Any fool can make things complicated

Author: Burgert Blom

Ray Dalio, the billionaire hedge fund manager and founder of Bridgewater Associates, is one of the most respected men in the world of finance at the moment and he spends a lot of time discussing principles of decision-making.

The events of 2020/21 and the supply chain disruptions caused by COVID-19 have forced many South African businesses – specifically those in the manufacturing fields – to reevaluate their decision-making processes and systems.

These are areas where we believe we add immense value as The FD & CFO Centre.

A fresh set of eyes:

Whenever an external consultant comes in, there is a natural hesitancy that they will come in and disrupt existing systems and processes. Often, we will be coming into businesses where the senior executives and management have been in place for 20 to 30 years and believe they are running things optimally.

But what if they are leaving real profit on the table? A fresh set of eyes help to find and fix those leakages.

COVID-19 has materially changed supply-chains and there is more demand for “Just-In-Time” manufacturing and distribution. This puts enormous pressure on supply chains, stock-levels, and raw material procurement processes. When you are too close to the operation you often lose sight of the bigger picture and need that set of fresh eyes.

Having been involved in manufacturing, construction and financial services businesses for the last 20 years, it is incredibly rewarding to come into a business and help decision-makers optimise their processes.

Financial innovation

One of our recent success stories involves a manufacturing business which turns over R200m per year but had been forced to review their operations in a post COVID-19 world.

Through our understanding of the B-BBEE legislation, we were able to come into the organization and roll out an Enterprise and Supplier Development (ESD) initiative which both helped the company improve their B-BBEE rating but also incentivise downstream operations which resulted in increased profitability for the company.

Developing a “war-room” principle

We live in a data-driven world where business processes often become so entrenched and habitual that they don’t have effective early-warning systems to detect issues or anomalies. If early warnings are built into processes, they can then identify the right levers to pull at the right times to re-allocate resources, to attend to the problem and resolve speedily.

By putting in place a data-driven “war-room”, your executives and decision-makers are empowered to make decisions which are transparent across the organization.

Making your ERP system sweat

An Enterprise Resource Planning (ERP) system remains one of the biggest – and most critical – technology systems you will invest in.

However, many ERP systems are often implemented through a technology lens as opposed to a tool that can empower decision-making for the entire organisation.

If you get it right, you will be able to make informed decisions across a number of functions including: finance, sales, stock control and raw materials.

If you get it wrong, you will be acting in a vacuum.

We have extensive experience in understanding ERP systems and how they can contribute toward improved enhanced operational efficiency.

Operational Optimisation is a Non-Negotiable

If it is your intention is to be a competitive business, it is key that your processes are optimised.

We as The FD & CFO Centre are able to bring in experienced teams who understand these processes and can free you up to focus on running your business.

Please feel free to reach out to one of our Regional Directors for more information on our Global CFO Service. www.cfocentre.com