. Develop the future finance workforce. CFOs should be planning holistically for their future talent needs, including promoting the greater use of AI and other innovative digital technologies.
4. Drive a deep transformation of operations. CFOs should consider zero-based budgeting as a means of creating spend visibility, driving the efficiencies that can fund a pivot to new growth.
5. Be the architect of value. CFOs should influence decisions about ecosystem partner organizations, ensuring every move is focused on delivering ultimate value for the business.
Above all, CFOs need to put themselves at the center of business decision-making as their companies pivot to the operating models that deliver consumer relevance and capture new growth opportunities in a highly complex, uncertain, and ever-evolving marketplace.
About the Author
Laura Gurski is senior managing director and global lead for consumer goods & services at Accenture.