The January/February 2010 edition of CFO Magazine features an article The New Normal: A Spot Check. The article itself highlights results of a December survey of senior financial executives regarding their views on “the new normal” of post-recession recovery. My sense is that supply chain and supporting IT professionals should take some note of the prevailing finance opinion, since it may bite you in the proverbial butt.
On the one hand the majority of the survey respondents do not see a sustained recovery in product demand occurring until at least Q4 2010 or beyond. That should be of no surprise, since that sentiment appears to be a cross-functional one, but it was the other two responses that really captured my interest.
When asked if the recent severe economic downturn had led to a worsened relationship with stakeholders, damaged supplier relationships only managed to come in third with a 13% response rate. A damaged employee relationship seems to be the overwhelming consensus. I would have thought that frayed suppliers and/or partner relationships would have scored a higher response as well. Perhaps many CFO’s are shielded from the day to day supplier relationship view?
Regarding the question that the decisions they made during the downturn had any negative consequences, a whopping 66% responded that these cuts had few negative consequences, and 63% indicated that they were well coordinated. The survey seems to indicate that only 42% feel that cost-cutting decisions will have a negative effect to meet future strategic objectives.
In many industry settings, a lot of cost savings came under the umbrella of supply chain, and it goes without stating by me, that these decisions were painful in terms of lost people and process capability. It amazes me that the financial side of the house doesn’t seem to see any long-term implications. Continuous cost-cutting within supply chain is an obvious requirement to sustain business in severe economic times, but to believe that prevailing opinion points to minimal consequences is rather startling.
Here’s a suggestion. If you have not done so already, make sure that you meet and communicate regularly with the CFO and his team. Take them to lunch, even if it is on your dime. Educate on where operational and supplier capabilities really stand.
While you think you may be protecting your butt by not making waves, you may be in for a rude awakening when the recovery actually makes its presence. By then, the prevailing opinion may well be that the supply chain did not respond adequately.
It seems that the notion of the functional stovepipe lives and breathes.
What’s your view? Do you have the same reaction to these survey results from the CFO side of the house.