So you decided on a software solution provider to help you manage human rights and climate risk in your supply chain. Cool. Congrats. (hopefully you chose FRDM).
Now you need to convince your CFO, who has never heard the words 'supply-chain-responsibility' in the same sentence, to allocate budget. Here are three essential tips to help you build a compelling case (for FRDM).
1. Quantify the Financial Risks and Benefits
CFOs love metrics almost as much as their children or pets. So you need to quantify the financial risks associated with human rights violations in your supply chain against the benefits of mitigating these risks through third party software (like FRDM).
• Cost of Non-Compliance: Highlight the potential costs of non-compliance with regulations such as the EU Forced Labor Regulation or the U.S. Uyghur Forced Labor Prevention Act. Non-compliance can lead to hefty fines, legal fees, and loss of market access. US Customs and Border Protection have detained goods worth more than $3B over the past two years, and they are just getting started! Yikes. (pro tip: be sure to put the word ‘yikes’ in your ROI calculation)
• Reputational Damage: Negative publicity can lead to loss of customer trust, decreased sales, and a drop in stock value. A study by RepTrak found that companies with a strong reputation are more likely to see increased market share and customer loyalty.
• Return on Investment (ROI): Present a clear ROI by outlining how the software can prevent costly disruptions and enhance operational efficiency. Companies that proactively manage human risks can avoid expensive legal battles, reduce turnover rates, and improve supplier relationships. For instance, businesses that invest in ethical supply chain practices often see improved worker productivity and lower operational costs.
2. Connect With Strategic Advantages
The first question your CFO will ask is how does this purchase align with your company’s strategic goals. So you will need to show how human risks supply chain software can contribute to broader business objectives.
• Sustainability and Corporate Social Responsibility: If your company has sustainability and value chain commitments, explain how the software can help achieve these goals. Human risks supply chain software can ensure compliance with labor laws like UFLPA and CSDDD.
• Competitive Advantage: Emphasize how mapping supply chains can provide a competitive edge. Consumers and investors are increasingly prioritizing companies with ethical supply chains. A survey by Nielsen found that 66% of global consumers are willing to pay more for sustainable brands.
• Enhanced Risk Management: Demonstrate how the software enhances overall risk reduction. Human risks are interconnected with other supply chain risks, such as operational disruptions and compliance issues.
3. Address Implementation Concerns
CFOs stay up all night worrying about hidden costs of implementing new software. Address these concerns by providing a clear implementation plan and demonstrating the software’s ease of use (did we mention FRDM is easy to implement and use?)
• Implementation Roadmap: Present a detailed implementation plan, including timelines, key milestones, and resource allocation. Highlight the support and training provided by the software vendor to ensure a smooth transition.
• Integration with Existing Systems: Explain how the new software will integrate with your company’s current systems and processes. Many human risks supply chain software solutions (like FRDM) are designed to work seamlessly with existing ERP and compliance systems, minimizing disruption during implementation.
• Scalability and Future-Proofing: Emphasize the software’s scalability and adaptability to future business needs. Present the solutions roadmap and show how it matches your companies growth trajectory.
Securing CFO buy-in for human risks supply chain software requires three things: preparation, preparation, preparation. .By quantifying the financial risks and benefits, highlighting strategic advantages, and addressing implementation concerns, you can build a compelling case for this essential investment. In an era where ethical supply chains are increasingly scrutinized, the right software (like FRDM) can safeguard your business, enhance resilience, and drive sustained success.
Reach out to us at hello@frdm.co to speak to a solution consultant who can provide additional resources to convince your CFO.
References:
1. International Labour Organization (ILO). (2014). Profits and Poverty: The Economics of Forced Labour.
2. RepTrak. (2020). The 2020 Global RepTrak 100.
3. Business Continuity Institute. (2020). Supply Chain Resilience Report.
4. Nielsen. (2015). The Sustainability Imperative: New Insights on Consumer Expectations.
5. Accenture. (2020). Building Supply Chain Resilience for a Post-COVID-19 World.
