Is your supply chain fit for the future?

07 Dec 2020

While many of the issues businesses have faced during the Coronavirus pandemic have been driven by reduced demand, there have also been significant issues on the supply side for many.  A recent research piece by the Manufacturing Growth Programme and Oxford Innovation found that 60% of SME manufacturers had seen a decline in supplier performance during the crisis and 35% reported production had been constrained as a result of either a reduction in the supply of inputs or the availability of labour.

Whatever the outcome of the current Brexit negotiations it seems likely that the end of the transition period on 31 December will place further pressure on cross border supply chains.  This may come from price pressure due to increased tariff costs on goods from the EU if there is no free trade agreement or the need to handle customs checks and clearances  leading to increased overheads and delays in delivery.  Whether there is a deal done or not there is going to be additional complexity for importers from the EU from 1 January onwards.

Demand challenges are difficult enough to face but what if they are compounded by supply issues which mean your business may struggle to fulfil even those reduced orders it receives?  Has your supply chain been tested in recent months and found wanting?  On the flip side, as your business returns to growth is your supply chain going to be a limiting factor?  12 months ago no one would have predicted the current hugely challenging economic situation – so who is to say there will not be other, similar economic shocks in future?

Many businesses are now taking time to examine their supply chain, identify any weaknesses and take steps to mitigate any risks so that their business is better prepared into the future.  Some of the issues that businesses are identifying include:

  • Over-reliance on a small number of suppliers for key inputs

  • Logistical inefficiencies – importing and re-exporting goods leading to additional handling costs (and post Brexit additional customs obligations)

  • Poor and/or inconsistent supplier performance

  • Inappropriate (or a complete lack of) terms of trade with suppliers and customers

While clearly for many the focus in a post-Covid world will be rebuilding demand for their products there may well be many supply-side lessons which can be taken from the current challenges and applied into the future to ensure that the business’s supply chain is well and truly for for the future.  If you would like to explore any of these issues further then please get in touch with your normal WR Partners contact to arrange a free of charge discussion.

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