News

UK should brace for sustained supply chain disorder

01-Mar-2023 - Last updated on 01-Mar-2023 at 11:16 GMT

Supply chain disorder is set to continue or get even worse, according to Coupa Software

The UK should brace itself for continued supply chain disorder, with challenges predicted to worsen or stay the same over the coming months, according to Coupa Software.

Research from the supply chain software provider found that 91% of supply chain leaders saw the situation getting worse or not improving.

Respondents attributed the ongoing disruption to a combination of geopolitical uncertainties (54%), increased costs in relation to transport, production and raw materials (51%), COVID-19 related issues (50%) and material shortages (42%).

Madhav Durbha, vice-president of Supply Chain Innovation at Coupa: “With climate change and geopolitical tensions expected to impact food and cause disruptions, now is the time for supply chain leaders to take initiative and be creative as to how they can invest and improve their operations.”

Shortages of essential items

Coupa warned consumers to prepare for sustained impact on essential items over the coming months – 34% of respondents anticipated continued shortages of goods and critical parts in the supply chain within the next 6-12 months, with fuel (24%), food (27%) and computer chips (10%) the top three products most affected.

When asked what the biggest challenges they expect to face, organisations cited keeping transportation and shipping costs down (15%), managing shrinking budgets (14%) and dealing with internal shortages (10%) as the top issues.

Despite predictions of continued disruption, UK businesses are still falling short on implementing contingency plans for potential future supply chain disruptions. While more than half (61%) said they had employees looking into contingency planning, less than a quarter (24%) said they had implemented targeted task forces. A further 15% said they had not addressed contingency plans at all.

Need for investment

The majority (78%) of UK supply chain leaders agreed that investment will be an important factor in building more agile and resilient supply chains. Currently, only 22% of UK supply chain leaders are digitising their supply chains, putting the UK behind France (36%), the US (34%) and Germany (30%). However, 38% plan to digitise in the next six months, while 18% are set to in the next year.

“As disruptions persist, it’s critical for organisations to prioritise improving their relationships with suppliers,” Durbha added. “When supply gets constrained and capacities and materials go on allocation, suppliers tend to prioritise their preferred customers.

“Organisations are gaining this status as ‘preferred customers’ by collaborating with suppliers by providing visibility into their anticipated demand and ensuring payments happen on time.”