Stamford-based Basware”™s academic partnership has found the old way of doing business needs reappraisal in the new economic paradigm.
Basware and academic Adrian Done of the IESE Business School in Barcelona, Spain, have released information showing chief financial officers and chief procurement officers of large organizations are struggling despite reports of economies beginning to lift out of recession. The study finds the lack of improvement can be attributed to applying existing approaches in cost control to the new demands of a tough economic climate.
Basware produces financial management software solutions.
“Businesses are looking for tsunami events in the supply chain, but they fail to keep track of the soil erosion that takes place day-to-day,” said Done. “This mentality is a big disruption as decision makers fail to see the sequential risks of suppliers struggling to meet demands, while obsessing about discrete insolvency episodes and their impact on short-term operations.”
Done said cost control and reduction have become “the new normal” going into 2010, with the urgency for reactive cost cutting measures continuing to supersede longer-term investment-driven directives. He said the report also identifies a growing trend for increased levels of finance and procurement collaboration as well as transparency among businesses seeking to overcome finance and purchasing challenges.
“As cost reduction and control become the new normal, automation will continue to be a key component of realizing cost savings via operational changes,” said Paul Cowley, vice president of Basware. “However, when headcount reductions and unit cost savings are harder to realize, businesses must turn their attention to address more systemic inefficiencies. Organizations that will thrive going forward will be those that lift themselves out of purely reactive cost-cutting directives and begin to think more strategically, adding a more systemic approach to address supply chain risk.”
