Let's start with a bit of a history lesson. Have you heard of Robert Rudzki?
As the co-author of the 2005 book Straight to the Bottom Line®: An Executive's Roadmap to World Class Supply Management, Rudzki knows a thing or two about the subject matter about which he confidently writes. Between 1977 and 2005 – 28 years, he was SVP and CPO for notable brands Bayer Corp. and Bethlehem Steel Corp. Be sure to note his dual finance and procurement role.
Based on his expertise – which includes an MBA in Finance from the world’s oldest and most prestigious business school, Rudzki identified the five critical finance terms every purchaser should know. In short, his bridge between finance and procurement was to have the latter refocus on areas such as ROIC, Cost of Capital, and P/E Ratio.
His reasoning was supported by a 2006 article that asserted, “Too often, finance executives in Corporate America simply don’t believe that purchasing departments are really bringing in the savings they claim" because “financing and purchasing don’t speak the same language.”
This linguistic disconnect was further emphasized in a 2007 news report indicating the following:
Less than 20% of CFOs consider the work of CPOs and their staffs as having a very positive impact on competitiveness.
Additional insights from an excerpt of the research paper referenced in the same news report also indicate that:
Mary Zampino, Vice President – Content, Research & Analytics