As we enter a new year, research shows that optimism and business confidence is returning amongst manufacturers and distributors. This is based on a survey that we conducted last year around the CFO 4.0 manufacturing executive. The survey presented strong evidence that manufacturing industry CFOs are looking beyond the current health crisis to see how their organisations can establish a sustainable recovery by taking advantage of the push for Industry 4.0. Given that senior finance leaders have access to both financial performance data and projections, their assessments of the impact of COVID-19 and how long its impact will last, are telling.
Weathering the Post Pandemic Story
When asking CFO’s about how their business had fared during the pandemic, 47 percent of global manufacturing businesses surveyed indicated that their enterprise had fared well. This pattern was particularly pronounced in the Asia Pacific (APAC) region, where 75 percent of respondents gave an answer of between three and five in terms of how well they had fared during COVID (with five being the best).
In addition, companies that had the ability to augment their existing digital activities and adapt to eCommerce models also scored highly in terms of how they believe they fared at the peak of the crisis. A further 30 percent expected to return to pre-pandemic trading conditions by the end of Q2 2021.
The levels of optimism uncovered by the research suggests that CFOs, who are increasingly responsible for risk management in their organisations, now see COVID-19 as manageable in a business context, rather than terminal.
Strategising about the next move
While some countries seem to be floundering when it comes to pandemic exit strategies and stimulus packages, manufacturing industry CFOs in APAC are looking beyond the current crisis. Some are now reconsidering their long-term strategies to remain resilient throughout future disruptions.
Businesses have therefore come to realize that in order to overcome supply chain disruptions, their business operations need to consider a different approach to ensure supply-chain resiliency. There is now a more powerful argument for re-shoring, where in the past, onshoring was predominantly driven by political considerations and trade tensions. The free movement of human capital also now much more constrained, upskilling the local workforce is becoming more feasible than importing talent from international markets.
Here, industry-built technology solutions will deliver industry specific functionality for manufacturers and distributors to optimize and simplify operations, stay current and in control. Unsurprisingly, the report also then reveals the changing investment priorities for CFOs that are directly aligned with an accelerated move towards Industry 4.0.
The next normal belongs to CFOs
While the human tragedy of the pandemic cannot be overlooked, COVID-19 represents a once-in a-generation opportunity to reset the manufacturing sector. Our survey revealed that the CFO will play a crucial role in this transition.
When asked about areas of technological investment, respondents indicated that the emphasis will be placed on investing in technology to make manufacturing smarter and less vulnerable to future disruptions. In fact, over 52 percent of businesses identified the investment in enterprise technology such as ERP, BI, and CRM as a key strategic focus area. The study went on to reveal that 44 percent of respondents singled out the warehouse and advanced manufacturing process automation as a key focus area.
Ultimately, The adoption of these Industry 4.0 technologies will be spearheaded by CFOs as they grow into the expanded roles defined by ‘CFO 4.0’. And they will increasingly be responsible not just for the finance function, but for technology and personnel issues, including upskilling the workforce.
Undoubtedly, the next normal belongs to CFOs; their importance as strategic decision makers will increase and with the expanded role delineated by CFO 4.0 will come greater responsibilities and enhanced influence. In short, manufacturing CFOs will need to ensure that they lead and guide their organisations through the uncharted waters ahead.