Cancelo has re-signed for Barca for a second spell from Al-Hilal this week.
Flick is happy strengthening their wing-back options, especially given Cancelo's versatility, stating: "I already said it, we have to decide what we need now.
"We are good in the central position with (Pau) Cubarsí, Gerard (Martin) or Eric (Garcia). Cancelo can play in several positions, he is fantastic in that sense. He has quality in attack, something we also need.
"When we are in the last third we need quality."
Flick, ahead of their Copa del Rey round 16 tie with Racing Santander, also commented on Real Madrid's dismissal of Xabi Alonso this week.
He said, "This is football and it's not my thing. What I can say is that I have a good relationship with Xabi. We met when he was in Leverkusen and I was in the national team. I wish him the best. He will surely have a great project soon, because he is a fantastic coach.
"It is part of football. The club must believe in you, the team too. Those who make the decisions must do so. But it's not my thing, I don't want to talk about that, because the job of a coach is very complicated, we have many responsibilities."