Video: 10 Minute IT Jams — SYSPRO's advice for today's financial leaders in the manufacturing sector

Manufacturers are under pressure. The last two years have accelerated changes already underway in the sector, and businesses are having to adapt fast. At the centre of this transition are financial leaders who, armed with new digital tools, are guiding their companies through uncertain times.

Sanjay Khalil, Chief Financial Officer and Chief Risk Officer at Syspro, a global provider of enterprise resource planning and business integration solutions, knows these pressures all too well. Speaking to us as part of a wide-ranging interview, Khalil outlined how technological adoption and an evolving CFO role are shaping the manufacturing sector's future.

Syspro's offering, Khalil explained, centres around delivering an "enterprise resource planning system" that acts as the backbone for manufacturers looking to integrate a range of products. "This allows for basically any other integrated products to cotton onto it and it serves mainly the manufacturing sector," he said.

For CFOs in manufacturing, the fight is often around margin management, costs, and inventory input. Khalil described how Syspro's platform brings these crucial threads together. "The system basically takes all of the above, wraps around the systems, cotton onto the ERP as the backbone as I mentioned, and basically gives me the visibility so that I can make better decisions for the business," he said. This type of visibility, he stressed, is essential for maintaining profitability and ensuring a business remains agile and resilient.

The pressure on CFOs is not just technical but also strategic, with the role transforming well beyond number-crunching. "The CFO role has evolved and changed already, I think it's just evolving at a more rapid pace as we go," explained Khalil. He emphasised that today's CFOs must "wear multiple hats instead of looking at finance alone," becoming a "true two IC to the business." Every decision, he noted, now impacts profitability directly.

"Involvement of the modern, or CFO 4.0, would be getting involved in the product lines with that production lead from inception all the way through to fulfilment for customers. That just will bring benefits and adds tremendous value to the business in terms of profitability currently and going forward," Khalil said.

The COVID-19 pandemic, he argued, has further transformed the landscape for Australian and global manufacturers. "The pandemic in the last two years has actually accelerated and forced change across the sectors not only in Australia but globally," Khalil pointed out. This has driven investment into "smart technologies," with businesses automating their ordering and fulfilment cycles and eliminating manual steps.

Technology's benefits have extended beyond efficiency within the factory walls. "Technology to automate and optimise has brought great benefits to firstly the business themselves but more importantly to all their customers or end users," he said. Increased automation, he added, is leading to "a happiness or a more contentment with your customers enabling a greater order book going forward and effectively giving you a foundation to attract more prospects and customers."

However, challenges remain acute, especially for financial heads in the Asia-Pacific region. Recent research shows that manufacturing CFOs in APAC are more troubled by rising inventory prices and supply chain disruptions than their global counterparts. These headaches, said Khalil, strike at the very core of a manufacturer's business.

"In manufacturing, obviously aspects such as inventory holding, warehousing, margin management, input costs and ultimately profitability are your key drivers," he said. "These headaches basically result in the erosion of these key factors." He warned it is "critical" that manufacturers focus on innovation and the adoption of new technology, because "ultimately it impacts the bottom line." Managing these pressures well is essential "in order to ensure that it doesn't erode away margin and profitability at the end of the day."

Protecting margins, managing cash flow, and increasing visibility were listed as top priorities for APAC manufacturing CFOs. This raises questions about whether risk aversion in the region is holding companies back, particularly regarding investments in Industry 4.0 and smart technologies.

Khalil was cautious in this assessment. "If you look at the pandemic and when it first arose, obviously APAC and Australasia specifically were effectively hit first in terms of realising the impacts," he said. However, he added, "I don't think that local Australasian manufacturers have been sort of conservative in their ways." He pointed out that while countries like the US and UK have "actually accelerated their spend" on automated technologies, this may have more to do with differences in timing and initial focus.

"For us here locally, I think the focus has been basically to get through the pandemic, to protect cash, and then to navigate ourselves through the situation more than ever," Khalil said. "So I think to summarise and answer that, it's just a timing difference. I think the adoption will follow the US and UK counterparts as our research points to."

The path forward, it seems, is not about avoiding risk but about managing it intelligently and preparing for growth beyond the current challenges. Visibility, agility, and digital integration are crucial, and the manufacturing CFO is pivotal in driving profitable change that lasts.

Khalil concluded by reflecting on the opportunity embedded in recent difficulties. "It's the old saying goes, never waste a good crisis, and I think it's more appropriate than ever now," he said.