ACCOUNTING FOR MORE

ELLIOT ZWIEBACH

Supermarket and wholesaler chief financial officers are no longer simply the numbers crunchers of yore.

Although they still analyze financial results to improve their companies' bottom lines, today's CFOs also must be experts in technology and raising money in capital markets -- and they must stay on top of Efficient Consumer Response and other methods of driving down costs, according to CFOs interviewed by SN. In addition, several said they consider themselves vital advisers to the chief executive officers of their respective companies. "We help the CEO with analysis and assessment of certain situations, and many CEOs look to their CFOs as sounding boards because, given our background and training, we provide logical and cautious assessments of certain situations and serve as a balance to other parts of the organization that might be more aggressive," said Herb Dotterer, senior vice president and CFO at Eagle Food Centers, Milan, Ill.

"In the past, we tended to stay within our own discipline and only met with other parts of the organization at staff meetings. But over the last decade or so, enlightened CEOs have drawn their CFOs into other parts of the business, and now we're more interactive and working on more team projects with team objectives."

CFOs are directly involved in determining how to manage the business, said Don Anderson, senior vice president and CFO at Carr Gottstein Foods Co., Anchorage, Alaska. "Rather than just throwing numbers against a wall, the CFO tends to get his hands dirty as we try to change the business and move it in certain directions. My role is to help move the business forward to where we're trying to take it -- not from a backstage, numbers-crunching position, but from up front." According to Stuart Newton, CFO at Richfood Holdings, Mechanicsville, Va., "The role of the CFO is evolving into more of a partnership with the president and CEO in working out the direction of the company. In our case, the president [John Stokely] is the former CFO, so it makes the partnership easier." Looking ahead, CFOs said they believe the need to manage costs will be their primary concern. "We've got to take a hard line on managing costs and driving them downward so we can be competitive with lower-cost operators," Eagle's Dotterer said. "With low inflation, stagnant growth and attacks by new forms of competition, CFOs are more involved than ever in the survival of their companies. So we need to be strategists and to understand how to modify our cost structures to hold on and compete with supercenters." Assessing the returns on various ECR programs is the key to the CFO's future, according to Rick Mills, vice president of finance and secretary at Weis Markets, Sunbury, Pa.

"Most CFOs understand the opportunities technology brings, but it also must bring measurable returns-on-investment," Mills explained. "If the CFO determines that the returns are not there, then a company should not proceed. "The CFO must look at ROI, because an unknowledgeable CFO could get on the ECR bandwagon for all the wrong reasons. Technology is changing so rapidly and prices are being driven down so quickly that you need a return on investment today, not years from today." The CFO for a Midwestern wholesaler told SN future CFOs will have to be more operations-and technology-oriented, "with more input into business strategies and planning and more responsibility for ensuring that the culture is in place to accomplish the objectives of the company." CFOs said their role began to shift in the 1980s, when technology began to play a bigger part in the supermarket industry. Their job evolved further later in the decade when a spate of leveraged buyouts made access to capital markets more of a necessity for companies of all sizes. Until the technology revolution, "most CFOs fit the controller stereotype that most of us had aspired to 20 or 30 years earlier," Eagle's Dotterer said. "From a financial standpoint, we still crunch numbers to understand market share, market profitability and future market trends -- to help our companies develop a sense of where we're going. But today the CFO also needs to understand how to operate the traditional management information systems part of the organization, and he needs to understand the technology requirements of his company, because organizations must make the right decisions about when to jump in and acquire new software or hardware." According to the Midwestern executive, "The CFO was traditionally strictly a numbers guy, but today he has to understand operations and relate to the objectives of the customers his company does business with. To be successful, he must understand the goals and objectives of his customers because without that knowledge he's working in a vacuum, and his company won't be successful if its customers are not successful."

As the importance of technology swelled, so did the CFO's job, executives told SN. According to Richfood's Newton, the CFO "has historically been a numbers guy. But since the 1980s, much of the growth in the industry has been on the technology side, where you can really affect the bottom line. And there are a number of things the CFO does that are technologically oriented to create efficiencies and higher profits."

With MIS reporting to most corporate CFOs, the CFO "is caught right in the middle" of upheavals in technology," he said. "I help direct where we want to be in terms of logistics, distribution systems and credit/debit systems. And on the flip side, I develop the technology that we provide to our retail customers." According to Mills of Weis, "As the technology revolution began, the majority of CFOs were not conversant with technology. But they are numbers people, and they could see the benefits of adding numbers more quickly."

The Midwest CFO said, "Technology is insidious; it's no longer a rifle-shot process but a business decision that affects operations, merchandising and finance. And we can talk about technology until we're blue in the face, but we must be able to communicate its value in plain English. So the communications aspect is a particularly challenging part of the job." Staying current on technology is not always easy because it develops swiftly, Eagle's Dotterer noted. The difficulty, he said, "is not to understand technology itself but to sort through the providers and to understand the differences between them and to determine who can and can't deliver. Because things are moving so rapidly, it's difficult to talk to someone who's using a system you're looking at, so a lot of decisions have to be made without a lot of historical data, which is the antithesis of the way CFOs think." For the CFO of a company like Eagle, part of Lucky Stores before its LBO, life as an independent operator presented a host of new financial challenges, Dotterer said, "because suddenly we had to get involved with financial markets and access to capital and public debt. "It was definitely a learning process for a company like ours, which had been part of a larger company, because typically all finances were handled by the corporation and concern with cash flow was a corporate issue." According to Mills at Weis Markets, the CFO became the key player in negotiating with investment bankers "as companies became more financially dependent, and who better to give the corporation financial guidance than the CFO?"