Factories facing supplier lead times of 56 weeks

5 July 2021

Manufacturing businesses have been hit by severe delays in supply, with some businesses reporting stock lead times of up to 56 weeks.

A survey from the business and financial advisers Kreston Reeves found 41% of businesses in London and the Southeast are currently experiencing significant supply chain challenges. A further 17% of businesses said they expected to face problems in the near future. 

The survey found even basic items like nuts and bolts were facing serious delays in reaching manufacturers. 

Andrew Tate, partner and head of restructuring and transformation at Kreston Reeves, said: “Manufacturing businesses are facing a perfect storm of delays caused by Covid, Brexit and the temporary closure of the Suez Canal, with stock lead times typically between 24 and 56 weeks.

“The demand for high-quality and high-value UK manufactured products is there, but the ability to stockpile for even just a few weeks is not possible for most businesses. Businesses are unable to fulfil orders and are taking a hit on margins.”

The news comes after a report by Interos found global supply chain disruptions were costing large companies an average of $184m annually. The report attributed these disruptions to factors including Covid-19, cyber attacks such as that on SolarWinds, and the blockage of the Suez Canal. 

Despite delays, UK manufacturing recorded some of the strongest output growth in 30 years throughout June, but supply shortages plagued the sector according to the latest PMI. Supply chain managers were said to be “working round the clock” to address these shortages. 

Government support like CBILS (Coronavirus Business Interruption Loan Scheme) and Recovery Loan funding is absorbing some of the increased costs as a result of these supply chain delays, according to Kreston Reeves, but funding challenges still remain.

Government support like CBILS (Coronavirus Business Interruption Loan Scheme) and Recovery Loan funding are absorbing some of the increased costs as a result of these supply chain delays, according to Kreston Reeves, but funding challenges still remain.

Tate said: “The Covid pandemic has meant that businesses cannot send staff overseas to sort our problems on the ground, and when they can the transportation is simply not there. 

“What will happen when that funding is exhausted? Will banks respond if more funding is needed? Businesses experiencing supply chain challenges should be speaking to their banks now,” he said. 

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