Key takeaways for CFOs
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Cost volatility does not create margin erosion, weak decision discipline does.
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65% of CFOs are actively adjusting forecasts due to volatility (PwC).
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Tariff pass-through averages 45%, meaning internal discipline determines margin outcomes (McKinsey).
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Weak governance creates decision latency when cost signals move faster than planning cycles.
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CFOs need driver ownership, scenario triggers, cross-functional decision forums, and pricing discipline.
Executive summary
Cost volatility is no longer an “input problem”. Today, it’s a management system stress test. When tariffs shift, supplier pricing moves, logistics costs spike, or energy swings, strong organizations don’t just “update the forecast” (like in the past). Instead, they execute a repeatable discipline: clear ownership of cost drivers, faster scenario cycles, integrated decision forums, and commercial rules for pricing and pass-through. Weak organizations revert to ad‑hoc escalations, spreadsheet battles, and slow decisions, exactly when the business needs speed.
Recent CFO and supply-chain leader surveys show how widespread the pressure has become: CFOs are actively adjusting forecasts and budgets in response to volatility, assessing tariff impacts, and implementing cost reductions beyond layoffs. Cost and supply-chain volatility is also landing at the top of executive agendas, while many organizations still lack formal senior-level (even board-level) governance routines to discuss supply-chain risk and responses.
The core message for CFOs: volatility doesn’t create the most damaging outcomes, but weak discipline does. It turns manageable cost movement into margin leakage, decision paralysis, and underperformance.
Problem
CFOs are operating in an environment where cost drivers change faster than traditional planning and governance can absorb.
- In PwC’s May 2025 Pulse Survey segment focused on CFOs and finance leaders, 65% report adjusting financial forecasts and budgets due to current volatility, and majorities are implementing cost reductions (excluding layoffs) and assessing tariff impacts.
- In Deloitte’s 3Q 2024 CFO Signals survey, CFOs cite tariffs and inflation as major watch items: trade policy and tariffs rank high among the areas CFOs monitor, while inflation is cited as one of the largest expected impacts on the business operating environment.
- On the supply-chain side, McKinsey’s 2025 supply chain risk survey reports that 82% of respondents say their supply chains are affected by new tariffs, and 39% are seeing increases in supplier/material costs. At the same time, companies often cannot cleanly pass costs through: the weighted average tariff pass-through rate is 45%, and fewer than one-fifth plan to pass through more than 80% of tariff costs.
- BCG’s global survey of 600+ executives (fielded Nov–Dec 2023) shows that while companies can hit initial cost savings, 35% struggle to sustain cost savings and 27% struggle to limit negative impacts on growth—classic symptoms of weak operating discipline around cost management.
- Grant Thornton’s Q4 2025 CFO survey highlights execution strain: only 53% of respondents report confidence in meeting cost control goals (and 57% in meeting supply chain needs).
Survey and market evidence at glance
| Source | Publication Date | Sample Size (Reported) | What It Says | Why It Matters to CFOs |
| PwC Pulse Survey (CFOs & finance leaders; “100 days in”) | May 1–8, 2025 / published Jun 5, 2025 | 678 execs; 83 CFOs | CFOs are actively re-planning: 65% adjusting forecasts/budgets; 61% implementing cost reductions (ex layoffs); 54% assessing tariff impacts. | Volatility is forcing planning cadence changes—discipline must be operational, not annual. |
| Deloitte CFO Signals (3Q 2024) | July 2024 / published Sep 18, 2024 | 200 CFOs (≥$1B revenue) | Tariffs and inflation feature heavily in monitored issues and perceived impacts; combined tax/tariff concerns outweigh inflation/rates in one question. | Cost volatility is intertwined with policy volatility—scenario discipline is required. |
| McKinsey CFO Pulse Survey | Apr 1–May 4, 2023 / published Jul 7, 2023 | 137 finance leaders, 36 countries | CFOs report high volatility in business performance; inflation becomes the top cited risk (58% top-two risk). | “Volatility in performance” is now mainstream; weak forecasting discipline is exposed quickly. |
| McKinsey Supply Chain Risk Survey (tariffs) | 2025 / published Dec 2025 (as shown) | 100 companies | 82% affected by new tariffs; 39% see supplier/material cost increases; avg tariff pass-through 45%. | Partial pass-through means margin is managed internally—pricing discipline and governance become decisive. |
| McKinsey Global Supply Chain Leader Survey | Apr 26–Jun 10, 2024 / published 2024 | 88 supply chain leaders | Only a quarter have formal board-level processes to discuss supply chain issues; many revert to ad hoc risk reporting. | Weak senior governance is a direct discipline gap; CFOs often must close it. |
| BCG Executive Perspectives (“CEO’s Guide to Costs and Growth”) | Nov–Dec 2023 / published Jan 2024 | 600+ executives | Supply chain/manufacturing costs seen as very important (65%); 35% struggle to sustain savings; 27% cite growth impact issues. | Sustained cost performance requires embedded discipline, not one-time programs. |
| Grant Thornton CFO Survey (Q4 2025) | Nov 4–13, 2025 / published 2025 | Sample size unspecified on the shown pages | Confidence in meeting cost control goals sits at 53%; supply chain needs 57%. | “Cost control” is not assured—discipline gaps convert volatility into underperformance. |
| KPMG tariff survey (reported by CFO Dive) | May–Jun 2025 / published Jul 14, 2025 | ~300 CFOs & senior execs | 57% report tariffs already squeezing gross margins; many report significant sales impacts. | Cost shocks are already visible in margin—response speed and decision rights matter. |
How volatility reveals weaknesses
In stable periods, weak discipline can hide behind averages. Under volatility, it becomes measurable because the organization’s decision system gets exercised daily. Four failure modes show up repeatedly.
Governance gaps show up as “decision latency”
When costs move weekly but governance meets monthly, you get a predictable outcome: decisions drift downward (into functions) or upward (into executives). Either way, speed collapses.
McKinsey’s supply chain leader survey points to a senior-level governance gap: only a quarter report formal processes to discuss supply chain issues at board level, and regular reporting cadence for supply chain risk drops to one-quarter, with many reverting to ad hoc reporting. The unavoidable CFO implication: if formal forums don’t exist, the organization substitutes escalation and email. That is not governance; it’s friction.
Forecasting breaks when assumptions aren’t owned
Cost volatility punishes “single-number forecasting” and loosely governed assumptions. If procurement has one view of supplier pricing, operations has another view of yield and scrap, and finance has a third view of overhead absorption, the forecast becomes a negotiation not an instrument panel.
PwC’s May 2025 findings show CFOs are already responding by changing pace: 65% adjusting forecasts and budgets due to volatility. The question is whether those forecast updates are disciplined (driver-based, transparent assumptions, scenario triggers) or simply more frequent rework.
Decision rights fail under pressure
In volatile cost environments, the “right” decision is often uncomfortable: change sourcing, change product mix, adjust inventory posture, renegotiate contracts, alter pricing corridors. These moves sit across functions.
What happens in weak discipline environments is predictable: Procurement negotiates price; sales protects volume; ops protects service; finance protects margin. Without explicit decision rights and escalation thresholds, the business delays and the market decides for you.
Survey data reinforces that this is not theoretical. PwC reports that 57% of executives say they are missing opportunities because they can’t make decisions fast enough, and explicitly cites rigid decision-making and limited visibility as contributing factors.
Cross-functional coordination breaks first at the commercial edge
Tariff- and supplier-driven cost increases create an immediate commercial question: what gets passed through, how fast, and under which rules? McKinsey’s 2025 tariff survey suggests many companies will absorb or mitigate a meaningful share of costs, given the 45% average pass‑through rate and low share intending to pass through most of the cost.
That reality exposes a discipline question, not a pricing “best practice” question: Do you have a defined pricing governance and a repeatable playbook, or do you renegotiate deal-by-deal while margin leaks?
The discipline framework CFOs can operationalize
The goal is not “better planning.” The goal is decision-grade planning: disciplined visibility, fast scenarios, clear governance, and accountable execution.
Discipline framework with owners, cadence, and KPIs
| Discipline pillar | What “good” looks like | Primary owner | Cadence | KPI that proves discipline |
| Cost visibility by driver | A small set of agreed cost drivers (materials, energy, freight, labor, yield/scrap, FX, tariffs, capacity) mapped to P&L + operational levers | CFO + FP&A lead (with procurement/ops inputs) | Weekly refresh of key drivers; monthly deep dive | “Driver variance explained” (% of cost variance attributable to named drivers); time to detect a driver shock |
| High-frequency scenario planning | Micro-scenarios tied to triggers (e.g., tariff change, supplier notice, freight index move, energy bands), each with pre-modeled actions | FP&A lead | Weekly scenario review in volatile periods; otherwise monthly | Decision lead time (signal → recommended action); scenario-to-action conversion rate |
| Integrated governance forum | One cross-functional forum with explicit decision rights (procurement, ops, sales, finance) and thresholds for escalation | CFO + COO (or GM) | Weekly (during turbulence), biweekly/monthly (steady-state) | Decisions made at the right level (% decided without exec escalation); aging of open decisions |
| Pricing discipline and pass-through rules | Pricing corridors, contract clauses, approval routes, and a pass-through playbook by segment/customer | Commercial leader + CFO | Weekly pricing/margin review; contract resets quarterly | Price realization vs. list; margin leakage (planned vs. realized); pass-through speed (days) |
| Owner accountability | Named owners for each cost driver and each major mitigation lever, with KPIs and follow-through | CFO chairs; functional owners execute | Monthly accountability review | Action closure rate; achieved savings vs. committed; forecast bias (systematic over/under) |
The point is not to build a bigger planning machine. It’s to build a smaller set of disciplines that run predictably under stress, so the organization can act faster than its cost environment moves.
Pattern case studies from the field
These are anonymized patterns we see repeatedly when volatility hits.
The “spreadsheet consensus” manufacturer
A multi-plant manufacturer faces volatile input materials and logistics. Each plant updates a cost forecast independently; procurement maintains a separate supplier view; finance publishes a consolidated “official” view. Under tariff shifts and supplier price moves, forecast updates become reconciliation exercises, not decision tools. Leadership responds late, primarily through blanket cost freezes.
What changes performance is not a new model, it’s discipline: a single driver list, weekly driver refresh, and an integrated forum that can decide inventory posture, sourcing exceptions, and pricing actions within days (not weeks).
The “pricing by exception” distributor
A B2B distributor experiences supplier cost increases but lacks a segment-based pass-through rulebook. Account managers negotiate price on the fly; finance monitors margin after the fact. Under tariff pressure, margin erosion accelerates because the organization cannot pass through costs consistently, and approvals bottleneck at senior levels.
The fix is governance discipline: pricing corridors by segment, clear thresholds, and a weekly commercial-margin review tied to driver movements. This aligns with what tariff research suggests: companies often cannot pass through the majority of costs, so internal discipline determines margin outcomes.
The “invisible consumption” services business
A services or tech-enabled firm sees volatility in vendor and platform costs (cloud usage, software consumption, third-party delivery). The business treats these as overhead until growth slows and unit economics become visible. Then, leaders attempt blunt cuts without understanding real drivers.
Discipline here looks like cost-driver ownership (consumption metrics), a weekly review of unit economics, and decision rights to change product/feature behavior or customer contract structures, not just “reduce spend.”
Leadership call to action
Cost volatility will not politely wait for your next planning cycle. Surveys show leaders are already rewriting planning, forecasting, and cost response routines in real time. The CFO opportunity is to turn that reactive motion into a deliberate management system:
If you want one practical starting point, ask three questions:
1) Do we agree on our top cost drivers, and who owns each one?
2) How quickly can we translate a cost signal into a decision (not a report)?
3) Do we have a cross-functional forum with decision rights to act weekly when needed?
If any answer is unclear, volatility is already exposing weak discipline, it just hasn’t shown up cleanly in the numbers yet.
How Centida supports CFOs under volatility
Centida works with finance and operations leaders to embed decision-grade planning into everyday governance. That means clarifying cost-driver ownership, designing high-frequency scenario routines, aligning cross-functional decision forums, and strengthening pricing discipline.
The focus is not on adding tools, but on making the existing planning system run predictably under pressure. Volatility cannot be removed, but the way an organization responds to it can be structurally improved.