Procurement wants to innovate. Finance wants to control costs. Somewhere in the middle lies the real opportunity: unlocking value that’s resilient, scalable, and future-proof.

Ahead of ProcureCon Asia, we sat down with Francis Lai, Chief Financial Officer at Far East Group, for a candid conversation on what it really takes to bridge that gap. Francis offers a CFO’s-eye view of what high-performing procurement really looks like—from navigating global volatility to making smarter, faster decisions with data. His advice? Think beyond savings—because resilience and ROI now carry just as much weight as cost.

Beyond Cost Savings: What CFOs Expect from Procurement Teams

The role of the procurement team has evolved over time, far beyond traditional cost-cutting measures and transactional activities such as price negotiations to one that has become more strategic, data-driven, and integrated with broader organizational goals. Being a strategic partner in risk management, the procurement team is expected to identify suppliers in politically or economically unstable regions and proactively diversify sourcing to alleviate potential disruptions. With technology and data being gathered, procurement teams should focus on innovation, seeking suppliers who can deliver technological advancements or process improvements that foster competitive advantages. Lastly, building long-term relationships with suppliers that align with overall business goals, such as sustainability and ethical practices, is increasingly vital in today’s global market.

In Far East Group, we advocate responsible refrigerant management by encouraging customers to use recovery units instead of releasing gases into the atmosphere and to use more environmentally-friendly refrigerants. Our key focus on being committed to sustainable practices in energy and resource management within the society has led us to increase our R&D in using natural refrigerants such as carbon dioxide and ammonia in small condensing units to encourage greater use by our customers.

As a strategic partner to the CFO, the CPO plays an important role in fostering collaboration to drive business growth and align financial and operational approaches, emphasizing joint planning and shared accountability. Using technological tools such as AI, automation and predictive analytics, the procurement team can optimize supplier relationships and create long-term value in business partnerships, forecast market trends, and enhance decision-making processes. In doing so, resilience can be enhanced by diversifying supplier bases, monitoring financial health, and mitigating vulnerabilities like currency fluctuations or geopolitical disruptions.

Real-World Impact: Mitigating Disruption Through Smart Sourcing

Far East Group managed supply continuity during the pandemic by sourcing critical materials like metals and agency products from multiple geographies such as Europe and China. In having a diversification in the country of origin, customers can select or determine which products better suit their needs, whether in terms of costs of supply chain or time of delivery. By having more than one source of supply, our company was better able to manage the supply chain disruptions, especially during the Covid-19 pandemic better.

Managing Financial Risk: Why Contracts and Currency Matter

A key focus for me in terms of procurement will be that of contract management. Poor contract management often leads to missed opportunities for cost savings or exposes the organization to unbalanced agreements that favour suppliers. Suppliers often dictate payment terms, especially those supplying key goods and services to the organization. By not understanding the terms of agreement in detail, contract terms such as shipment, delivery times, payment terms, etc. may lead procurement teams to overlook the importance of proactive risk management, such as failing to monitor supplier compliance with ethical standards or environmental regulations. This oversight can result in legal ramifications or tarnished brand image, especially in industries where corporate social responsibility plays a vital role.

Another major financial risk involves currency fluctuations and their impact on international sourcing costs. With currency fluctuations, it is important for procurement teams to collaborate and work together to hedge against exchange rate risks through forward contracts and diversified sourcing strategies. This is especially critical when currency rates become volatile due to macro-economic influences.

By working with the procurement team and educating them on the concerns of how these risks affect the business, the procurement team then appreciates the need to look out for areas of exposure that they may not traditionally pay significant attention to.

Aligning Procurement with Business Objectives

Aligning procurement strategies with financial goals requires cross-functional collaboration between CFOs and CPOs. Procurement activities directly support the organization’s growth objectives, such as scaling capacity, while maintaining cost efficiency. For instance, negotiating multi-year contracts, discount structures and rebates with trusted suppliers’ balances cost stability with resilient partnerships that withstand market volatility.

To drive a company’s growth and be resilient, procurement strategies must focus on fostering effective communication, optimizing costs, and ensuring seamless supply chain operations. Proactive risk management frameworks and maintaining regular communication with suppliers, including predictive analytics to foresee potential disruptions and contingency planning to address unexpected events greatly enhances and mitigates risks associated with geopolitical upheavals or economic instability.

Another strategy involves leveraging emerging technologies or enhanced analytical reviews, not only to streamline processes but also aligns with broader corporate goals like sustainability and ethical sourcing. Integrating ESG (Environmental, Social, and Governance) goals into procurement strategies ensures that growth is not only profitable but also socially responsible and future-proofed against regulatory shifts.

Smarter Budgeting Starts with Data

Whether zero-based budgeting (ZBB) or incremental budgeting that’s being applied, there is no running away from the data analytics. The ability to use data and to analyse data efficiently makes the difference in the amount of value-add to an organization. Incremental budgeting would usually be a simpler way to look approach budgeting based on previous year’s spending patterns but may not be as efficient.

Using a ZBB approach to budgeting, data analysis is more critical as the focus is on efficiency. It forces the procurement team to justify spending and also the returns based on the amount spent. Such justification requires the procurement team to identify the key processes and in doing so, be critical of whether the activities in each process is necessary. Having said that, this can be a tedious process which requires more time and a greater understanding of the procurement and supply chain arrangements.

Beyond reviewing historical costs, ZBB also compels teams to analyse shifts in cost structures based on new or current economic environment factors using data analysis. In certain cases, costs of products may be overpriced due to new entrants into the market, thus forcing suppliers to reduce prices to be more competitive. Customer spending patterns may also affect the demand of certain goods and thus affect purchasing patterns. If these scenarios are not taken into account, organisations may lose out on the opportunities to negotiate more competitive pricing, arrangements with suppliers and leverage on changing consumer patterns to improve profitability. Procurement teams have to be vigilant in knowing the competition, where certain supplies of goods and raw materials are derived and work with other functional teams to reduce the costs related to supply chains.

This is where the CPO steps in and plays a vital role by ensuring transparency in procurement spending and identifying cost-saving opportunities without compromising strategic priorities. Data-driven reviews ensure procurement spending aligns with financial priorities. CFOs can also provide financial insights that help CPOs evaluate the cost-benefit ratios such as adoption of AI technologies which may offer promising returns in the mid- to long-term by reducing operational inefficiencies and improving decision-making accuracy.

The Rise of AI and Automation in Procurement

AI isn’t new. It’s the evolution of AI in recent years, allowing greater generative and predictive analysis that has changed the way things are done in various functions such as finance and procurement. Routine work such as ordering or re-ordering processes and the alerts on low inventory quantities can be automated with robotic process automation (RPA). Verification of deliveries and orders can also be done with automation and OCR technologies to save time and improve efficiency. These technologies help to reduce manual errors and improve accuracy. It is the predictive analysis of procurement trends, supply chain schedules and harmonization of procurement objectives with that of the organization and finance team’s objectives of accuracy of forecasts and meeting budgets that require human intervention for review and fine-tuning. Such dynamic performance-based scenarios will directly impact the ability of the organization in reacting quickly to changes in the economic environment and business based on uncertain changing environment, providing CFOs with real-time insights into procurement’s impact on financial performance.

Measuring Supplier Value: Going Beyond Price

While cost remains a key metric, CFOs now evaluate suppliers based on broader contributions like delivery reliability, quality, innovation, and customer support. While lower cost is important, the supplier should be able to add value to the organization to work together to achieve the organisation’s objectives. One such example is in the form of support given in product training and awareness creation and innovation. By working very closely with our suppliers, they play an integral part in educating our customers about using the latest technologies in the products that we sell. We communicate often with our suppliers to update trends in the industry as well as innovative and technologically advanced products that can be applied by our customers.

Financial Data as a Strategic Compass

Financial data and analytics serve as core tools in procurement strategy. For example, by using predictive analytics, procurement teams can forecast demand fluctuations and adjust inventory levels accordingly, reducing storage costs. While this may not be 100%, it greatly elevates the accuracy in inventory management, reducing holding costs as well as improving inventory turnovers. With leaner inventory management systems, this greater flexibility allows organisations to toggle the amount of inventory to be held and thus improve cash flow management. Data dashboards also help uncover inefficiencies in supplier contracts, enabling renegotiations that enhance performance outcomes without having to wait for the problem to occur before taking necessary action to mitigate risks or situations that may have already taken place.

What a Resilient Procurement Function Looks Like in 2025 

• Predictive risk management embedded into sourcing strategies
• Sustainability integration across supplier selection and evaluation
• Tech agility, including automation and real-time data tools
• Robust supplier partnerships that go beyond transactions

Rethinking the CFO-CPO Relationship

Both CFOs and CPOs must shift from a transactional mindset to a strategic one, recognizing procurement as a driver of value creation rather than a cost center. In today’s increasingly VUCA (Volatility, Uncertainty, Complexity, and Ambiguity) environment, CFOs are under immense pressure to navigate financial complexities and respond to situations that are unexpected. At the same time, CPOs are playing a more significant strategic role in helping to mitigate financial risks, ensuring supply chain resilience, and delivering measurable returns on investment (ROI).

As both the finance and procurement functions start to move away from repetitive transactional tasks and leverage more on technological advancement, innovation and automation, there is an increasing need for both CFOs and CPOs to work as partners to mitigate risks to drive strategic growth, enhance resilience and thence deliver returns to the organization. This partnership is even more critical where physical goods are involved, where delivery schedules may be hard to compromise and effective communication and collaboration is crucial to protect the organisation’s reputation and standards to enhance customer trust and shareholder confidence. The ability of CPOs to understand the concerns of CFOs and vice-versa forms the core of this partnership to deliver the returns of value creation.