Executive Briefings

Even as Economy Improves, CFOs Still Must Balance Service Levels, Capital, Operating Expenses

For many companies, 2015 is looking rosy. The overall economy is finally accelerating out of the worst recession since the 1930s, helped in no small part by construction as the Construction Backlog Indicator (published by Associated Builders and Contractors) reached an all-time high in June.

But the recent rise in consumer spending has fueled inflation speculation, foreshadowing an inventory carrying cost upswing in the form of rising short-term borrowing rates. Couple that with a truck driver shortage and the resulting upward pressure on freight rates, 2015 may challenge CFOs of product-based companies to guide financial policy through turbulent waters.

To effectively manage supply chains, one must tame the three-headed trade-off monster. Or, simply put, balance service levels, capital and operating expenses.

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But the recent rise in consumer spending has fueled inflation speculation, foreshadowing an inventory carrying cost upswing in the form of rising short-term borrowing rates. Couple that with a truck driver shortage and the resulting upward pressure on freight rates, 2015 may challenge CFOs of product-based companies to guide financial policy through turbulent waters.

To effectively manage supply chains, one must tame the three-headed trade-off monster. Or, simply put, balance service levels, capital and operating expenses.

Read Full Article