CFO Studio Magazine - Curt Allen, CFO, Subaru

1st QUARTER 2015 WWW.CFOSTUDIO.COM 19 had no idea what a variance is. Early on, the CFO and Cahn realized they weren’t going to get the information by asking for it, they were going to have to create systems that people would naturally follow. Now, rather than asking for yards of fabric used, they ask, How long did you roll out one ply of material and how many layers did you lay up? “[Once workers] didn’t have to do any calculating. We began getting much more accurate information,” says Cahn. Counting small pieces is an inaccurate process too. So the company switched from recording a count to recording weight for components like zippers, snaps, straps, etc. “It was just little things like that, but hundreds of little things,” says Cahn. At year-end, the MRP system was set to be launched; the next step will be analyzing pricing and purchasing methods, and looking to eliminate unprofitable product lines. In the future, says Cahn, with accurate information on labor and materials usage coming back from the factory floor, there will continue to be “a large role for the CFO. It will really be more of a continuous-improvement type role.” A finance executive who takes the initiative to analyze data and make recommendations based on that analysis can help an organization improve many aspects of operations. Partnering on Equipment Negotiations Interactions between CFOs and the executives heading up operations or manufacturing in their organizations work best when the CFO understands operational challenges.That’s where Imburgia, the VP of operations, gives CFOPaglieri a great deal of credit. When Paglieri joined Control Group inMarch 2012, he began educating himself on the commercial printing business. On the shop floor, he’d talk to pressmen, asking howmany rolls of paper go into this job? He’d ask, how do we track that? and is there anything we’re not tracking? “You’ve got to understand operations … to make sense of the numbers,” says Paglieri, who back in those early days ran reports to get a handle on the business and dug into where the numbers came from. “And I had a lot of discussions with Jim because he knows the operation like the back of his hand.” Paglieri watched and learned. The two meet every morning to go over problems and issues. Paglieri now works together with Imburgia on big financial deals for equipment, Imburgia negotiating for the machinery and Paglieri negotiating the leasing terms. On a recent equipment lease, says Imburgia, the salesperson offered to include materials for the duration of the three-year lease. “The vendor would discount our materials [used to make printing plates] or upcharge the material,” building it into the lease price. “Rob worked out all the numbers and then he came to me and said, ‘What do you think your volumes are going to be?’” The two performed like a short stop–first baseman combo. Imburgia has worked with many CFOs over a 30-year period; he has never had a better CFO relationship than with Paglieri, he says. He sees the key to good interactions between the heads of operations and finance to be neither party having hidden agendas. Says Paglieri, “In general, the CFO is there to service the operation, not run it, and not hold it back. Numbers sometimes become most important [to CFOs] but they should just support business decisions.” Operating in the Face of Risk For a fine fragrance, Takasago might require a unique and costly raw material found someplace in the world. Or, a flavor for a drink might use a highly seasonal raw material. In either case, VP of Operations Bushman will have discussions with the general manager and the CFO. As an example, there might be a forecasted need for 10 metric tons of lemon oil, “but you don’t have that guarantee the business will be there,” says Bushman. “The [product sale] could go south. So that’s where, from a true supply chain relationship, we’re always in communication with finance about how much risk we’re willing to take.” MAY 12, 2015 SEE PG 24 FOR COMPLETE DETAILS MetLife Stadium, East Rutherford, NJ Bill Bushman, VP Operations, Takasago International Corporation (USA)