Supply chain disruptions are the primary business concern for CFOs in 2023, according to a survey by BDO involving 600 finance leaders from companies with annual revenues between $500 million and $3 billion. The survey highlights that 84% of CFOs view supply chain issues as a major risk, noting that these problems had been emerging even before the pandemic.
In supply chain worries, talent shortages and potential tax law changes are also significant concerns for CFOs. Interestingly, COVID-19 has become less of a direct worry, although its impact on work models has intensified cybersecurity risks. Data privacy breaches are a top risk for nearly 80% of CFOs, with an Accenture report confirming this concern by indicating a 107% increase in ransomware attacks in 2021 compared to 2020.
The BDO survey reveals that supply chain risks are complex and intertwined. CFOs are grappling with increased material and transportation costs, coupled with delays and shortages on the supply side, and shifting customer preferences on the demand side. Rapid delivery expectations add to these challenges, making supply chain management a critical headache for CFOs.
To address these issues, CFOs are prioritizing accurate demand and inventory management, aiming to employ technology to evolve from the just-in-time inventory approach to more resilient methods. The BDO report suggests that while cost reduction has been a primary driver of just-in-time strategies, the lack of built-in redundancy has been problematic.
An example of adapting to these challenges is CarParts.com, a major auto parts retailer. The company’s CFO, David Meniane, shared that they are holding significantly more inventory than pre-pandemic to avoid shortages and delays. This approach, while costly, is seen as a temporary measure to ensure customer satisfaction. As supply chain reliability improves, Meniane anticipates a shift back towards a more efficient, yet resilient, inventory model.
Find the latest supply chain report news at The Supply Chain Report. For international trade tools, see ADAMftd.com.
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