CFO Studio Magazine - Curt Allen, CFO, Subaru

18 WWW.CFOSTUDIO.COM 1st QUARTER 2015 INTERACTING WITH THE CFO materials. His job title: CFO. Both Paglieri’s cost analysis based on a colleague’s gut feeling and the Unionwear consultant’s role in developing procedures, fail-safes, and backup plans for data collection reflect the new reality in manufacturing organizations: Today the most effective CFOs are elbow deep in supply chain management and getting goods produced. The details of operations are a day-to-day concern. Bill Bushman, vice president of operations for Takasago International Corporation (USA), in Rockleigh, NJ, the North American headquarters for a Japan-based company in the fragrance and flavor industry, says that the relationship between the CFO and the senior executive in charge of operations is “a critical partnership in the organization, from my point of view.” That’s because on the operations side, the focus is cost and value, both of which are obvious concerns for the CFO. “The more the CFO understands the operational challenges frommanufacturing, inventory control, supply issues, and business contingency planning, and the more he is educated about all the complexity in a global manufacturing environment,” says Bushman, “the better the negotiations” and the outcome for the company. Negotiations run the gamut: When to purchase equipment and supplies for production Whether to replace aging equipment, or continue to maintain it What it would cost in capital, training, and downtime to implement a new system Bushman says the CFO’s close involvement in supply chain and operations issues has occurred over at least 10 years, perhaps as many as 15. This has been driven by a growing realization that the supply chain is responsible for, in some cases, more than half of the costs of the company. Something similar can be said of CFOs’ involvement in manufacturing issues. An MRP System Launch Unionwear employs a full-time controller, which Cahn feels is as much financial heft as is needed on the 120-person staff. But he brought in a CFO as a consultant for the MRP system launch. The main goal: to develop accurate costing data. “We’re a domestic manufacturer in a market where almost everything is made overseas. … There is a really, really slimmargin between us losing money on an order and pricing a job too high, which means we lose the business,” he says. The CFO/consultant came aboard in June and, working closely with the COO, spent many months just developing the methodology to be able to track materials usage and labor per job. A primary difficulty Unionwear encountered is not atypical. Says Cahn, in the office, English is the primary language; other languages are secondary. On the manufacturing floor, that’s reversed. There is also a math skills gap among workers and a key manufacturing executive lacks computer skills. Another challenge: “no feedback loop on rawmaterials yields being wrong,” says Cahn. Being an outsider, that CFO would have had trust and communications problems to overcome in the best of circumstances. But the difficulties were heightened by the fact that he was trying to get variance data from a person on the shop floor whose English skills were such that he “WE BEGAN TO GET MUCH MORE ACCURATE INFORMATION.” — MITCH CAHN, CEO, UNIONWEAR The world market for digital packaging and labels is expected to reach $15.3 billion by 2018, with labels making up the lion’s share of that figure. The unit price of digitally printed materials is higher than for analog, but today’s shorter product life cycles demand faster production times, pushing commercial printers in the direction of digital. DID YOU KNOW? Jim Imburgia, VP of Operations, Control Group