Costs are rising for companies, caused by a number of factors, such as how the pandemic disrupted global supply chains and the probability of a strong economic rebound this year. As The Wall Street Journal points out, this has finance chiefs evaluating their options.
In this recent article, they point out…
Purchase prices for a range of products—from steel and copper to lumber and plastics—have gone up in recent weeks on the back of a resurgent U.S. economy. Bottlenecks around global production, supply chains and logistics are exacerbating the issue, resulting in shortages of key components such as computer chips.
Many companies are looking to pass these costs on to buyers and consumers, naturally. It’s the point in the business cycle when it’s the easiest window to improve pricing, as everything is coping with price increases. So it’s the perfect moment for an organization to implement price optimization in order to mitigate any negative impacts:
Companies are likely to report lower profits despite these pricing actions and cost cuts in the coming quarters. Many businesses have regular annual cost-reduction programs in place, but inflation is outpacing the gains made through such efforts. Some businesses are renegotiating prices with their suppliers, investing in automation or delaying new hires to keep costs down.