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Thursday, 18 April 2024 11:12

SYSPRO survey reveals manufacturing sector's strategic shift amid crises.

By Lehlohonolo Lehana.

SYSPRO, a global provider of ERP software has issued its third annual Global CFO Survey, revealing a strategic shift within the manufacturing sector towards bolstering operational resilience and efficiency. These findings have emerged as a response to a range of unprecedented macroeconomic shocks that the sector has faced over the recent past.

The survey, which fielded responses from July to September 2023, focused on CFO sentiment within various manufacturing arenas, including the Americas, Asia Pacific (APAC), Europe, the Middle East and Africa (EMEA), Australia, and New Zealand. In an attempt to gain comprehensive insights, financial leaders from both SMEs and larger corporations were incorporated.

A prominent disclosure of the study is the belief shared among manufacturing CFOs that are currently in a state of suspension between crises. This viewpoint has led to an emerging trend of a 'Hybrid CFO', incorporating new priorities into conventional CFO roles. The survey also indicated a significant shift toward operational focus in response to a series of external challenges, such as post-pandemic supply chain disruptions, escalating material costs, inflation, and environmental obstacles.

Key Insights from SYSPRO’s Global CFO Survey:

The study revealed that manufacturing CFOs believe that we are not post-crisis but rather between crises and that this is a situation that is likely to persist. As a result, the vast majority have recognised that their role is evolving into one of a 'Hybrid CFO'.

Shift to Operational Focus: In response to a series of external shocks, including post-pandemic supply chain disruptions, rising material costs, inflation and environmental challenges, manufacturing CFOs are increasingly adopting a hybrid role. This approach emphasises operational efficiencies to mitigate future economic shocks.

The research demonstrated that CFOs are increasingly expected to operationalise digital transformation (52 percent), which again points towards a greater involvement in operational areas.

The Rise of the Hybrid CFO: The survey highlights the evolving role of CFOs, who now integrate strategic business knowledge with traditional financial expertise. This hybrid capability is essential for ensuring competitive advantage and requires a deep understanding of all business functions.

Survey responses from all regions including Africa showed a high degree of consistency in terms of identifying the core skills and competencies required for a modern manufacturing CFO. The research showed that 80 percent believed that strategic business knowledge is vital for CFOs to ensure their businesses remain competitive.

Fiscal Conservatism and Digital Transformation: Amid ongoing economic uncertainties, the survey reveals a trend towards fiscal conservatism, paired with a commitment to digital transformation. This strategy aims to manage risks while fostering sustainable business growth.

63 percent said they have opted for a more conservative business strategy considering the current world economy and over half of respondents (57 percent) anticipate a return to profitability by the end of 2023, while an additional 24 percent expect to reach this point by mid-2024.

The majority of CFOs (85 percent) are either part of or lead the digital transformation project team demonstrating their commitment to their ongoing digital transformation journey. However, for African CFOs, fiscal conservatism is influencing their plans for digital transformation, with 65 percent of respondents planning to fund digitisation initiatives using cash, and 60 percent identifying cost efficiencies as the primary benefit of their digital transformation investments.

Internal Resilience as a Strategic Priority: Building internal resilience through cost efficiencies and improved margins is identified as a key strategy for countering external threats. Almost 100 per cent of respondents reported that pandemic-induced business modifications have enhanced their resilience against future disruptions.

Continued Investment in Innovation: Despite challenges, CFOs are prioritising investments in new equipment, inventory, expansion and digital transformation. Investing in Business Intelligence to support better clarity and information transparency across the business for better decision-making is a focus for 51 percent of those surveyed. Respondents also show a clear leaning towards investing in ERP as a means of delivering operational efficiencies.

Collaborating closely with the IT department and leadership has emerged as a key priority with most of the CFOs surveyed (77 percent) either working closely with the CIO/IT team, overseeing and leading all IT projects or having the CIO/IT team reporting directly to them.

In Africa specifically, the top five business priorities for manufacturing CFOs in 2024 are:

  1. Margins/profitable growth
  2. Cashflow
  3. Quality Management
  4. Visibility into performance and operations
  5. Governance and risk.

"Our global CFO Survey highlights the adaptive strategies and priorities of manufacturing CFOs in navigating complex and volatile economic landscapes. The emergence of the Hybrid CFO marks a pivotal shift towards a more integrated, strategic role, with a clear focus on leveraging digital transformation to secure operational resilience and drive sustainable growth," said Aucamp van der Schyff, Head of Finance at SYSPRO EMEA.

"While their challenges are different to those of many other regions, the survey shows that African CFOs are embracing the Hybrid CFO role and are rising to the task of digitising their organisations while building operational insights. 80 percent believe that a strategic outlook is vital," added van der Schyff.