The upward pressure on prices poses a serious challenge for corporate finance executives and could trim 9% from the profits of a typical large global company, according to recent research from the Hackett Group.
The problem is not just the magnitude of the price increases but their volatility, Hackett says. And while 61% of the companies Hackett surveyed say they're good at anticipating price inflation, only 39% say they are successful at mitigating it.
Hackett says companies' efforts to limit the effects of price increases are hampered by their siloed approach, with few able to link the procurement unit's forecasting back to the company's planning and budgeting.
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