Supply chain disruption: be prepared for the unexpected

Brexit, Covid, the fuel crisis and container shipping issues mean businesses could be looking at supply shortages in the run-up to Black Friday and Christmas.

Throughout 2021, supply chain disruption has been affecting not just UK but global trade. Why?

In the UK, Brexit continues to impact sectors and businesses. From more complex regulation to labour and skills shortages, challenges have been felt across production, processing, manufacturing, retail and logistics. In particular, a shortage of HGV drivers has led to delays in petrol arriving at pumps, further compounding supply chain pressures. As the government phases in new border controls, UK businesses reliant on EU imports are bracing themselves for further disruption. 

Covid-related shutdowns and public health rules have also affected shipping. Delivery times have reached record lengths, while congestion at ports and overstretched demand for containers have driven shipping costs to new heights. 

For many businesses, the so-called ‘golden quarter’ of October to December, when retailers look to generate revenues that will tide them through the leaner early months in the new year, will be more important than ever. Shoring up the supply chain now is essential to meet demand and withstand heightened uncertainty. 

Four steps to make your supply chain more resilient

Rowan Austin, the bank’s Head of Trade Origination and Advisory, Corporates & Institutions, offers the following tips for building resilience.

1. Thoroughly map your supply chain

The disruption European suppliers have seen so far this year has been limited by the phasing in of Brexit regulations, with further border checks to come. It’s therefore vital that UK companies review their supply chains as soon as possible.

  • Switching to local suppliers or identifying near-shore or secondary sourcing locations, warehousing or distribution facilities may help consolidate supply chains.
  • Remember that switching to local suppliers doesn’t mean your supply chain is truly local or that there is no risk of disruption.
  • Engage with every link in your chain now to understand how ready your suppliers are for the new trading environment, and to identify where potential gaps could appear if any unforeseen events occur.

2. Enhance your supply chain’s transparency and visibility

The digitisation of supply chain management can be an important way to enable transparency.

  • Digital onboarding is helping businesses adapt to new regulations, speed up processing times and broaden funding access.
  • Supply chain management software can help to manage and track every aspect of supply chains, from sourcing to final delivery.
  • The use of application programming interfaces (APIs) to transmit data between suppliers will add value by enriching the flow of information across your supply chain.  

3. Identify opportunities for changes in stock management and delivery procedures

With just-in-time delivery approaches potentially at risk from extra customs processes, businesses may need to consider holding more inventory and revisiting their delivery times.

Even if your just-in-time processes are robust, it’s still crucial to make contingency plans. As a starting point, ask yourself questions like: 

  • What would you do if a supplier couldn’t deliver for a month – do you have alternate sources? 
  • How ready are you to switch suppliers if necessary? 
  • Full scenario planning will help you prepare in the event of the unforeseen.

4. Invest in staff awareness and training

Much of the Brexit-related disruption experienced by businesses has been down to a lack of understanding about what needs to be done and how to do it. While there are still many unknowns in forthcoming post-Brexit customs arrangements, there is information out there to help up you understand and prepare. 

  • Trade advisers, peer groups and trade finance partners can provide the insight needed to help train employees on new rules.
  • All employees and partners across your supply chain need to be fully aware of the new rules and trained correctly on how to implement them.
  • This will be particularly important in helping to avoid further disruption when new controls are implemented on imports from the EU to the UK.

This material is published by NatWest Group plc (“NatWest Group”), for information purposes only and should not be regarded as providing any specific advice. Recipients should make their own independent evaluation of this information and no action should be taken, solely relying on it. This material should not be reproduced or disclosed without our consent. It is not intended for distribution in any jurisdiction in which this would be prohibited. Whilst this information is believed to be reliable, it has not been independently verified by NatWest Group and NatWest Group makes no representation or warranty (express or implied) of any kind, as regards the accuracy or completeness of this information, nor does it accept any responsibility or liability for any loss or damage arising in any way from any use made of or reliance placed on, this information. Unless otherwise stated, any views, forecasts, or estimates are solely those of NatWest Group, as of this date and are subject to change without notice. Copyright © NatWest Group. All rights reserved.

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