Recent disruptions in the Suez and Panama canals, coupled with concerns about inflation and the potential for another interest rate hike, have created an unprecedented level of uncertainty that global supply chains must navigate. Amid this chaos, companies are increasingly turning to technology.

Analytics for forecasting and software upgrades have emerged as critical tools in the battle against unpredictability, with improved profitability reported in 94% of cases. Yet as businesses struggle to adapt their supply chains to dynamic market needs, they’re constantly reminded of one core truth: In the end, it's all about the money.

Enter the chief financial officer. CFOs are pivotal in navigating supply chain uncertainty. With the stakes higher than ever, they must take a strategic approach to software evaluation to maximize investments and mitigate risks — consider that 74% of executives regret their recent supply chain software purchases—and collaborate closely with other key stakeholders to make the most informed and effective decisions.

For CFOs, the first step in navigating supply chain uncertainty is quantifying its true cost. A recent PYMNTS report reveals a harsh reality: Supply chain uncertainties alone cost mid-market companies an average of $21 million annually, or 4.4% of their total revenue.

The impact of the disruptions at the Panama and Suez Canals is a case in point. As cargo volumes through these vital waterways have plunged by more than a third, hundreds of vessels have been forced to divert to longer routes. Companies traversing the Panama Canal are facing up to $4 million in additional costs per crossing.

Quantifying the true cost of these disruptions is critical for CFOs to make informed decisions about how to mitigate their impact. This requires a comprehensive understanding of the company's supply chain, including its vulnerabilities, dependencies and potential points of failure. It also demands close partnerships with procurement, logistics, risk management, IT and other key functions to develop a 360-degree view of risks and opportunities.

Armed with this knowledge, CFOs can then turn to technology for proactive management. By drawing on data-driven tools such as predictive analytics and scenario planning, they can identify potential disruptions before they occur, and develop contingency plans to minimize their impact..

Selecting the Software

With a clear understanding of the cost of uncertainty, CFOs must turn their attention to the critical task of selecting the right supply chain software. 

While procurement officers and other stakeholders play important roles in the software selection process, CFOs are uniquely positioned to drive these decisions because of their holistic view of the company's financial health and strategic objectives. They understand how supply chain performance impacts the bottom line, and are best equipped to evaluate the long-term financial implications of software investments.

CFOs are also increasingly taking on a more strategic role, moving beyond traditional financial management to become key drivers of digital transformation. 

The right supply chain software can make a CFO's job significantly easier, by providing real-time visibility into key financial metrics and automating manual processes. For example, advanced analytics tools can help CFOs track and optimize procurement spend, identify cost savings opportunities, and manage risk more effectively. By automating routine tasks such as invoice processing and payment approvals, CFOs can free up time and resources to focus on more strategic initiatives.

In addition, supply chain software can help CFOs to build stronger relationships with key stakeholders. By providing a single source of truth for supply chain data, these systems can foster greater collaboration and transparency between finance, procurement, logistics and other functions. They can also help CFOs communicate more effectively with suppliers, customers and investors, by providing clear, accurate and timely information about the company's supply chain performance.

The Software Selection Dilemma 

CFOs especially feel the pressure to make the right software choices, as these decisions can directly impact their career trajectories. The buying process can be a nightmare for some, because of the financial risk that CIOs and IT procurement officers face. Constraints demand higher value for money, and the multiplier effect of making an error means that the wrong decision is compounded financially throughout the future. Operational efficiency is a top priority, and with 48% of businesses worried that new software may disrupt operations, CFOs must carefully consider whether the software will genuinely improve processes and be embraced by the team.

The temptation to cut corners is strong. Unfortunately, this is often where CFOs run into trouble, as hasty decisions made under pressure can lead to costly mistakes and missed opportunities for long-term success. The wrong software is, at best, a sunk cost; at worst, it can have a serious negative impact on business operations, such as data breaches.

To avoid these pitfalls, CFOs must take a strategic approach to software selection. It starts with a clear understanding of the company's specific needs and requirements. What are the top supply chain challenges? What capabilities are needed to overcome them? How can software enable supply chain strategy and deliver measurable business value? By answering these questions upfront in close collaboration with key stakeholders, CFOs can narrow down the field of options and focus on solutions most likely to deliver the highest return on investment.

A common mistake that companies make is rushing into a purchase without thoroughly evaluating the options. Over half (56%) of organizations experience buyer’s remorse over large purchases. While there’s often pressure to make decisions quickly in our fast-paced world, CFOs must lead a rigorous cross-functional evaluation.

The process should involve close collaboration among procurement, logistics, IT and other relevant departments, including the chief information officer. Involving the CIO in the evaluation process provides valuable insights into the software's technical fit and alignment with the organization's IT infrastructure and digital strategy. By integrating diverse perspectives, CFOs ensure thorough consideration of all potential risks and benefits, including evaluating the vendor's track record, solution scalability, flexibility and integration capabilities.

Another key consideration is the financial impact of the software purchase. CFOs must carefully evaluate the total cost of ownership, including not just the upfront purchase price but also ongoing maintenance, support and training costs. They must also consider the potential ROI, both in terms of hard dollar savings and softer benefits like improved efficiency and customer satisfaction.

Once a decision has been made, CFOs must work closely with the implementation team to ensure a smooth rollout by developing a clear project plan, setting milestones and metrics for success, and communicating regularly with stakeholders. They must also prepare for potential disruptions and have contingency plans in place to minimize their impact.

In the end, successful supply chain software selection isn;t just the CFO's responsibility, but a cross-functional collaboration. By bringing together diverse perspectives, rigorously evaluating options against business requirements, and making decisions based on financial impact and strategic fit, CFOs can lead their organizations to choose solutions that deliver the most value.

Chris Heard is chief executive officer of Olive Technologies.