I just read an insight-spewing article entitled “That Rising Feeling: CFOs are fretting about the prospect of inflation, but are split on how to respond.” The article includes quotes from several CFOs who share their concerns about cost increases and their strategies for combating them. While the entire article was quite revealing, the graphs – which I have included at the bottom of this full blog post – really told quite a story.
One pair of graphs irked me, actually. One of those two graphs shows that 59% of CFOs have said that inflation had directly impacted their business in the past 12 months. The other indicates that, of those CFOs’ companies that have been impacted by inflation, only 39% of them have negotiated with suppliers to manage and/or reduce the impact of that inflation.
So, 61% of CFO’s allow costs to rise without tapping the potential of their procurement departments to negotiate with suppliers in order to mitigate those cost increases?
As the saying goes, “what’s wrong with this picture?”
Another graph that is telling is the graph that shows the type of inflation that CFOs are most concerned about. With rising energy prices, metal prices, and cost of other commodities making up three of the top four inflation concerns, it should be clear that procurement departments can play a heroic role in helping CFOs sleep better at night. Why CFOs aren’t tapping into that resource with more gusto is confusing.
It’s time to educate the CFO on what procurement can do to put the smackdown on inflation.