Dive Brief:
- A growing number of CFOs expect to change the breadth of their supply chains as a result of the COVID-19 pandemic, according to 50 CFOs, mainly from U.S. Fortune 1,000 companies, surveyed by PwC.
- Supply chain issues remain a top-three concern for roughly one-third of the CFOs in PwC's ongoing survey. The auditing firm will complete the same survey every two weeks.
- Since the last survey "financial impact, including effects on results of operations, future periods, and liquidity and capital resources," gained the most ground in terms of CFO concern, while a reduction in workplace productivity, consumer confidence and not having enough information to make decisions lost some status as a top concern. Cost containment remains the number one priority for respondents.
Dive Insight:
Three weeks ago, CFOs focused on meeting critical needs in the near-term. By the middle of last week, their conversation was more focused on what supply chains should look like long-term, Tim Ryan, U.S. chairman and senior partner at PwC said on a Monday call with media.
"As the crisis evolves, complexities and vulnerabilities in global supply chains, which extend beyond China's central role in manufacturing and goods trade, are coming to the fore," reads the report accompanying the survey.
But how can businesses mitigate a pandemic, which by definition is a global risk?
"I see the focus right now on diversification," Ryan said, explaining that executives who may have previously felt sufficiently diversified sourcing from three countries may now seek exposure to 10, for example.
The share of CFOs expecting to change the breadth of their supply chains went from 30% on March 11 to 42% on March 25.
But though each individual supply chain management team must assess their own risk for themselves, PwC is unclear as to whether the changes they make will be palpable at the macro level.
"While it's too soon to say whether large-scale sustained adjustments will be made, given the extreme labor cost arbitrage, the change in sentiment caused by COVID-19 is striking and worth watching," according to the report. As the crisis stretches on, and the response evolves, so does the level of uncertainty. The number of CFOs who were unsure whether or not they would change the breadth of their supply chains grew from 18% on March 11 to 27% on March 25.
PwC's survey was conducted before the passage of the CARES Act, which will provide some liquidity support for individuals and businesses.
