A question that keeps popping up here at Celtrino is what’s going on in the minds of the CFO community and in particular, if CFOs are aware of the cost and cash flow benefits of improving their supply chain management efficiency.
Deloitte’s have just published their CFO Survey which is a quarterly survey of Chief Financial Officers and Group Finance Directors of major UK companies. Now in its 5th year, the survey provides another insight into the thinking of the CFO’s and their intended spend patterns in 2012.
The report returned seven key findings:
- The biggest concern for UK CFOs in 2012 is the risk of a break-up of the euro. CFOs attach a 37% probability to one or more members of the Single Currency leaving the euro in 2012.
- CFOs are pricing in a UK recession and expect the economy to remain weak for a prolonged period.
- 87% of CFOs believe this is a bad time to be taking additional risk onto their balance sheet.
- The profits cycle is turning. 70% of CFOs expect corporate margins to decline in 2012.
- The major priorities for large corporates in 2012 are reducing costs and increasing cash flow.
- Financial stress is affecting the supply of credit to large corporates. Credit availability has deteriorated at the fastest rate since the credit crunch in September 2008.
- Despite the risks, CFOs see opportunities to expand market share and acquire assets at discounted valuations.
According to the report, “Despite the uncertainties 48% of CFOs think troubled times create new opportunities. One-third see opportunities to acquire undervalued assets; 30% think weaker competition provides a chance to expand market share; 19% believe that a difficult economy gives them a chance to implement overdue changes to their businesses. And some foresee new sources of demand. 12% of CFOs plan to develop new offerings to meet needs created by a difficult macro environment.”
Close on 20% of CFOs envisage the conditions to be favourable to affect transformative change to business processes that are either out-of-date or simply inefficient. As the supply chain is now such a critical component of a company’s performance and very survival it makes perfect sense for CFOs to examine ways to improve the effectiveness and efficiency of how to manage B2B trading activities.
For those 87% of CFOs that believe this is a bad time to be taking additional risk onto their balance sheet, they should consider improving supply chain management efficiency as it is relatively risk free.
A key note about transforming inefficient supply chains is that it both reduces costs and improves cash flow. That’s a powerful addendum to the Deloitte survey for every CFO to take note of.