Where manufacturing CFOs are focusing now

Last April, I shared the results of a BDO survey of manufacturing chief financial officers (CFOs) and what they viewed as important to increase supply chain resilience. Their strategies included reshoring, improving talent availability, and leveraging tax credits. This year’s survey reveals manufacturing CFOs are now focusing on accelerating growth, shifting from defensive, lean operations to go on the offensive with strategies aimed at growing revenue and improving profitability. (For more details, see this month’s Gaining Altitude.)

Again, I asked BDO’s Manufacturing Industry National Leader Bill Pellino to explain what changed CFOs’ priorities.

He believes the need for resiliency hasn’t changed, but there’s more uncertainty about reshoring, near-shoring, or friend-shoring.

“The question now is where and why do you want to move your supply chain?” Pellino says. “We’re finding it’s more about strategy and whether the reason is proximity to customers or suppliers and securing your supply chain.” The survey was conducted before tariffs became top of mind, but Pellino notes, “With tariffs, or the threat of tariffs, manufacturers want to know the rules and what they need to plan appropriately.” Uncertainty may explain why supply continuity and access to materials remain the top supply chain challenges.

Has there been any incremental improvement in the talent shortage? “This isn’t a problem that can be fixed easily,” Pellino replies. “It’s a challenge manufacturers are going to need a lot of different strategies to solve.”

One strategy is automation, Pellino notes. “In the past two to three years, a lot of investments have been made in automation to fix internal processes, and that’s why we’re optimistic 2025 will be a year where we shift from defense to offense as companies look to grow profitably, rather than spending on resiliency.”

Pellino says leveraging tax credits is still underutilized. “One of the biggest opportunities manufacturers have is taking advantage of tax credits and incentives available on the state and local level. Think about opportunities to reduce total tax liability, rather than just thinking about federal and state income tax or franchise tax. Too many companies think of it at the end of the year when it’s too late.”

Artificial intelligence (AI) figures prominently in the new survey. About 63% of respondents have used generative AI. Pellino cites as a good use case a company using generative AI to translate supervisors’ instructions into multiple languages simultaneously so workers can hear them in their own language. Using AI increases productivity and throughput.

Pellino advises manufacturers to make sure to start with the strategy. Automating something that doesn’t need it won’t move your business forward; for example, using AI to help with predictive maintenance on a machine that rarely goes down because it’s already well monitored. “Is that a strong use case? Make sure what you’re doing is something that’s impactful for the organization.” What he’s already seeing is the adoption of AI in finance and the back office, which positively impacts revenue and profitability. – Eric