Major Supply Chain Issues Faced By Today's Businesses

Author
Dakota Murphey
Business Growth Consultant
10th June 2022

Having a streamlined supply chain is an important part of being able to run effectively for businesses of all sizes. The consequences of supply chain problems can be dramatic and may be more likely to be felt by smaller businesses which typically have fewer resources and options for flexibility available to them. 

The UK continues to experience supply chain issues that stem from the summer of 2021. Headlines have been made by supermarket shelf shortages and petrol stations running dry, but there have also been issues relating to freight shipping and much more. 

While some of these shortages are short-lived they can have a big impact. For example, during the fuel crisis in October 2021, 37% of people said that they struggled to find fuel while much larger numbers faced long queues to fill up. These types of supply chain issues don’t only affect individuals, but have a huge negative impact on businesses too. 

Here we take a look at some of the major supply chain issues that are currently being faced by businesses across the country. By understanding these issues, we may have the opportunity to overcome them. 

Just-in-time

For many years the UK has relied on something known as just-in-time (JIT) supply chains. Utilising the network of roads, rail, ships, factories and warehouses, these systems work by ensuring that goods and products are constantly in motion. There are many advantages to this way of working - not least that businesses do not need to have huge physical spaces where goods can be stored at all times. Products get to where they need to go, as the name suggests, just in time to go out onto shelves or be moved elsewhere. 

The problem with JIT supply chains is that a single failure in the chain causes complete havoc. Issues like labour disputes, closed roads, or fuel prices can bring the entire system to a grinding halt. 

One of the issues that has been seen with JIT supply chains is the shortage of qualified drivers. For a number of reasons it has been harder to recruit professional drivers of large vehicles and, as mentioned above, if there is just a small amount of disruption at one stage of the supply chain, it spreads everywhere else. Thankfully though, “We have seen a surge in applications for driving training,” says the National Driving Centre, a government-approved driving testing centre, adding “more people understand that there is demand for roles and are looking to get trained. It is actually a misconception that training drivers is taking too long, most of our courses take between four and seven days”. 

Impact of Brexit

It can’t be ignored that issues in the supply chain had begun to surface just as issues relating to Britain’s exit from the European Union hit the country. It is certainly far too much of a simplification to argue that Brexit itself is the cause of supply chain issues, but there are a number of factors relating to Brexit that have undoubtedly had an impact. 

The EU is the UK’s largest trading partner, so perhaps it is not a surprise that additional complexities to the ability of British companies to trade with Europe has led to supply chain issues. But, it is also harder for businesses to operate as a result of changes to rules and added paperwork created by Brexit. 

A global issue

It should be noted that there are issues in supply chains across the world, and this in turn is having an impact on the UK. Sometimes there is a focus on high-profile events such as the blockage of the crucial Suez Canal in mid 2021

But there have also been challenges caused by global events including new anti-Covid lockdowns in China, and the war in Ukraine. The dire situation in the Ukraine has certainly fuelled existing supply chain issues and created new ones. It has also accelerated the UK’s and other countries' impetus to manage and change current dependency on foreign supply chains. Unfortunately, we should expect these events to have a knock-on effect that impacts us even after these initial problems are over. 

The Covid-19 pandemic 

Speaking of the Covid-19 pandemic, it certainly must be stated that this has had a huge impact on supply chains. 

“We have been operating for more than 30 years and the Covid-19 pandemic has undoubtedly been the biggest supply chain challenge in that time,” says Kathleen Jones, Director of Quadratech Diagnostics, a provider of medical diagnostic and research products based in Lewes. “As well as changing the focus of our products, the pandemic has also created challenges in sourcing products from our suppliers”. 

The rise of the Omicron variant only worsened these challenges.In fact, in the 2022 Q1 Business West Quarterly Economic Survey, 66% of manufacturers reported having suffered goods and supplies availability issues relating to the variant. 

Inflation and increased costs

Just at a time when there are all of these challenges impacting supply chains, it is also important to recognise the impact of inflation and increased costs. The simple issue of the cost of fuel rising at its fastest rate in 30 years has caused many businesses to struggle to fulfill aspects of the supply chain. 

Increasing costs can be hugely problematic for supply chains. If businesses find themselves unable to source the materials they need, it can make their whole operation no longer viable. 

The cumulative effect

It should be stated that while many of these challenges have existed in one form or another for a number of years, part of the problem is the cumulative effect of them all happening at once. Businesses in Britain and around the world need to do everything they can to overcome their supply chain issues and get back to operating normally. 

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