Across industries, enterprises need to find new ways to get ahead of economic upheaval. CFOs can review their debt strategies, hedge against fluctuating currencies, and manage portfolio investments. But they will also look to see where they can absorb costs or pass them on to others. And this is where CFOs should recalibrate to focus on intelligence-driven tactics, using forecasting, stress testing, and scenario planning to isolate high-risk factors at their source and find new ways to grow.
The companies hit hardest by inflation are those that depend on raw materials and components, such as construction, manufacturing, technology, pharmaceuticals, and consumer goods. Retail is also feeling seismic shifts. Let's consider some of the industries most impacted:
- Pharmaceuticals: reducing drug prices saves lives. Inflation could get in the way of affordability and health equity to reduce the counterfeit and gray market. Instead, life sciences companies should focus on embedding automation and intelligence at the R&D and approvals stages to bring down costs and speed drugs to market. They can, for example, automate data processing with AI, use data simulation to reduce clinical trial time, or collaborate with competitors to innovate. COVID-19 vaccine development has shown just how powerful these tools are in not only accelerating time to market, but also building public trust
- Manufacturers: ensuring supply chains are sustainable and ethical as well as cost-effective is paramount. Short-term gains made from sourcing cheap labor, suppliers, and materials in response to inflation will likely cause long-term damage to brand reputation, both as an employer and supplier. Leading manufacturers instead use intelligence to design a proactive strategy for sustainable sourcing that balances both purpose and performance to give them the competitive edge
- Retailers: the quick win is to pass on costs. But companies risk pushing customers to cheaper alternatives, and if they lose brand loyalty, it's hard to win it back. Playing the long game and thinking ahead to automate fulfillment, re-evaluate supply chain and logistics, and negotiate with suppliers in return for market share will soften the blow while ensuring consumers don't feel the shock and lose faith
As the above examples illustrate, embedding intelligence not only has the power to minimize the impact of near-term disruption, but also to build more resilience to current and oncoming disruptions and improve long-term outcomes. Enterprises need to invest in mid- to long-term agility enabled by digital transformation.