Over the last two years, businesses of all sizes faced challenges that they had never experienced before. New problems arose that exposed the unpreparedness of businesses for disruptions, and many suffered as a result. In particular, supply chains were largely affected by the pandemic as teams realised how they had failed to anticipate disruption of this scale. These events taught of the importance of supply chains, and the need to ensure that they are resilient, reliable, and in line with the corporate values and objectives of the business.
Recently, the ACCA released a report titled 'Supply chains: a fine professional's perspective' which considers the challenges and changes to supply chain teams in 2022, and the difficulties caused by the pandemic. One major finding was that the disconnect between supply chain and finance teams within businesses is something that needs to be reconsidered. A disruption in the supply chain of a company, no matter how small or large it may be, can have major financial consequences. Small companies in particular may be more at risk as they are less likely to have dedicated teams, time and resources for their supply chains. It is therefore suggested that a more integrated approach between supply chain teams and financial teams is needed.
One mistake that businesses are found to make during times of crisis is hording cash. This may seem wise however it may lead to a breakdown of supply chains and a loss of suppliers. A better approach would be for finance teams to work with supply chain teams to create solutions and plans for how to cope when a challenge presents itself.
The CPA Practice Advisor lists some steps that finance teams can take to improve their involvement in the supply chains of the business including improving their understanding of and identifying potential risks within the supply chain. Maintaining continued communication between the supply chain and finance teams, and continued updates of any changes to the suppliers can help finance teams to better create strategies for when things go wrong. Continuously revaluating supply chains and suppliers may also be necessary to ensure they are serving the business as best they can.
While most of the challenges caused by the pandemic may be over, events such as the war in Ukraine show that supply chain risks are far from over. More than ever, businesses need to strengthen their supply chains and plan how they can cope with difficulties. Improving the connection between supply chain and finance teams could be the answer to these problems.
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