Businesses focus on long term in 2011

Currencies, commodities among key issues

December 29, 2010
by Purchasing b2b staff

STAMFORD, CONN: Volatility and risk will top the list of concerns for chief financial officers in 2011, according to forecasts from purchase-to-pay company Basware.

Each year, the company releases predictions of up-and-coming business trends and issues. Basware said long-term fallout from the global economic recession remains front-of-mind for CFOs in the coming year.

“In 2011, we will see businesses focus on longer-term supply deals and processes, while continuing to face the challenges of volatility and cost reduction,” said Ari Salonen, Basware’s general manager, North America. “Businesses will be planning and preparing further ahead than in recent times, as the economy becomes increasingly stable. Accurate forecasting and appropriate measurement for inventory costs will be essential considerations.”

The company’s forecasts include:

•    globalization will continue to present opportunities and challenges, and companies continue to need efficient and agile relationships with their global supply chain;

•    currency and commodity fluctuations will remain key issues. Volatility makes it difficult for companies to plan and forecast, resulting in stocking up on inventory when costs are low. That means high storage costs and instability if cash flow is tied up in inventory. Commodity inflation—along with currency and commodity volatility—will stay important; and

•    rather than measuring procurement teams using a purchase price variant (PPV) comparison, Basware predicts in 2011 CFOs will seek longer-term cost/saving measurements that consider inventory costs and supplier risk.

Basware also forecasts that corporate social responsibility (CSR) initiatives will remain high on the CFO agenda.