CFOs Face Challenges, Benefits When Managing Order Backlogs

A backlog of orders for high-demand products may sound like a great problem to have, but it also creates challenges for companies and their chief financial officers (CFOs).

One is getting hold of any components that may be hard to get, slowing production of the company’s products. Another is determining which customers to prioritize when distributing the finished products.

Those are challenges that have been faced by players in any industry that needs electronic chips, as there have been supply chain challenges for these parts over the past two or three years, Sai Gopal, CFO at Grass Valley told PYMNTS.

Staying Ahead of the Curve

Grass Valley (GV) is a 60-year-old company providing technology for the live media and entertainment market, powering media brands’ media centers, mobile production units, newsrooms and sports streaming platforms.

Gopal joined the company in August, bringing 20 years of experience in running financial operations for small and midsize companies.

Interviewed for the PYMNTS series “A Day in the Life of a Digital-First CFO,” Gopal said that Grass Valley has been dealing with supply chain issues by getting ahead — preordering some of the long-lead items and planning accordingly. In addition, the company sources products from every market available to stay that way.

“We still have challenges from a supply chain standpoint,” Gopal said. “That still doesn’t give us a clean slate from a supply chain standpoint, but we are doing everything we can from our side, from all sources, to stay ahead of the curve in terms of supply chain issues and challenges.”

Balancing Competing Demands

Then there’s the issue of distributing the finished products. Because there’s a backlog of orders, resellers have been lining up and, in some cases, offering to make advanced payments and pay a premium to get ahead of the line for shipments.

This creates a challenge because Grass Valley doesn’t want to disrupt other resellers’ relationships with their end users. So the company must do a balancing act over which customers to prioritize.

“We want to have this balance so that, one, the relationship with the end user is not damaged and, at the same time, you’re making sure your working capital requirements are met and are aligned with what we project for the success of GV,” Gopal said.

Streamlining Global Operations

Beyond the supply chain-related challenges, Gopal is working to streamline processes, establish best practices and set up an enterprise resource planning (ERP) system to handle the complexities of Grass Valley — a company that has grown by acquisitions and mergers over the last 60 years and is now a global company with one-third of its customers in each of three regions: the Americas, Asia-Pacific, and Europe, Middle East and Africa.

“The challenges we have in time zones, the challenges with setting up a global ERP system, is probably the one I would emphasize the most here at GV for the next three to six months — or maybe more — because having a global ERP system that caters to the worldwide market is not a simple task,” Gopal said.

Looking ahead, Gopal said Grass Valley will keep growing as it moves from hardware-centric model to more software-based, cloud-centric solutions and platforms — and works with its customers to help them do the same.

“[Grass Valley] seems to be set up for success in the next three to five years just taking the company from a hardware-centric to a more software-based, cloud-centric company,” Gopal said. “It’s set up great to succeed.”