Supply chain disruptions are wreaking havoc on manufacturing balance sheets. What’s a CFO to do?

by | May 26, 2021 | News | 0 comments

It can be tempting for those of us in corporate finance to replace the accountant’s iconic green eyeshades with rose-colored glasses when reflecting on the past. With the nostalgia of hindsight, it’s easy to visualize times that we now wistfully look back on as “normal”—times when manufacturing processes were routine, when the costs of doing business were stable, when markets were predictable and when product features were standard.

In reality, of course, business has never been that tranquil. But compared to the turbulence of this past year, it almost seems as though it were. Today, international trade disputes are jerking manufacturers around, disrupting supply chains, alienating trading partners and impacting revenues. Parts shortages, price spikes, port delays and labor issues are all conspiring to ignite a potentially grave inflationary spiral and make supply disruptions the “new normal.”  Plastic resins, computer chips, wooden pallets, chicken wings and just about everything that goes into manufacturing has been in short supply. And Covid-19 has hammered entire sectors of the economy, exacerbating labor shortages, distorting markets and forcing the urgency of extreme agility onto organizations more familiar with constancy.

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