Accountants and procurement experts are being urged to team up to deal with the supply chain shortages plaguing the world economy during the pandemic.
A new
The pandemic has stretched supply chains and caused unexpected shortages in recent years in critical parts like computer chips. Energy supplies have also been strained as gasoline prices rise across the U.S. and other parts of the world. The war in Ukraine is expected to send gas prices to new highs.
The report points out that with all the ongoing disruptions, major fault lines need to be tackled, including that many organizations don’t really understand their supply networks; that regulation is accelerating; and that financial and nonfinancial reporting demands are also increasing. As business models shift at a rapid pace, procurement and supply professionals need to work more closely with finance teams in the planning process, the management of working capital, the development of ethical supply chains, and in managing enterprise risks.
Accountants and procurement experts can also tie these goals with the push toward environmental, social and governance (ESG) reporting to curb climate change and help alleviate other problems in society. “While there’s an intensified regulatory focus on supply chains, including their sustainability and the impact that they have on the world’s carbon emission targets, a strong ethical lens is also needed to address poor working conditions, modern slavery and other social issues,” said ACCA chief executive Helen Brand in a statement Thursday. “These are critical issues that accountants and supply chain professionals have the power to change together — especially in this decade of action to reach the UN Sustainable Development Goals by 2030.”
Procurement and accounting experts can collaborate on providing relevant, accurate and informed advice to support decision making, including understanding the cost base and cost to serve, the report recommends, strengthening the relationship between supply chains and finance.
“True collaboration between our two disciplines can benefit all — from improving capabilities, managing business and consumer disruption by reducing uncertainty in companies, and therefore, ultimately benefiting society,” said IMA president and CEO Jeffrey Thomson in a statement. “For accountants, this is about being a great finance business partner, providing relevant, accurate and informed advice to support decision making. By doing this, it will strengthen the relationship between the supply chain and finance functions.”
Technology can also help, as procurement experts work together with accountants using predictive analytics, ensuring the relevant data is available, and understanding how digital supply chains can enable business models to evolve. The report also recommends that finance and procurement experts use the “ethical lens” they share in common to assess the challenges in supply chains and the behaviors of entities, especially as they lead to regulatory challenges.
“Using their professional expertise, and by working closely together, finance and supply chain teams can add real value for their organizations, their customers, their suppliers and their investors,” said Malcolm Harrison, group CEO at the Chartered Institute of Procurement & Supply, in a statement. “With greater challenges in, and more scrutiny of, supply chains and an increased focus on ethics by investors and consumers, the complementary skills of procurement and finance professionals are needed to ensure that every organization has a supply chain they can rely on. A strong ethical stance should lie at the core of any profession. Procurement and finance professionals have an opportunity to create trustworthy businesses for the good of the planet and its citizens.”
To help finance teams and supply chain experts join forces, the “Charter for Collaboration” outlined in the report highlights 10 areas of activity to deliver success, including a shared vision that supports the purpose of the business and its operations; risk and due diligence management; and having a clear understanding of ESG policies.
AICPA survey
Separately on Thursday, the American Institute of CPAs released its first-quarter
It found that only 36% of the business executives surveyed expressed optimism in the U.S. economy over the next 12 months, down from 41% last quarter. The outlook for the global economy also fell, with 30% of business executives expressing optimism, down three percentage points over the same term. The survey closed on Feb. 23, the day before Russia’s invasion of Ukraine that led to heavy economic sanctions.
Inflation was the top concern cited by the survey respondents for the second quarter in a row, with 42% saying labor costs represented the most significant risk in this area and 31% citing raw material costs. Anticipated salary and benefit costs for the next 12 months ticked up slightly to 4.4%. The projected rate a year ago was a relatively modest 1.9%.
“Our survey shows significant concerns about inflation and lingering supply chain issues from the pandemic,” said Ash Noah, vice president and managing director of CGMA learning, education and development for the Association of International Certified Professional Accountants, in a statement. “With Russia’s invasion of Ukraine and the resulting economic and political turmoil, we expect additional stresses throughout the global economy. We don’t know yet the full impact on energy and commodity prices and general trade, but the levels of risk and uncertainty have increased for finance managers.”
Availability of skilled personnel was the second biggest challenge cited by the respondents for U.S. companies beyond inflationary pressures. In terms of hiring, 45% of business executives said their organizations were looking to fill roles immediately, while another 12% indicated they had too few employees but were still hesitant to hire.
