CFOs look to improve relationships following downturn

7 April 2011

7 April 2010 | Lindsay Clark

Nearly eight out of 10 CFOs believe relationships with suppliers, customers and business allies will be very important to their firms’ success in the economic recovery.

In a survey of 193 finance chiefs, around 60 per cent said their companies are also more likely to pursue strategic alliances following the downturn.

“During the recession, companies that had financial strength could use it to their advantage, extracting better prices and more favourable terms from their less-healthy suppliers,” said Sam Knox, director of research, CFO Research Services which conducted the research. “But as the worst of the downturn abates, companies are increasingly looking to third-party relationships as sources of process improvements and expertise through which they can enhance supply chain stability and share the risks and rewards of mining new and mutually beneficial ground.”

However, the research, which was sponsored by software firm Ariba, found that a complex, highly diverse supply base was likely to interfere with a company’s ability to improve relationships. This was the most commonly cited cause, pointed out by 36 per cent of respondents.

The research found more than half of businesses are currently taking steps to get to know and manage their suppliers better, gathering information on prices, product quality and performance. A majority are also renegotiating terms and rationalising their supply bases to ensure they have the right cost structures and partners in place to support their growth.

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