Fifth of CFOs concerned about supply chain disruption

15 April 2020

Controlling costs is becoming increasingly important to chief financial officers (CFOs) as the coronavirus pandemic gathers momentum, a survey has revealed.

Consultancy firm PWC surveyed CFOs in the US and Mexico in the first week of April when 82% revealed they were now focused on reining in costs.

Over a fifth (21%) of those surveyed said supply chain disruption was one of the top three concerns provoked by the outbreak. Almost two-fifths (39%) of firms were considering making changes to their supply chain as a result of the pandemic.

The report said companies were still absorbing lessons about risk warning systems, visibility into supplier financial health and exposure to single sources of supply, and assessing areas of vulnerability.

While they were realising the need to make adjustments to operating models to improve flexibility, it remains too soon to say exactly what form these adjustments would take, given the expenses associated with change.

“Diversification of risk will likely begin by being more purposeful in new product manufacturing site selection, creating pre-approved second sources of supply and improving supplier financial health diligence work,” said the report.

“New government regulations and consideration of the impact to legacy communities will also be factors for making any modifications to the supply chain models.”

Almost two-thirds (61%) of CFOs said they could return to "business as usual" within three months if Covid-19 were to end immediately.

However, three-quarters said the financial impact of the coronavirus pandemic now rated as their top concern, while 67% said they were considering deferring or cancelling investments.

A separate survey by Proxima of finance leaders in the UK and US taken before the coronavirus outbreak has found respondents considered the procurement function to be “imperative” for the financial success of the business.

Even before the virus sent stock markets tumbling, finance leaders were concerned about the prospect of a global recession despite increasing overall optimism, the survey revealed. 

Over two-thirds (68%) of finance leaders in the UK said they overwhelmingly valued their procurement function.

This was both for business revenue and savings the function could generate, as well as making “working life easier”. Just over 60% of US respondents held the same view.

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