Whether it’s a stuck ship in the Suez, sanctions or a factory shutdown in Shenzhen, CFOs are shackled by supply chain issues.
Purchase order lead times in South Africa reached a multi-decade high in the first quarter of 2022, according to a survey by the Bureau for Economic Research. They found that almost seven out of ten manufacturers listed raw material shortages as a production constraint.
Internationally, supply chain issues are at the front of many CFOs’ minds. Half of CFOs surveyed by PwC’s Pulse Survey listed it as a key to growth in 2022. A BDO Outlook Survey recorded supply chains as CFOs biggest headache in 2022, with 84% of CFOs listing it as either a moderate or significant risk.
The different strategies CFOs are using
The authors of the BDO survey believe technology plays a vital role in unclogging the supply chain.
“Businesses lose control of the supply chain when they can’t see changes coming”
,an issue reflected by the 31% of respondents that cited lack of supply chain technology as a significant threat. Increasing supply chain visibility through technology improves cost predictability and allows time to be proactive to any potential disruptions that could impact the supply chain.”
One method is by implementing machine learning solutions. Richard Knight, CFO by Smollan and Tech Cluster explained in a recent CFOTalks podcast that machine learning technology can help identify consumer buying patterns and streamline warehouse management.
Another method is by better understanding the supply chain. In a CFOTalks podcast, Bradley Wentzel from Douglasdale Dairy explained that his PhD thesis research was concerned with understanding and improving the food supply chain.
“There is quite a lot of wastage in the food supply chain in South Africa, where for all the food that’s manufactured in the agricultural sector, one-third of it gets wasted from farm to fork.”
Some firms are addressing supply chain issues by moving supply chains closer. “Over the next decade, we are likely to see a dramatic shift in how companies establish and manage their supply chains,” says BDO’s Eskander Yavar. “Companies will prioritise minimising the distance between their products’ source and the customer, which will lead to a transformation in many businesses’ global physical footprints.”
Sandeep Parasramka from the Tolaram Group explains on CFOTalks how this approach is helping his company in Nigeria, “As a group, we have been able to mitigate some of the supply chain issues, so we have our own packaging plant, we have our own flour mill, we have our own palm oil refinery, where we bring the crude palm in and process it.
Through various solutions, CFOs within the CFOClub network are driving the supply change they want to see in the world.
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