By Jessica Salerno-Shumaker, OSCPA senior content manager
The pandemic has made companies more aware than ever of the value of resiliency, and many are now rethinking the way they prepare for the future.
“Businesses are under increasing pressure to establish a game plan to address enterprise risk and navigate all forms of disruption,” said Scott Wiley, CAE, president & CEO of The Ohio Society of CPAs.
Wiley hosted OSCPA’s Feb. 24 Town Hall with guests Mary Adams of Smarter Companies and RJ Romano of BDO to discuss operational resiliency – specifically on the topics of ESG and supply chain management.
ESG stands for environmental, social and governance criteria, and Adams said for many companies this is a new way of thinking.
“What we're really talking about is a new class of data,” Adams said. “It's data that's looking at what economists and businesses have thought of in the past as externalities, things that weren't directly relevant to a company. But our perspectives have changed dramatically in recent decades.”
While considering factors like climate change or human capital might not seem as valuable as financial numbers to a business, Adams said there is data detailing that companies who are strong in ESG have outperformed their peers the past two years.
This is an opportunity, Adams said, for businesses to grow and learn new things, and this evolution could help the longevity of the business.
“It turns you into a much more valuable person at the strategy table,” she said. “Because you're not just saying it costs less. You're saying, ‘If we invest in this, it's going to help us move the needle on all these other metrics.’ And that's a pretty nice place to be in.”
Romano said he can appreciate mindset shifting in businesses right now, especially when it comes to the supply chain. Years ago, he said there was a cost-focused approach to supply chains, when the goal was to make things as cheap and as efficient as possible.
“It’s no surprise a large disruption like COVID would break people’s supply chains very quickly,” he said.Now the shift is toward resiliency, and how to make the supply chain dependable no matter what disruptions might occur. Romano said more businesses are looking at local suppliers instead of oversea suppliers, having more inventory on hand and reserving more warehouse space for that inventory.
“This type of disruption will happen again, or it will be another type of disruption,” Romano said. “And will your supply chain be able to be efficient and optimal enough that it can be nimble and adapt to these disruptions?”
Romano said BDO published a recent survey of CFOs who said supply chain was the number one concern for the success of their business. He said the time to have conversations and begin planning is now.
“People that have been taking that wait and see approach are a little bit behind the eight ball,” he said. “And they will continue to fight different disruption day after day, versus those who form a strategy now.”