Supply chain issues haunting East Anglia businesses

The pressure on supply chains has been pronounced for some time, as importers and exporters contend with the array of challenges that are impacting the movement of products across the globe, writes Fraser Paget, head of Supply Chain & Logistics Advisory Services at BDO LLP.

Three years on, Brexit is still a significant factor. This has been compounded by the global pandemic, Russia’s invasion of Ukraine and more recently poor weather impacting food  supply. These challenges add a layer of complexity that is stifling some businesses in the region.

Supply chain issues have been a regular talking point in East Anglia as part of our bi-monthly Rethinking the Economy survey of 500 mid-market businesses.

Many businesses have been citing the supply chain as their greatest challenge and number one priority in light of pressures triggered by Brexit, a global pandemic and geo-political uncertainty.

The latest findings of the February survey are no different, with supply chain ranking as the number one concern for East Anglia businesses.

In fact, a quarter of regional companies view supply chain disruption, such as delayed materials and a lack of supplies, as the biggest challenge in the first half of the year.

There’s no escaping the fact that domestic and global supply chain issues continue to hamper the growth of East Anglia businesses.

When you consider the other challenges that rank below supply chain pressures – namely access to labour, including skills shortages and immigration, and rising interest rates and the cost of borrowing – then you begin to understand the magnitude of the problem facing businesses in the region.

What’s more, rising prices of materials and products, increased costs of suppliers, and increased customs legislation, all point to this being a persistent theme for regional companies.

But where does the solution lie? Businesses in the region are taking a number of steps to deal with supply chain pressures and rising costs, with our Rethinking the Economy survey showing that more than a third of companies in East Anglia plan to launch new products or services to diversify revenue streams.

As a result of supply chain issues, 38 per cent also intend to increase the price of goods and services for customers, while a quarter are changing to cheaper suppliers.

Many are also introducing new systems or measures to increase efficiency and reduce costs, with some onshoring operations to help manage supply chains.

There’s no doubt that there are many lessons that can be learnt from the last five years of supply chain disruption – most notably, that building resilience within the manufacturing process and supply chains has taken priority over efficiency.

This is a seismic step-change after 30 years of Kaizen, Lean and Six Sigma methodologies -  industry recognised ways to increase customer satisfaction, realise lasting improvements in company results, and to continually enhance processes and procedures, and the way businesses operate.

To build resilience, business leaders are now looking to localise and have continuity of supply. They are trying to ensure they have multiple options for transport methods (air, road, sea and rail), and multiple service providers to ensure supply.

Firms are investing in technology to give them both better visibility of supply throughout their supply chains, and capabilities to model scenarios that may affect supply. This modelling will enable instant and effective decision making in the event of any future disruptions, either locally or globally.

The most incredible thing we have learned is how resilient the regional workforce is to ensure supply of vital services and goods. When faced with adversity, business functions have collaborated, often remotely, using new technology to overcome unimaginable events successfully.

It’s fair to say that the pressures are great on businesses, and the issue of supply chains is high up on the agenda. How businesses navigate the next few months and beyond will depend on geo-political and economic factors that are largely out of their control, but it will also depend on the approach and mind set of individual businesses in how they respond to these challenges.

• You can contact Fraser on 07795 926381or via email: fraser.paget@bdo.co.uk