SGS-Maine Pointe on how CFOs can manage supply change challenges
Jeff Staub, CEO of supply chain and operations consultancy SGS-Maine Pointe, spoke with StrategicCFO360 about today’s supply chain challenges and how chief financial officers can respond effectively.
The supply chain ecosystem continues to face a high volume of challenges, and not all are temporary nor a result of Covid. According to Staub, the top three areas driving supply chain challenges are labor shortages and mismatches; inflation driving up input costs; and supply chain shortages and high-friction logistics disrupting productivity.
Staub expects the current supply chain issues to persist through to mid-2023, with Q4 of 2022 showing initial signs of improvement.
Covid helped accelerate various permanents trends – including the central issue of labor shortages and skills mismatch – with manufacturers struggling to fill over 46% of open roles this year. As for inflation, it’s not as temporary of a feature as initially stated by policymakers – who will now attempt to crank up interest rates without sending the economy into the painful zone of stagflation.
Inflation will continue as Russia’s war in Ukraine seems likely to persist in at least the short term – choking off vast quantities of commodities including oil and gas, grain, and metals.
Though executives can’t do anything about macro factors like inflation, Staub says they can explore optionality in the supply chain and driving productivity in manufacturing. Some solutions include changing financial postures on cash to build inventory; importing labor from neighboring countries; and redesigning products to open up new suppliers. Enhancing visibility via predictive data analytics and decisioning support is another way to help mitigate disruption.
In order to better future-proof their business, Staub notes that companies are moving toward structural risk management and resilience through predictive measures and optionality. These digitally driven systems provide real-time visibility with higher levels of responsiveness and predictive power. They also reduce human intervention through automated workflows that eliminate numerous handoffs within the supply chain.
Companies are also retreating from leaned-out supply chains that prioritize cost reduction at the expense of resilience. This includes a re-evaluation of mix and location of suppliers, inventory strategy, and manufacturing footprint.
As for digital supply chain transformation, Staub says that CFOs are particularly well-placed to see its end-to-end impact and help resolve the return-on-investment question. As such, procurement leaders would be well-served by having CFO buy-in on digital adoption.
